Morning NOTE

GOOD MORNING

The ZAR remained in its range after reaching 15.8800 in Joburg trading, only to return back to 16.0000 in Asian trading.

OPENING RATES

• USDZAR 15.9700
• EURZAR 16.7800
• GBPZAR 19.5500

SOUTH AFRICA   

• Eskom load shedding is back !
  
  
  • Eskom will implement Stage 2 load shedding between 10:00 and midnight on Wednesday, and between 05:00 and midnight from Thursday to Sunday.
  • The SOE and power utility said a breakdown of 4 generation units was to blame for the forced implementation which contributed to the capacity constraints.
  • Also, Eskom CEO,  De Ruyter said there is an opportunity to roll out renewables in Mpumalanga, which has good solar and wind resources and can ensure easy access to the grid.
  • Expanding the transmission network will be costly, which is why it is essential to enable access to the existing infrastructure by repurposing old power stations, says De Ruyter. NEWS 24
• ANC president Cyril Ramaphosa survived another week in his party, without it interrogating the burglary at his Phala Phala farm in Bela Bela .
  
  
  • ANC officials (CR allies) continue to fight against any investigations).
  • However, one official did say “We don’t want to commit the same mistake we did with Nkandla and the swimming pool, we are not just going to report it willy-nilly”.
  • Ramaphosa is facing possibly one of the toughest scandals since assuming power.
    
    
    • This as calls in some quarters for the president to step aside from his role in both government and in the party. EWN
• Striking mine workers also refuse to work until their wage demands have been met.
  
  
  • The strikers in Rustenburg, affiliated with Numsa met in Freedom Park near Rustenburg on Tuesday where they called for increased wages and additional benefits such as medical . EWN

GLOBAL MARKETS

Stocks:

• Global stock futures all lower in Asian trade on Wednesday after the major averages rallied overnight.
  
  
  • In regular trading on Tuesday, the Dow gained 2.15%, the S&P 500 jumped 2.45% and the Nasdaq Composite rallied 2.51%.
  • All sectors participated in the market rebound, led by the energy, consumer discretionary and consumer staples sectors.
  • Notable gainers include Exxon Mobil (6.2%), Tesla (9.4%) and Walmart (3.3%).
  • However, investors bracing for further volatility in equities, as Fed Chair Jerome Powell is set to testify before Congress on Wednesday and Thursday.

Bonds:

• The 10-year US Treasury note yield tumbled below the 3.3% level as investors rushed into safe-haven assets.
  
  
  • Investors remain concerned that aggressive tightening from central banks could tip economies into a recession.
  • News of Germany’s energy situation also a cause for concern as safe haven buying sparked a rush into the Greenback.
• The Fed raised its target interest rate by 75 bps on Wednesday to address the highest inflation seen since late 1981.
  
  
  • They also appear unconcerned when  projecting a slowing economy and rising unemployment in the months to come.
  • On top of that, the  RBA , BoE , BOC , SARB and the biggest surprise the SNB all raised rates.
  • Investors remain on edge as the actions sparking worries that other central banks could consider raising rates higher and faster.
• RISK : Powell’s testimony today.

YESTERDAY

• The Dow rallied 641 to 30,530
• The SP500 gained 89 to 3,764
• The Nasdaq  gained 270 to 11,069

Futures Trading:

• 
  image : Trading economics

• Asian markets lower following the strong reversal on Wall Street.

  • In Japan, the Nikkei 225 Index fell 0.37% to close at 26,149, reversing gains from earlier in the session and tracking a slide in US equity futures.
    
    
    • As fears that aggressive monetary tightening could lead to a global recession weighed on investor sentiment.
      
      
      • Meanwhile, BOJ officials agreed to no change in its stance of taking additional easing steps without hesitation, if needed, minutes of its last meeting showed.
    • They also acknowledged the repercussions of a weak yen to businesses and the broader economy, but debated against directly addressing the currency markets.
      
      
      • Sharp losses were seen from index heavyweights.
    • Meanwhile, healthcare firms and automakers bucked the trend and eked out some gains.
• Brent crude futures fell more than 5% toward $108/bl before recovering to $110/bl after news of Germany’s Gas problems resurfaced.
  
  
  • Traders remain worried about concerns that rising US interest rates aimed at curbing soaring inflation would cause a demand slowdown.
  • US President Joe Biden is also expected to call for a gasoline tax holiday and is set to meet with seven large oil companies this week amid a campaign to drive down fuel prices.
  • Supply disruptions caused by the war in Ukraine and OPEC’s failure to pump more crude due to underinvestment also kept upward pressure on oil prices.
  • Analysts argued that Fed-induced slowdowns are a short-term solution to surging prices, but will not solve the problem of supply tightness. Energy News
• Gold fell below $1,830/oz and in turn sliding for the 4th straight session as the Dollar firmed, while investors awaited fresh cues from the Federal Reserve on the likely direction of US monetary policy.
  
  
  • The metal has declined nearly 2% from a week ago amid a global wave of interest rate increases aimed at bringing inflation down, led by the US central bank’s 75 basis point rate hike.
  • Market participants are now eyeing Fed Chair Jerome Powell’s appearance before Congress on Wednesday and Thursday for fresh insight on the central bank’s policy plans.
  • Analysts expect the Fed to deliver another 75 basis point rate hike in July, followed by a 50 basis point increase in September.
  • Traders worried on news that GOLD  could be among assets that may be targeted in a possible next round of European Union sanctions on Russia, a draft document showed. KITCO METALS
• US Dollar rose above 104.80 and in turn, recouping some losses from previous sessions and inching towards a 20-year high reached last week as expectations.
  
  
  • The Fed will continue to aggressively tighten monetary settings supported the currency.
  • The US central bank raised its benchmark interest rate by 75 basis points last week, the largest increase since 1994, as it seeks to bring inflation under control.
  • Investors are now awaiting the Hawkins testimony of Powell  Congress on Wednesday and Thursday for fresh insight on the central bank’s future policy plans.
  • Analysts expect the Fed to deliver another 75 basis point rate hike in July, followed by a 50 basis point increase in September.
  • The dollar also benefited from safe-haven inflows spurred by fears of a global economic slowdown.

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

Cases / Deaths / Recoveries

• WORLD 545,863,833 / 6,343,809 / 521,837,532
• USA 88,244,870 / 1,038,900 / 3,165,493
• SA 3,987,979 / 101,640 / 3,872,768