Morning NOTE

GOOD MORNING

The ZAR managed to strengthen to open at 16.8700 on the back of improved Risk sentiment and profit-taking on ZAR shorts.

• USDZAR 16.8700
• EURZAR 16.8400
• GBPZAR 19.9500

SOUTH AFRICA   

• After protests from unions regarding the costs of living as well as the sale of failing SOE’s ,
  • …Minister in the Presidency Mondli Gungubele, told Cosatu and Saftu members that government does not intend to sell Eskom.
    • Cosatu and Saftu said that they had planned a national shutdown.
    • But while this didn’t happen, they managed to gather thousands of workers to put forward a series of demands.
    • The demands  including calls to slash the cost of fuel and halt any plans to privatise Eskom. EWN
• Economists said that while SA’s inflation rate was a concern, it remained significantly below its global counterparts.
  • The country has recorded a 13-year record in inflation of 7.8% for July.
    • That is up from 7.4% in the previous month and at a record high above the SARB’s target of between 3% and 6%.
    • Transport, food and non-alcoholic beverages are all drivers of inflation.
  • Stanlib chief economist, Kevin Lings, said that the current rate would not persist.
    • “Hopefully, during the course of next year, inflation starts to moderate meaningfully.
    • And we’re reasonably confident that by the end of next year, inflation will be back inside the target and below 5%.  Source : Business day
• Bidcorp  announced an earnings increase of nearly 58% .
  • The group saying it has closed its books on the two difficult financial years of 2020 and 2021 in exceptional style.
  • Earnings setting  a new record of R4.9 billion in the year to end-June 2022.
  • This is around 10% higher than in the pre-pandemic 2019 financial year. Moneyweb

GLOBAL MARKETS

Stocks:

• Stocks staged a rally in New York on the ahead of more corporate earnings reports.
  • Technical traders also pointing to oversold market conditions.
  • In regular trading on Wednesday, the Dow and S&P 500 gained 0.18% and 0.29%, respectively, while the tech-heavy Nasdaq also gained 0.41%.
  • This morning US stock futures remained well bid, as traders assessed a fresh batch of earnings reports.
• Also investors keenly awaiting the start of the Jackson Hole economic symposium later in the global day.

Bonds:

• The yield on the 10-year US Treasury note declined to 3.08% after trading as high as topped 3.11% earlier in the session.
  • Softer economic data causing hawks to take some money off the table with profit-taking,
  • However, the yield remains above the key 3% level on the back of multiple Fed policymakers noting the need to move borrowing costs to a restrictive territory.
  • The view remains that inflation needs to be at 2%, even if it induces a recession, thus erasing previous bets of a dovish pivot.
• Investors expect Fed Chair Powell’s speech on Friday during the annual Jackson Hole symposium to echo the hawkish stance of the central bank.

YESTERDAY

• The Dow gained 59 to 32,969
• The SP500 added 12 to 4,140
• The Nasdaq  added 50 to 12,431

Futures Trading:

• image : Trading economics

OVERNIGHT HEADLINES

• Asian markets all higher on the back of a stronger close in New York.
  • In Japan, the Nikkei 225 rose 0.5% to 28,470, pausing this week’s decline.
    • Traders noting a bounce in nearly all sectors as the BOJ stressed the need to maintain massive stimulus to support a fragile economic recovery.
      • The BOJ cited fresh Covid outbreaks, supply disruptions and slowing global demand as some of the risks that justify keeping monetary policy ultra-loose.
    • Investors are also bracing for Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium on Friday that could guide the outlook for US rate hikes.
  • In Australia, the ASX 200 Index gained 0.8% to 7,050. The index rising for the 2nd straight session as investors welcomed upbeat corporate earnings.
    • The rebounding in commodity prices also supporting commodity stocks.
    • Energy and mining stocks also gained on stronger commodity prices, including Woodside Energy (2.3%) and BHP Group (1%). Reuters
• Crude oil rallied for the 3rd straight day. The US benchmark, WTI crude above $95/bl on Thursday.
  • Traders citing a return of a tightening supply outlook after Saudi Arabia flagged potential output cuts by OPEC+ earlier this week to deal with market volatility.
  • OPEC worried about the addition of Iranian crude to market supply that could push prices lower.
  • OPEC sources telling Reuters that any cuts are likely to coincide with a return of Iranian oil to the market.
    • Tehran will reportedly seek to replace Russian oil in Europe, while Moscow approached several Asian countries to explore long-term oil contracts at steep discounts.
    • On the demand side, official data showed that the US exported a record amount of crude and refined products last week. Gulf Energy news
• Gold prices rose above $1,750/oz after a decline in US yields and a softer Dollar supported the Yellow metal.
  • Traders assessed whether the US Federal Reserve will move ahead with aggressive rate hikes in the face of a weakening economy.
  • New orders for US-manufactured durable goods were unchanged, disappointing expectations for a slight increase following a healthy growth in June.
  • Focus shifts to Chair Jerome Powell’s speech at the Jackson Hole symposium on Friday.
  • Markets are also factoring in hawkish remarks after other Fed officials signalled a commitment to the fight against inflation. Kitco metals
• The US dollar declined to 108.3, after reaching near 20-year highs.
  • Traders avoided making big bets ahead of Federal Reserve Chair Jerome Powell’s speech at the Jackson Hole symposium.
  • It is expected that Powell, could add more certainty as to the Fed’s rate hike path.
  • Investors are also assessing whether the Fed will move ahead with its aggressive plan to stamp out inflation as recent weakness in US economic data complicated the picture.
  • Markets pricing in another 75 hike, but weak data complicating things with some traders betting on 50 only.
  • The Dollar likely to sway either way.