Morning NOTE

GOOD MORNING

The Rand caught in a negative storm after policy statements caused a sharp rally in the Euro and the USD across the board.

OPENING RATES

• USDZAR 15.4100
• EURZAR 16.7000
• GBPZAR 19.6600

SOUTH AFRICA   

• Anheuser-Busch InBev, the world’s largest brewer, will sell its non-controlling interest in its Russian joint venture.
  
  
  • Beer makers join the global move to exit operations in the country following its invasion of neighbouring Ukraine. A-inbev to take a $1.1bn hit.  Moneyweb
• Barclays announced the sale and halving of their stake in SA banking giant ABSA.
  
  
  • Barclays Plc has sold a 7.4% stake in former African unit Absa Group for 526 million pounds, cutting its holding by half.
  • The firm priced an accelerated placing of 63 million shares at R164 each ($10.88 at a 7.3% discount to the JSE-listed price).
  • Barclays gathered enough investor orders to cover the sale within minutes of opening the book, terms seen by Bloomberg showed. Bloomberg
• In a somewhat troubling announcement, Eskom CEO Andre de Ruyter on Wednesday warned against fearmongering over ongoing rolling power cuts.
  
  
  • He said “ Eskom could restart the grid in the unlikely event of a blackout”.
  • “I would caution against speculation in this regard, I would caution against fearmongering, stoking of speculation and fear in this regard.
  • “We do have plans in place, we have the capability of recovering,” De Ruyter said during Eskom’s update on the power crisis on Wednesday morning after power outages had to be ramped up to stage four. EWN

GLOBAL MARKETS

Stocks:

• US stock futures extended losses on Friday after an overnight rout on Wall Street.
  
  
  • Traders citing the  hawkish remarks from Federal Reserve Chair Jerome Powell hinting a 50-point rate hike was likely next month.
  • The Dow ended 1.1% lower, while the S&P 500 and Nasdaq Composite declined 1.5% and 2.1%, respectively.
• Speaking at a panel hosted by the IMF, Powell said a 50-basis point rate increase was “on the table” for May, and reiterated that Fed officials were committed to “front-end loading” inflation-fighting efforts.

Bonds:

• The yield on the 10-year US Treasury note, consolidated around 2.90%, not far from an over three-year high of 2.98% hit in the prior session.
  
  
  • Investors pricing in chances of an increasingly hawkish Federal Reserve stance.
  • Speaking as part of an IMF panel, Powell made clear that the central bank remains committed to taming inflation while opening the door for a 50bps interest rate hike in May. source: U.S. Department of the Treasury
• The rapid rise in the U.S. 10-year Treasury yield to three-year highs has erased its gap with its Chinese counterpart, something that hasn’t happened for more than a decade.
  
  
  • The narrowing gap reflects diverging monetary policy between the two countries, analysts said.
  • Investors are watching the implications of the narrowing yield gap for the Chinese yuan.

YESTERDAY

• The Dow fell 368 to 34,792
• The SP500 fell 65 to close at 4,393
• The Nasdaq  declined 278 to close at 13,174
• image source: Trading Economics

OVERNIGHT HEADLINES

• Asian markets all lower following a negative close on wall street. Both the ECB and FED hitting the markets hard with their hawkish rates comments.
  
  
  • In Japan, the Nikkei 225 fell 1.6% to close at 27,105 retreating from 2-week highs.
    
    
    • Traders now examining  hawkish remarks from Fed Chair Jerome Powell who hinted at more aggressive rate hikes ahead.
    • Technology stocks tracked the Nasdaq lower, with sharp losses from SoftBank Group (-3%).
    • The benchmark indexes ended the week little changed as Friday’s selloff erased gains from earlier this week.
  • In Australia, the ASX 200 dropped 1.6% to 7,473 , after closing at an 8-month high in the previous session,.
    
    
    • Financials  the big losers with the Aussie  “Big Four” banks losing between 0.8% to 2.8%, while energy stocks declined on softer oil prices.
    • Woodside Petroleum fell 2.7% and Santos Ltd lost 2.6% TE
• US WTI crude fell 1% to below $103/bl and were on track to lose about 4% this week.
  
  
  • The price weighed down by the prospect of higher interest rates, weaker global growth and slower demand from top importer China.
  • Federal Reserve chair Jerome Powell on Thursday indicated more aggressive rate hikes ahead to control inflation, dragging risk sentiment.
  • In China, central bank governor Yi Gang said Friday that the country was not immune to external shocks and faced pressure from Covid outbreaks. Energy news
• Gold steady at  $1,950 /oz on Friday and was on track to lose more than 1% this week, pressured by a strong dollar and rising US Treasury yields.
  
  
  • Investors prepared for the Fed to aggressively raise interest rates to bring decades-high inflation under control.
  • Speaking at a panel hosted by the IMF on Thursday, Fed Chair Jerome Powell said a 50-basis point rate increase was “on the table” for May.
  • In addition, he reiterated that Fed officials were committed to “front-end loading” inflation-fighting efforts. Kitco
• The US dollar rebounded from a 1-week low following the Fed comments of a 50bps hike in May. The benchmark 10-year US yields bounced back above 2.9%.
  
  
  • The dollar index rose above 100.80
  •  Fed Chair Jerome Powell said the central bank is committed to raising rates “expeditiously” to bring down inflation.
    
    
    • He added that a 50-basis point rate increase was “on the table” for May.
      
      
      • In addition the FED will start reducing its massive balance sheet soon, which consists of about $9 trillion-worth of Treasuries and mortgage-backed securities.
    • Powell noted that other than pernicious inflation, the US economy is “very strong” otherwise, and characterized the labor market as “extremely tight.”
      
      
      • The dollar index is set to gain for the third straight week.

RUSSIA / UKRAINE

• President Joe Biden authorized another $800 million security package and an additional $500 million dollars in direct economic assistance to Ukraine.
  
  
  • The latest security package, includes heavy artillery and tactical drones.
  • Western intelligence reports warns of an intensified Russian offensive in eastern and southern Ukraine following weeks of stalled ground advances on Kyiv. CNBC
• Russia tests nuclear-capable missile that Putin calls world’s best.
  
  
  • In a show of strength two months into its assault on Ukraine, Russia test-launched a new nuclear-capable intercontinental ballistic missile.
  • President Vladimir Putin said on Wednesday would make Moscow’s enemies stop and think. Reuters

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

Cases / Deaths / Recoveries

• WORLD  507,922,445 / 6,236,694 / 460,315,985
• USA  82,553,058 / 1,017,609 / 80,355,389
• SA 3,750,830 / 100,276 / 3,631,082