Morning NOTE

GOOD MORNING

ALL EYES ON NFP:  The ZAR strengthened on the back of some profit taking ahead of today’s NFP report.

• USDZAR 18.5300
• EURZAR 19.6200
• GBPZAR 22.0900

SOUTH AFRICA

• Gauteng MEC for Finance Jacob Mamabolo said that his office wanted to settle all the province’s unpaid invoices to service providers.
  • Mamabolo said this was part of the government’s efforts to strengthen its supply chain management processes and reduce irregular expenditure. EWN
     
• The Automobile Association (AA) has strongly criticised the proposed expansion route of the Gautrain announced recently by Gauteng Roads and Transport MEC Jacob Mamabolo.
  • The proposed phase one route will run through various areas, including Little Falls, Bryanston, Olivedale and Randburg with the Sandton and Marlboro stations being upgraded.
  • The Gautrain has long been praised for its speed and convenience, but the AA says the expansion will only benefit the privileged and cost taxpayers billions of rand due to a shortfall. News24
     
• Chairperson of the Resource Mobilisation Fund, Martin Kingston, said that at least R100 million had been raised by the private sector to help alleviate the impact of load shedding.
• Kingston made the announcement at the launch of the fund on Thursday afternoon.
  • It has been established by the business fraternity after President Cyril Ramaphosa called on the sector to help capacitate the National Energy Crisis Committee,
  • which in part is driving the intervention in the country’s battling energy sector. Moneyweb

Banks prosper

• Standard Bank CEO said Earnings would be better if SA’s situation was easier
• The group delivered record-high earnings, which grew 37% to R34.2 billion in the year to December 2022.
• Even as Standard Bank reported the highest headline earnings in its history,
  • CEO Sim Tshabalala said he believes the group could have delivered a stronger set of results were it not for the myriad of issues currently facing South Africa.
  • The bank, South Africa’s largest by assets, grew headline earnings by 37% to a record high of R34.2 billion in the year to 31 December 2022.
  • The bank granted more loans to consumers, resulting in handsome income earned from interest. MONEYWEB

GLOBAL MARKETS

Stocks:

• US stock futures rose on Friday after a bank-led selloff on Wall Street during Thursday’s regular session.
  • Investors look ahead to the monthly jobs report for clues on the Federal Reserve’s tightening path.
     
• In regular trading on Thursday, the Dow fell 1.66%, the S&P 500 dropped 1.85% and the Nasdaq Composite tumbled 2.05%.
   
• SVB Financial led the losses in the financial sector, sinking 60% after announcing plans to raise more than $2 billion in capital in a bid to offset losses from bond sales.
  • Sharp losses were also seen from Bank of America (-6.2%), JP Morgan (-5.4%) and Wells Fargo (-6.2%), among others.
     
  • This raised concerns among investors that higher interest rates are pressuring bank balance sheets due to borrower defaults.
     
  • Meanwhile, the February jobs report is expected to show that hiring slowed from January’s large gain, but another strong reading could pressure equities further.

Bonds:

• The yield on the US 10-year declined to 3.82% after a softer than expected weekly claims report.
  • Traders however, eagerly awaiting the NFP this afternoon.
  • On the policy side, Fed Chairman Powell stated that recent hot economic data might force the central bank to increase interest rates more aggressively and that the terminal rate may be higher than anticipated.
  • Despite the pullback in 10-year Treasury yields, the remarks drove investors to price an almost 80% chance of a 50bps interest rate hike instead of back-to-back 25bps increases.
  • As a result, the spread between the two and 10-year yields widened to as much as 104 basis points, the deepest inversion since 1981.

YESTERDAY

• The Dow  fell 543 to 32,354
• The SP500 fell 73 to 3,918
• The Nasdaq fell 237 to 3,918

:  image: Trading economics

OVERNIGHT HEADLINES

The Dollar

• The dollar index steadied around 105.2 on Friday as investors cautiously awaited the monthly US jobs report.
  • The report is expected to show that hiring slowed in February, but another strong reading could push the currency higher.
    • The dollar is also on track to finish the week in positive territory, underpinned by hawkish remarks from Fed Chair Jerome Powell.
    • Powell warned this week that the ultimate level of interest rates could be higher than anticipated in light of strong economic data.
    • On Thursday, the greenback slid on Thursday after the latest US jobless claims data indicated possibly easing labour market conditions
    • and tempered expectations of further aggressive tightening from the Fed.  FX news

Asian markets tracing wall street lower. Stocks in New York reversing early session gains before declining.

• In Japan, the Nikkei 225 dropped 1.67% to close at 28,144, retreating sharply from multi-month highs as the Bank of Japan left its policy of ultra-low interest rates unchanged at its March meeting.
  • It  was Governor Haruhiko Kuroda’s final policy meeting before retirement.
  • Japanese shares also tracked a bank-led selloff on Wall Street overnight amid concerns that higher interest rates are pressuring bank balance sheets due to borrower defaults.
  • Financial stocks led the market lower, but the benchmark indexes finished the week higher for their second straight weekly advance.
• In Australia ASX 200 Index tumbled 2.28% to 7,145 on Friday, closing at its lowest level in two months and tracking losses on Wall Street overnight.
  • Traders worried about the prospect of further monetary tightening from the Federal Reserve ahead of the release of a key monthly jobs report in the US.
  • Domestically, RBA  Governor Philip Lowe  once again said . the  bank was closer to reaching a point of pausing interest rate increases as monetary policy had become restrictive. Reuters

Crude oil

• Brent crude futures traded near $81/ bl  on Friday and were set to drop more than 5% this week, weighed down by fears that the US Federal Reserve will raise interest rates further to combat inflation.
  • Traders citing the continued rise in rates will likely be increasing recessionary risks that could dampen energy demand.
    • OPEC Secretary-General Haitham Al-Ghais echoed such concerns, saying weakening oil consumption in the US and Europe could threaten the market.
  • Traders also tracked energy flows from Russia as the country’s oil exports held up well even in the face of escalating sanctions.
    • Also, investors continued to assess the demand outlook in China, as the world’s top crude importer dismantled strict Covid curbs but set a modest growth target for this year. Gulf energy news

Gold

• Gold was subdued around $1,830/oz on Friday as investors cautiously awaited a key US jobs report which is expected to show that hiring slowed in February.
  • But another strong reading could pressure the metal further.
  • Gold is also set to lose more than 1% this week, weighed down by hawkish remarks from Federal Reserve Chair Jerome Powell and stronger-than-expected US economic data.
  • Powell warned this week that the ultimate level of interest rates could be higher than anticipated in light of strong economic data.
  • But Gold jumped about 0.9% on Thursday after the latest US jobless claims data indicated possibly easing tensions in the jobs market.  Kitco metals report