View this email in your browser

Morning NOTE

GOOD MORNING

The ZAR continued to trade within its weekly range after the SARB’s rate surprise and also this week’s US FOMC.

OPENING RATES

• USDZAR 17.1900
• EURZAR 18.6800
• GBPZAR 21.2900

SOUTH AFRICA

• EFF leader Julius Malema said it would pursue a private prosecution case against the Minister of Mineral Resources and Energy Gwede Mantashe for his role in state capture corruption.
  • The State Capture Commission of Inquiry named Mantashe as one of the African National Congress (ANC) bigwigs who benefitted from the state’s ties with the late businessman Gavin Watson. iol
     
• ANC president Cyril Ramaphosa has admitted the governing party will face a difficult election campaign ahead of the hotly contested 2024 general elections.
  • The party faced dwindling support at the polls in the previous national and local elections.
  • High unemployment, corruption, poor service delivery and failing state institutions are believed to be among the reasons South Africans have lost confidence in the governing party.
  • During his opening address the ANC’s two-day lekgotla, Ramaphosa called on party leaders to gear up for a tough fight to retain power.
    • He vowed the party would address the country’s socioeconomic issues.
  • The growing energy crisis would be at the top of the agenda. Ewn
     
• After the chaos of a few weeks ago, it has been reported that another tiger was on the loose in Edenvale
  • A tiger was spotted roaming around parts of Edenvale in Ekurhuleni on Monday morning, the local community policing forum said.
  • Edenvale CPF has since warned residents to be on the lookout and keep all animals indoors. A video of the animal has since surfaced.
  • It shows the wild animal roaming around the yard of an office building at around 05:22. News24

GLOBAL MARKETS

Stocks:

• US stock futures eased on Monday as investors braced for corporate earnings reports from major firms and a pivotal interest rate decision from the Federal Reserve this week.
  • Futures contracts tied to the three major indexes were all down at least 0.1%.
     
• Last week, the Dow gained 1.81%, the S&P 500 jumped 2.47% and the Nasdaq rallied 4.32%, with all three benchmarks on track to end January higher.
  • Trader benefiting from  slowing inflation, in the US and the case for a slower pace of central bank policy tightening.
  • Investors now await the Fed’s policy decision on Wednesday where it is widely expected to deliver a smaller 25 basis point rate increase.
     
• Major companies are also slated to report earnings this week including Apple, Alphabet, Amazon, Meta Platforms, Exxon Mobil and Pfizer.

Bonds:

• US 10 Year Note Bond Yield was 3.51 percent on Monday January 30, according to over-the-counter interbank yield quotes for this government bond maturity.
  • Markets keenly await the US Federal open market committee (FOMC) , rates decision on Wednesday.
  • Last week the FED’S inflation gauge, the US PCE  printed lower than expected and markers are pricing for a dovish FED.
     
• In the UK, the UK’s 10-year Gilt fell below 3.3%.
  • Yields were hovering around its lowest level since December 14th, as doubts were raised about the BOE’S policy path after weaker-than-expected PMI data underscored the risk of the UK slipping into recession.
• The latest survey showed Britain’s business economic activity fell at its fastest rate in two years in January,
• Traders citing rising interest rates, strikes, and weak consumer demand due to the rising cost of living.
  • Investors also believe the Bank of England will raise interest rates again to 4% at its next meeting but are split on how much further borrowing costs will rise beyond that.
  • Meanwhile, the UK CPI  eased as expected to 10.5% in December, but remained well above the Bank of England’s target of 2%. BLOOMBERG

On Friday

• The Dow added 28 points to 33,978
• The SP500 gained 10 to 4070
• The Nasdaq  added 109 to 11,621

•   Image: Trading Economics

OVERNIGHT HEADLINES

• The US dollar remained around the 102 levels as traders cautiously awaited a key interest rate decision from the Federal Reserve this week.
  • The US central bank is widely expected to deliver a smaller quarter-point increase on Wednesday.
  • Traders will pay close attention to the press conference after the rate decision , for clues on the path for interest rate rises.
    • In addition data released on Friday showed that the Fed-preferred core PCE inflation measure in the US slowed to an over one-year low in December,
    • The data supporting the case for a slower pace of policy tightening.
  • The Bank of England and the European Central Bank are set to decide on monetary policy this week as well, that will also affect the relative value of the dollar.  FX news

Asian markets trading higher in early Monday trading following a strong rally on Wall Street on Friday. The Eastern markets joining in on positive risk sentiment.

• In Japan, the Nikkei 225 rose 0.19% to close at 27,433. Although higher, Japanese stocks struggling for direction ahead of key interest rate decisions from major central banks this week.
  • This all headlined by an expected rate hike from the US Federal Reserve as well as ECB and the BOE.
    • Last week, data also showed that Tokyo inflation exceeded expectations in January.
    • The data indicating elevated nationwide inflationary levels and adding pressure on the Bank of Japan to tweak its policy of ultra-low interest rates.
• In China, the Shanghai Composite rose 0.14% to close at 3,269, hitting its highest levels in at least 5 months as mainland markets returned from the week-long Lunar New Year holidays.
  • Stocks extending the January rally driven by China’s rapid reopening from Covid curbs and expectations of a slower pace of central bank policy tightening worldwide.
  • Chinese authorities also said over the weekend that they would promote consumption recovery and seek to boost imports, bolstering the outlook in Asia’s largest economy.
  • Growth-oriented new energy, technology and consumer-related stocks led the advanced.  Reuters

Crude oil

• US WTI crude oil fluctuated near $80/bl  as traders weighed hopes for a demand recovery in China and growing tensions in the Middle East.
  • Traders discussing  fears of a global economic slowdown and the resilience of Russian supply.
    • Chinese authorities said over the weekend that they would promote consumption recovery as a major economic driver and boost imports, sparking demand optimism in the world’s top crude importer.
  • In the Middle East, Israel carried out a drone strike against a target in Iran over the weekend, fuelling fears of supply disruptions.
    • Meanwhile, the US oil benchmark dropped more than 1% on Friday as Russian oil supply remained robust despite Western sanctions amid strong demand in Asia.
    • Investors also turned cautious ahead of key policy decisions from major central banks this week,
      • The concerns remain  that tighter financial conditions could finally tip the global economy into recession. Gulf energy News
         
• Gold  remained near $1,930/oz, holding near its strongest levels in 9 months as investors remained on the side-lines ahead of a key interest rate decision from the Federal Reserve this week.
  • The US central bank is widely expected to deliver a smaller quarter-point increase on Wednesday.
  • Traders will also be watching for clues on the path for interest rate rises.
    • Data released on Friday showed that the Fed-preferred core PCE inflation measure in the US slowed to an over one-year low in December.
    • The lower than expected PCE  supporting the case for a slower pace of policy tightening.  Kitco metals report