Morning NOTE

GOOD MORNING

The ZAR weakened to 15.1000 after SA inflation surprised to the down side with 5.9% vs 6.0% expected.

OPENING RATES

• USDZAR 15.0500
• EURZAR 16.3300
• GBPZAR 19.6600

SOUTH AFRICA   

• Eskom announced it was working towards lifting rolling blackouts by the weekend despite its vulnerable and unpredictable generation system.
  
  
  • The embattled power utility announced that the power cuts would be reduced to stage three until Friday.
    
    
    • Eskom has blamed the latest round of power cuts on heavy rains across the country over the Easter long weekend.
  • The SOE painting a bleak picture of what’s expected in the coming winter months unless it can manage unplanned outages.
• Toyota SA, announced that the Durban plant had experienced extensive damage due to the floods in KZN.
  
  
  • Production at the plant has been suspended since April 11 and TSAM has not yet given an indication of when it will resume.
  • The importance of Toyota to the SA economy cannot be understated.
  • It was the best-selling automotive brand in South Africa in 2021 for the 42nd consecutive year, with a market share of 25.4%.
  • This means that one in every four vehicles sold locally last year was a Toyota product. Moneyweb
• The health department announced, SA’s Coronavirus test positivity rate climbed to the highest in more than three months, indicating that the number of undetected infections may be rising.
  
  
  • Of those tested for the virus on Wednesday 13.4%, or 2,846 cases, were found to be infected, the highest proportion since 13 Jan 2022.
  • The positive rate has now increased for 4 straight days.

GLOBAL MARKETS

Stocks:

• US stock futures rose on Thursday after a mixed session on Wall Street, as investors digested more quarterly reports against a backdrop of elevated inflation and further monetary tightening.
  
  
  • In regular trading on Wednesday, the Dow rose 0.7%, boosted by strong earnings from Procter & Gamble.
  • Dow futures rallied to add 0.3%, S&P 500 futures gained 0.4% and Nasdaq 100 futures jumped 0.6%.
• On the earnings side, Strong Q1 results helped Tesla to add 5.6% on an expectation-beating record quarterly profit, while United Airlines surged 7.6% after the company forecasted a return to profit in 2022.
  
  
  • The tech-heavy Nasdaq Composite, meanwhile, was dragged down 1.2% by Netflix’s post-earnings plunge, while the S&P 500 ended slightly negative.
  • Investors await more quarterly reports from companies like AT&T, American Airlines and Snap on Thursday. Weekly jobless claims are also slated for release Thursday Morning.
• The market now awaits FED chair Jerome Powell who speaks at 19h00 SA time tonight to get more clues on the interest rate hiking cycle.

YESTERDAY

• The Dow  added 249 to close at 35,160
• The SP500 fell -2.76 to close 4.459
• The Nasdaq  declined 166 to close at 13,453
• image source: Trading Economics

OVERNIGHT HEADLINES

• Asian markets all higher, following a strong close on Wallstreet and an overnight rally in  US stock futures.
  
  
  • Traders cheering the upbeat earnings results from giants Tesla, United Airlines and P&G and ignoring inflation for now.
  • In Japan, the Nikkei 225 jumped 1.1% to close at  27,553 reaching fresh 2-week highs, as chip-related technology stocks rebounded from recent declines.
    
    
    • Investors also continued to monitor moves in the Japanese yen which remained volatile above 128 per dollar, while remaining cautious of rising US bond yields.
  • In Australia, the ASX 200 gained up 0.3% to close at 7,593, moving within 1% of a fresh record high, as gains in industrial stocks outweighed losses in the technology and mining sectors.
    
    
    • Financial, healthcare and energy stocks also advanced, while, technology firms tracked losses on Wall Street. TE
• Crude oil  gained 1% to $103/bl, but remained down for the week as volatility in oil markets is expected to continue due to several market moving events.
  
  
  • Investors remained concerned as the EU weighs a ban on Russian oil for its invasion of Ukraine and evaluates ways to offset potential supply shortfalls from Russia due to sanctions.
    
    
    • Supply remains tight with OPEC members battling to meet their production targets.
    • Libya, an OPEC member, said Wednesday it was losing more than 550,000 barrels per day of oil output due to blockades at major fields and export terminals.
  • In addition, the demand outlook in China continues to weigh on the market, and the IMF highlighted risks when it cut its forecast for global economic growth on Tuesday. Energy News
• Gold prices fell to $1,950/oz on the back of a rebound in US Treasury yields.
  
  
  • The spike in yields dampened bullion’s safe-haven demand stemming from the Ukraine crisis and its potential impact on the global economy.
    
    
    • The Dollar also gained slightly after dropping in the previous session, making gold less attractive for other currency holders.
    • Meanwhile, investors remained wary of geopolitical risks and inflationary pressures. Kitco metals
• The US Dollar continued its rally and the Euro continues suffer against the Dollar.
  
  
  • The steep rise in US yields on the back of a hawkish Fed pivot continues to support the Dollar.
    
    
    • The Euro depreciated to below the $1.08 level for the first time since May 2020 on uncertainty about the timing of interest rate hikes in the Euro Area.
    • Investors remain concerned about the hit to economic growth from the war in Ukraine and surging commodity prices, as well as political uncertainty in France.
  • The Japanese yen may continue to see weakness and reach ¥135/$ against the U.S. dollar if the policies of the Bank of Japan and Federal Reserve continue to diverge, according to Wells Fargo Securities’ Brendan McKenna.
    
    
    • The yen fell nearly 6% against the greenback in March, and is continuing to see losses in April.
    • The Japanese currency has struggled for gains against the Dollar amid expectations the Bank of Japan will lag its peers such as the U.S. Federal Reserve in normalizing monetary policy. Fx news

RUSSIA / UKRAINE

• Ukrainian forces are continuing to resist Russian attacks in the south-eastern port city of Mariupol. 
  
  
  • However,  Ukrainian President Volodymyr Zelenskyy said the country’s forces don’t have enough “serious and heavy” weapons to defeat the Russian army in the city.
  • The Russian defence ministry announced it had conducted a test launch of its intercontinental ballistic missile, the Sarmat, adding that it landed in the “designated area in Kamchatka.”
• Oleg Tinkov, the billionaire founder of a big Russian digital bank, has blasted Russia’s “insane war” in Ukraine and urged the West to help President Vladimir Putin find an off-ramp to “stop this massacre.”
  
  
  • Russia’s brutal assault on its neighbor began nearly two months ago.

COVID-19 SOURCE https://www.worldometers.info/coronavirus/

Cases / Deaths / Recoveries

• WORLD  507,032,346 / 6,232,220 / 459,308,210
• USA 82,488,517 / 1,017,093 / 80,309,804
• SA 3,746,424 / 100,211 / 3,630,033