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Morning NOTE

GOOD MORNING

The ZAR traded stronger to once again reach 17.8700 after US GDP data.

OPENING RATES

• USDZAR 17.9800
• EURZAR 17.9500
• GBPZAR 20.7900

SOUTH AFRICA

Following the US embassy’s terror alert, the SA government has hit back at the USA for not following proper protocols.

• Thus, Deputy State Security Minister Zizi Kodwa has dismissed reports of possible terrorist attacks in Sandton this weekend.
  • The US embassy caused a stir this week after it released an alert warning that large gatherings could be targeted during the attacks.
  • Government has hit out at the embassy for raising panic without following the due processes. EWN
     
• Finance Minister Enoch Godongwana said that government had no basic income grant policy.
  • Gondongwana said that government was still focusing on the temporary relief introduced to offset the impact of the COVID-19 pandemic.
  • The finance minister faced several calls from opposition parties to introduce a permanent basic income grant to replace the R350 temporary solution.
  • They say the grant should be just over R600 for the more than 10 million unemployed. EWN
     
• South Africa must make the shift towards electric vehicles (EVs) if the country is to have a large and growing auto sector, says Minister of Trade, Industry and Competition Ebrahim Patel.
  • “There is no debate in government on the need to shift to electric vehicles,” Patel said on Thursday.
  • This was an address to an SA Auto Week conference at the Kyalami Grand Prix Circuit and International Convention Centre.
  • It’s expected that sales of new energy passenger vehicles will surpass those of combustion engines by 2038,” he said. IOL

GLOBAL MARKETS

Stocks:

• In regular trading on Thursday, the Dow gained 0.61%, while the S&P 500 and Nasdaq Composite declined 0.61% and 1.63%, respectively.
  • Those moves came as investors digested better-than-expected third quarter US GDP numbers, while disappointing quarterly reports from megacap names weighed on the technology sector.
  • The Dow and S&P 500 are on track to end the week higher, while the Nasdaq is set to finish slightly lower.
     
• Nasdaq 100 futures extended losses on Friday as disappointing results from Amazon added pressure to the tech-heavy index. Futures tied to the Nasdaq dropped 0.7%, while S&P 500 and Dow futures lost 0.5% and 0.1%, respectively.
  • In extended trading, Amazon plunged as much as 19% after missing third quarter earnings and revenue estimates and issuing weak fourth quarter sales guidance.
  • Apple also wobbled on lower-than-expected iPhone sales, while Intel and Pinterest gained on upbeat quarterly updates.

Bonds:

• The US10YT traded at 3.96% after better than expected US GDP data.
• Across the pond,
  • The yield on Britain’s 10-year gilt was at 3.6%, the lowest in five weeks on hopes the new government could offer more predictability and stability and help calm financial markets.
  • Rishi Sunak officially became the new UK Prime Minister and pledged to fix mistakes made by the previous government and said economic stability and confidence will be at the heart of his government’s agenda.
  • On the monetary policy front, the BoE is likely to raise rates by 75 bps next week, bringing borrowing costs to the highest since 2008 after inflation returned to 40-year highs in September.

YESTERDAY

• The Dow added 194 to 32,033
• The SP500 declined 23 to 3,807
• The Nasdaq  fell 178 to 10,792

•  Image: Trading Economics
   

OVERNIGHT HEADLINES

Asian markets lower after a drop on Wallstreet.

• In Japan, the Nikkei 225 dropped 0.88% to close at 27,105, sliding for the second straight session and tracking a technology-led rout on Wall Street amid disappointing quarterly results from US tech companies.
  • Investors also focused on domestic earnings reports which have so far yielded mixed results.
  • Meanwhile, Prime Minister Fumio Kishida unveiled a 71.6 trillion yen economic stimulus package to help households and businesses with rising prices.
  • Also, the Bank of Japan maintained its policy of ultra-low interest rates to support the economic recovery.
• In Australia, the ASX 200 Index slipped 0.87% to close at 6,786 on Friday. The index retreating from six-week highs as weaker iron ore prices weighed on heavyweight miners.
  • Iron ore prices have come under renewed pressure as Chinese cities doubled down on Covid restrictions to arrest widening outbreaks. REUTERS
     
• The US dollar steadied around 110.4 on Friday but was still set to decline for the second straight week, pressured by growing expectations that the Federal Reserve will turn less aggressive soon.
  • The Fed is widely expected to deliver its fourth straight 75 basis point rate increase in November, though markets started to speculate that it would slow the pace of rate hikes after that amid concerns about overtightening.
  • Meanwhile, the greenback jumped 0.8% on Thursday after data showed that the US economy expanded 2.6% YoY in the third quarter, exceeding forecasts for a 2.4% growth and rebounding from two consecutive quarters of economic contraction.
  • Elsewhere, investors reacted to the European Central Bank’s decision to raise rates by another 75 basis points, while the Bank of Japan maintained its policy of ultra-low interest rates in a widely expected move.  FX NEWS
     
• Brent crude oil  eased toward $96/bl on Friday but were still on track to end the week higher.
  •  Prices underpinned by a tightening supply outlook, record US exports and a sharp retreat in the dollar.
  • The US exported a record amount of crude and fuel last week even as fuel inventories hit seasonal lows in domestic markets, weighing on the supply outlook.
  • A sharp retreat in the dollar supported oil prices as well, as it makes greenback-priced commodities less expensive for buyers holding other currencies.
  • Oil prices are also on course to gain in October, breaking four months of losses, driven largely by an OPEC+ decision to cut output by 2 million barrels a day from November.
  • Meanwhile, investors stayed cautious as the demand outlook remained clouded by surging inflation, rising interest rates and mounting recessionary risks. GULF ENERGY NEWS
     
• Gold prices steadied above $1,660/oz and were on track to gain for the second straight week.
  • Prices benefiting from sharp declines in the dollar and Treasury yields on growing expectations that the US Federal Reserve would slow the pace of rate hikes later in the year.
  • A slew of soft US economic data earlier this week supported such expectations, though better-than-expected US GDP numbers in the third quarter balanced out those views.
  • Meanwhile, investors remained cautious about upside risks to inflation that could drive another rally in the dollar and Treasury yields.
  • IMF Managing Director Kristalina Gerogieva also called on central banks to keep raising interest rates further to fight inflation until they hit a “neutral” level. KITCO METALS

INFLATION

• Annual inflation rate in France accelerated for the first time in three months to 6.2% in October of 2022, the highest since June of 1985, from 5.6% in September.
• Figures came higher than market expectations of 5.7%, preliminary estimates showed.
• Prices of energy (19.2% vs 17.9%), food (11.8% vs 9.9%) and manufactured products (4.2% vs 3.6%) . BLOOMBERG