The ZAR retreated in overnight trading after US stocks retreated following weak corporate earnings on Wallstreet.
- The Rand retreated from a strongest level of 15.6300 to reach 15.8200 in overnight trading after stocks in New York traded lower.
- Analysts citing weak tech results, stalling a “fledgling” rally, and subsequently Risk aversion back on the table.
- US stock futures dropped after Snap warned that it is unlikely to meet revenue and profit forecasts for the second quarter amid deteriorating macroeconomic trends.
- The Snapchat owner’s shares plunged 31% in extended trading, dragging other internet giants including Meta Platforms (-7.1%), Twitter (-3.7%) and Alphabet (-3.4%).
- The moves came as the markets staged a rebound in regular trading on Monday after last week’s sell-off, led by the Dow’s 1.98% surge.
- Wednesday : 20h00 US FOMC MINUTES
- Thursday : 11h30 SA PPI
- Thursday : 14h30 US GDP
- Today : Expect some ZAR weakness following the tone on Wallstreet.
- A follow on after the negative earnings reports on Wallstreet as well as DAVOS and recession talk.
- Traders now awaiting the FOMC minutes as more uncertainty grabs markets.
- USDZAR : Expect a range 15.6000-15.9700
- Importers 15.7200-15.6000
- Exporters 15.8500-15.9700
- EURZAR : Expect a range of 16.7300-16.9800
- Importers 16.8100-16.7300
- Exporters 16.9000-16.9800
- GBPZAR : Expect a range of 19.7600-20.0200
- Importers 19.8400-19.7600
- Exporters 19.9200-20.0200
| OPENING RATES
- USDZAR 15.8200
- EURZAR 16.8700
- GBPZAR 19.8800
- A woman has been arrested in connection with the contract awarded to controversial company Digital Vibes.
- The person an employee of the Municipal Infrastructure Support Agent (MISA) was arrested on Tuesday morning.
- She is expected to appear in the Pretoria Commercial Crimes Court. News24
- The City of Johannesburg are debating how to reduce the country’s largest city from its dependence on Eskom for electricity.
- Joburg’s City Power, said that the Kelvin power station currently supplied it at a cheaper rate compared to Eskom.
- City Power also said that the involvement of more independent power producers would drive costs down.
- due to innovative solutions and better efficiency, they are able to sell it to us at a cheaper rate and they’ve proven it with Kelvin. EWN
- Currently Joburg obtains 90% of electricity from ESKOM and 10% from a Kelvin power station, an IPP ( independent power producer).
- After announcing his willingness to run for the ANC presidency at the end of the year, the ANC veterans have hit back against Mkhize.
- The ANC’s veterans’ league and party national executive committee (NEC) members have warned party members, including former health minister Zweli Mkhize.
- The warnings are against making declarations of willingness to contest the ANC presidency before the party declares nominations for positions open. News 24
- US stocks rebounded on Monday after Biden’s comments that China tariffs imposed by Trump are being reviewed.
- Investors now look ahead to a speech from Jerome Powell on Tuesday and the latest Fed minutes on Wednesday.
- At one stage all 11 sectors of the SP500 were trading higher.
- However, following a strong rally Snap (owners of Snapchat) informed the market of negative earnings guidance, sending markets in a tailspin lower.
- Tech giants all lower on the news.
- The US 10-year yield, consolidated above 2.80% as investors reassessed the outlook of tightening monetary policy.
- The US Central Bank has raised its benchmark policy rate by half a percentage point for the first time since 2000 in early May.
- The Fed also signalling it intended to increase it by the same amount at the next two meetings.
- Traders now turn their attention to the FOMC minutes on Wednesday .
- The Dow rallied 618 to 31,880
- The SP500 gained 72 to 3,973
- The Nasdaq added 180 to 11,535
- image : Trading economics
- Asian markets all lower following weak earnings guidance in New York. After a strong session in regular trading, Stocks futures all pointing to a lower European open.
- In Japan, the Nikkei 225 Index fell 0.94% to close at 26,748, giving up gains from the previous session, as Japanese technology stocks tracked US futures lower .
- Snap warned of a hit to its top and bottom-line figures amid deteriorating macroeconomic trends.
- Investors also assessed latest data showing Japan’s manufacturing activity expanded at the slowest pace in three months.
- Also, Toyota Motor company, edged lower by 0.6% after the automaker sharply cut its global production plan due to the semiconductor shortage.
- In Australia, the ASX 200 Index slipped 0.28% to close at 7,129 as Australian technology stocks tracked US futures lower, following the Snap warning.
- Investors also watched for market reaction after President Joe Biden floated the idea of tariff cuts on Chinese goods.
- This as the US announced the Indo-Pacific Economic Framework with Asian partners including Australia, Japan and South Korea.
- Crude oil traded below $110, as concerns over a possible global recession and a challenging demand outlook weighed on oil prices.
- The WEF in DAVOS taking centre stage ( with highlights below).
- Investors also worried that elevated oil prices could dent consumption for fuels worldwide.
- Concerns over tight global supply and hopes for demand return in China provided some support to crude prices.
- Chinese demand is also expected to pick up as Shanghai prepares to reopen and authorities ramped up policy support.
- The head of Saudi Aramco told Reuters the world is facing a major oil supply crunch as energy firms are afraid to invest in the sector as they face green energy pressures.
- Political and business leaders flagged the risk of a worldwide recession amid multiple threats.
- IMF Managing Director Kristalina Georgieva said she did not expect a recession for major economies but could not rule one out. Energy News
- Gold held steady around $1,855 an ounce on Tuesday after hitting 2-week highs on Monday.
- Recent weakness in US economic data and corporate earnings, as well as fears of a possible worldwide recession also prompted investors to hedge with the metal.
- Gold is still seen as a safe store of value during times of economic crises.
- Meanwhile, investors remained cautious over aggressive interest rate hikes by the US Federal Reserve.
- Kansas City Fed Bank President Esther George said Monday she expects the US central bank to lift its target interest rate to 2% by August.
- In addition, high inflation environments always attract gold as a store of value against the erosion of purchasing power of Fiat currencies. Kitco metals
- The US dollar retreated to 101.00 after the broad-based rally on Wallstreet as investors flocked back into risk assets as well .
- The Dollar however recovering (102) in early Asian trading on the back of a general risk-off mood in the markets.
- Risk off after US stock futures fell after social media firm Snap warned of a hit to its top and bottom-line figures amid deteriorating macroeconomic trends.
- However, having peaked at a nearly 2-decade high above 105 earlier this month, the dollar has been falling broadly alongside a decline in Treasury yields.
- Analysts citing aggressive easing by the Federal Reserve already priced in. Fx news
- Following the struggle of Europe trying to divest from Russian oil and gas dependencies, an unlikely source have stepped forward.
- Spain paints itself as the answer to Europe’s Russian energy problem.
- Spanish Prime Minister Pedro Sanchez has said his country as well as southern Europe could provide an answer to the shortfall in gas supplies from Russia.
- Sanchez highlighted that Spain represents 37% of the European Union’s total regasification capacity
- Where liquefied natural gas is turned back into the end product of natural gas.
- The issue of energy security as well as soaring energy prices, continues to be front and centre in the political debate in Spain. CNBC
COVID-19 SOURCE https://www.worldometers.info/coronavirus/
Cases / Deaths / Recoveries
- WORLD 528,387,922 / 6,301,925 / 498,808,288
- USA 85,113,962 / 1,029,121 / 81,701,524
- SA 3,931,534 / 100,952 / 3,739,543