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Morning NOTE

GOOD MORNING

The ZAR strengthened significantly on the back of an expected FED rate hike of 25 bps.

OPENING RATES

• USDZAR 17.0400
• EURZAR 18.790
• GBPZAR 21.1300

SOUTH AFRICA

• The DA plans to send a delegation to Tottenham Hotspur Football Club to get to the bottom of the R1 billion sponsorship deal between the English Premier team and South African Tourism. 
  • DA’s tourism spokesperson Manny de Freitas said in a statement on Wednesday that the party would be submitting questions on how the alleged deal, which it called “lunacy”, came about.
    • The DA wants answers on an alleged sponsorship deal between Tottenham Hotspur Football Club and South African Tourism.
    • Reports are that the sponsorship deal is worth R1 billion. 
    • Tourism Minister Lindiwe Sisulu has distanced herself from the deal. News24
       
• Diesel sharks smell blood at Eskom
• While South Africa continues to suffer under extended and high levels of load shedding, government departments are looking for opportunities to sell diesel to Eskom at extortionate rates.
  • According to findings from energy expert Chris Yellend and consultancy group EE Business Intelligence (EEBI),
  • Eskom’s diesel crisis has forced the power utility to procure diesel at a rate above pump prices from state-owned PetroSA,
  • while politicians and government departments submitted unsolicited suggestions for ‘other’ sources of diesel. BusinessTech
     
• February petrol price hike could push more than half of South Africans below the poverty line
  • According to the AA , Motorists will now have to fork out an additional 28c per litre for both 95 and 93 octane petrol, while diesel will be hiked by between less than a cent and around 9c a litre. IOL

GLOBAL MARKETS

Stocks:
On  Wednesday, the Nasdaq rallied 2%, the S&P 500 gained 1.05% and the Dow ticked up 0.02%, with ten out of 11 S&P sectors finishing higher.

• Those moves came as the Federal Reserve reduced the size of its rate hike and said it has made progress in the fight against inflation.

The central bank also signaled more rate increases ahead, but hopes that this tightening cycle may be nearing its end is growing.

• Nasdaq jumped on Thursday as Meta shares surged on an upbeat quarterly report, extending gains made during Wednesday’s regular session amid a Fed-induced technology rally.
• Nasdaq 100 and S&P 500 futures gained 1% and 0.4%, respectively, while Dow futures were flat.
• In extended trading, Meta surged nearly 20% after reporting a stronger-than-expected fourth revenue and announcing a $40 billion stock buyback.

Bonds:

• The US 10 Year yield declined to 3.40% after the Fed’s expected 25 bps rate hike.
  • Federal Reserve Chair Jerome Powell then held a news conference, in which he said that the economy’s disinflationary process had started.
  • But he maintained that it was too early to  declare victory over inflation..
  • He also  made it clear during his press conference,
  • Former Goldmans COO also noted,  that the data the Fed is closely watching more than anything else is jobs data,

Yesterday

• The Dow added 6.92 points to 34,092
• The SP500 gained 42.61 to 4,119
• The Nasdaq gained 231 to 11,816

•   Image: Trading Economics

OVERNIGHT HEADLINES

The US Dollar weakened sharply after a what the markets deemed to be a dovish FED.

• The buck falling to 100 and sliding to its lowest levels in over nine months as the Federal Reserve delivered a smaller 25 basis point rate hike in a widely expected move.
  • Fed Char Jerome Powell said that the “disinflationary process has started” , and  he added that it is “certainly possible” that the Fed will keep its benchmark interest rate below 5%.
  • He also said the FOMC believed it can get inflation back down to 2% without significant economic damage.
  • All eyes now turning towards Friday’s NFP report.
    • After former  Goldmans COO noted,  that the data the Fed is closely watching more than anything else is jobs data,

Asian markets rallying on the back of a strong close on Wall Street.

• In Japan, the Nikkei 225 Index rose 0.2% to close at 27,402 on Thursday, extending gains from the previous session and taking cues from a positive lead on Wall Street.
  • Markets trading risk on, after the  US Fed reduced the size of its rate hike and said it has made progress in the fight against inflation.
  • The US central bank also signaled more rate increases ahead, but hopes that this tightening cycle may be nearing its end is growing.
  • Technology stocks led the advance, with strong gains from SoftBank Group (1%).
• In Australia, the ASX 200 rose 0.13% to close at 7,512, hitting its highest levels in over nine months and taking cues from a positive lead on Wall Street.
  • The Fed’s  smaller rate hike of 25 bps, and comments that it has made progress in the fight against inflation, sent stocks higher.
  • The US central bank also signaled more rate increases ahead, but hopes that this tightening cycle may be nearing its end is growing.
  • Technology stocks also, led the market higher, with strong gains from Block Inc (5.9%). And
  • Gold stocks also rallied on higher bullion prices, with sector leaders Newcrest Mining and Northern Star Resources surging 3.7% and 4.6%, respectively.

Crude oil

• US WTI crude  oil  rose to around $77 /bl after a moderate  US Federal Reserve delivered a more moderate 25 basis point rate hike and said it has made progress in the fight against inflation.
  • The Dollar declining and thus making Dollar-priced commodities cheaper for foreign buyers.
  • On the supply side, an OPEC+ committee recommended keeping crude production steady, citing uncertainty about the impact of China’s economic reopening and the latest sanctions on Russian supply.
  • Meanwhile, the US oil benchmark remained down more than 3% this week as signs of robust Russian crude exports and mounting fears of a global economic slowdown continued to grip energy markets.
  • Official data also showed that US crude inventories jumped by 4.14 million barrels last week, much more than market expectations of a 0.376 million barrel rise.  Gulf Energy News

Gold

• Gold moved  above $1,950/oz, reaching  its highest levels in over nine months as the US FED delivered a more moderate 25 basis point rate hike in a widely expected move.
  • Fed Char Jerome Powell said that the “disinflationary process has started and
    • added that it is “certainly possible” that the Fed will keep its benchmark interest rate below 5%
    • and that it can get inflation back down to 2% without significant economic damage.
  • Still, the US central bank indciated more rate increases ahead, but Powell’s remarks ignited hopes that this tightening cycle may be nearing its end.
    • The BOE  and the ECB are also expected to tighten policy further as they conclude their meetings today.
  • Gold is highly sensitive to the rates outlook as higher interest rates raise the opportunity cost of holding non-yielding bullion and vice versa. Kitco metals report