SOUTH AFRICA
- The African National Congress (ANC) has thrown its weight behind Electricity Minister Kgosientsho Ramokgopa’s power plan.
- The party’s national executive committee (NEC) has resolved to extend the lifespan of Eskom’s coal-powered stations.
- The plan includes the decommissioning of some power plants, while still honouring South Africa’s commitments to climate change. EWN
- Former Eskom CEO André de Ruyter is expected to make a formal submission to Parliament this week, on alleged corruption during his tenure at the power utility.
- De Ruyter made headlines at the end of February when he claimed African National Congress (ANC) politicians turned a blind eye to his complaints about corruption in an interview with eNCA.
- Eskom will also appear before Parliament to brief it on the latest tariff hike granted to it by the South African National Energy Regulator (Nersa). EWN
- Anglo American’s overall first-quarter production rose 9%, helped by strong copper output from the ramp-up of its Quellaveco mine in Peru and improvement in its steelmaking coal operations, it said on Tuesday.
- The London-listed miner said it produced 178 000 tonnes of copper in the quarter to March, 28% higher than a year ago, and reported a 59% jump in steelmaking coal output to 3.5 million tonnes. Money web
GLOBAL MARKETS
Stocks
In extended trading, First Republic sank more than 20% after the regional bank reported that deposits tumbled 41% to $104.5 billion in the first quarter.
- Earlier Standard Chartered’s CEO warned of risks in the banking sector that haven’t come home to roost.
- Bill Winters said there could be other issues that “come home to roost in some form of a crisis” as imbalances in some banks are exposed by inflation and higher interest rates.
- In regular trading on Monday, the Dow and S&P 500 rose 0.2% and 0.09%, respectively, while the Nasdaq Composite dropped 0.29%.
- Despite signs that companies are holding up well in this challenging macro environment, investors remain cautious about slowing growth and restrictive central bank policies.
- Alphabet and Microsoft will report earnings after the bell on Tuesday.
- US stock futures were little changed on Tuesday as traders looked ahead to corporate earnings reports from mega-cap technology and consumer discretionary names, as well as more economic data.
- Futures contracts tied to the three major indexes drifted flat to slightly negative.
- Cadence Design Systems also fell 5% on weak earnings and revenue guidance for the second quarter, while Whirlpool gained 4% after beating estimates for the top and bottom lines.
Bonds
The 10-year US Treasury note yield, seen as a proxy for borrowing costs worldwide, eased to around 3.5% as money flew into safe-haven government debt amid lingering concerns about Fed-induced recession late in 2023. Still-high inflation and a slew of hawkish speeches from policymakers prompted bets for another 25bps increase in the Fed funds rate next month. Investors now focus on critical economic data, including the US GDP on Thursday and the PCE price index on Friday, for further insight into the central bank’s future policy. Meanwhile, money markets continue to see interest rates peaking in the coming weeks before a series of cuts later this year.
Yesterday
- DOW added 66 to 33,875
- SP500 added 3 to 4,137
- NASDAQ fell 35 to 12,037
 image: Trading economics
OVERNIGHT HEADLINES
The US Dollar
- The US dollar traded around 101.3 on Tuesday after losing 0.4% in the previous session.
- Traders reassessed the outlook for the US economy and Federal Reserve monetary policy.
- The market is sifting through a raft of corporate earnings and economic data to determine whether the US economy could be headed for a recession.
- Still, the Fed is widely expected to deliver another 25 basis point interest rate hike in May, though traders will be monitoring guidance on the future rate path.
- The ECB is also set to raise rates further next month, but the market remains split on whether it would be a quarter- or half-percentage point increase.
- Investors now look ahead to first quarter GDP data and April consumer sentiment data for more clues on the state of the economy, as well as more earnings reports from major US firms. FX NEWS
Asian markets mixed following another flat session on Wallstreet. Markets remain nervous ahead of next week’s Fed FOMC meeting.
- In Japan, the Nikkei 225 rose 0.09% to close at 28,620, rising for the second straight session due to earnings optimism and an improving risk sentiment.
- Investors also look ahead to the Bank of Japan’s monetary policy meeting this week.
- The BOJ is widely expected to maintain its policy of ultra-low interest rates as the bank aims to achieve price stability.
- In Australia ASX 200 Index fell 0.11% to close at 7,322 on Monday, sliding for the third straight session, dragged by mining and energy stocks as recession fears weighed on commodity prices.
- Heavyweight iron ore miners led the market lower, with sharp losses from BHP Group (-1.9%), Fortescue Metals (-3.3%), and Rio Tinto (-3.4%).
- Meanwhile, South32 plunged 7.2% after the diversified miner downgraded its annual production guidance for several operations, citing wet weather and other issues.
- Australian markets will be closed on Tuesday for a holiday. REUTERS
Crude oil
- US WTI crude futures traded above $78 /bl on Tuesday after rising for two straight sessions, as investors continued to assess the demand and supply outlooks.
- Oil prices got a boost from hopes that the upcoming Golden Week holidays in China would drive up fuel demand amid increased travel.
- A pullback in the dollar also supported crude prices, though investors remain cautious about further central bank policy tightening that could hurt global growth and energy demand.
- Recent data showed that US implied gasoline demand fell from a year ago, fuelling fears of an economic slowdown in the world’s top oil consumer.
- Signs of shrinking refining margins in Asia also weighed on the market, which analysts attributed partly to the ramp up of new Middle Eastern refineries. Gulf Energy news
Gold
- Bullion prices recovered up to $1,991/oz on Tuesday after being steady the day before.
- The US dollar softened further ahead of a slew of US economic data this week, including consumer sentiment, core PCE index, and Q1 GDP figures.
- The Fed is still expected to hike rates by another 25 basis points when it meets next week, but Fed Fund futures prices show that markets are pricing in an over 60% chance for a mid-year pause in rate hikes.
- A Bloomberg survey pointed to growing expectations that the Fed will cut interest rates later this year, especially if economic conditions worsen. Kitco metals report
Base metals
- Copper futures in the US fell near the $4 per pound mark, retreating from the seven-week high of $4.12 touched on April 13th.
- Traders citing the dollar rebounded from its recent lows and investors weighed near-term demand concerns against evidence of tight supply.
- The stability of US banks added leeway for the Federal Reserve to hike rates further, while lower-than-expected industrial production in China heightened doubts over the economic recovery of the world’s top copper consumer.
- On the other hand, data from the London Metal Exchange showed inventories fell to 56,000 tonnes, the lowest since 2005.
- Depleting stocks worldwide drove Trafigura to forecast copper prices at a record high this year, while Goldman Sachs projected a global shortage of visible copper inventories by September. LME REPORT
DISNEY
- In continued signs that the US economy faces significant challenges ahead. Walt Disney group announced more lay-offs.
- Walt Disney (DIS.N) will begin a second wave of layoffs on Monday involving thousands of jobs, as part of efforts to eliminate 7,000 positions and save $5.5 billion in costs, according to sources familiar with the matter.
- The company will cut “several thousand” jobs through Thursday, with the latest round of reductions bringing the total number of jobs culled to 4,000, Disney officials say.TUERS
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