The ZAR consolidated inside the weaker range of 15.8000-15.6000, ignoring the rebound in Risk.
- The Rand struggled to make any gains on the back of stronger risk sentiment.
- Traders however focussing local factors, that include flooding and Eskom electricity supply.
- The local unit hitting 15.7900, in overnight trading.
- Traders citing the risk of a return of severe power cuts, devastating floods in KZN and the E. Cape raised concerns over the country’s economic outlook.
- With this in mind the aggressive rate hikes by the Federal Reserve and a deterioration in projections for global growth remains a headwind.
- The SA 10Y government bond yield also hitting 9.92%, after trading at 9.50% less than two weeks ago.
- Traders adopting a global theme of selling fixed income securities as rates are expected to rise due to multi-decade inflation levels.
- Foreigners remaining NET sellers of SA bonds.
- Big data remains,
- SA PPI on Thursday at 11h00 (expected +10.8%) and
- US GDP on Thursday at 14h30 with 1.1% expected QoQ for Q1, vs 6.1% previous.
- Today: The ZAR opening at the top end of the range with momentum on the weakside.
- A retest of 15.7500, opens up score to test 15.9300.
- The theme remains a stronger US Dollar (higher rates) and SA domestic factors i.e. Eskom / Flooding.
- USDZAR : Expect a range 15.9300-15.5500
- Importers 15.5500-15.3600
- Exporters 15.7000-15.9300
- EURZAR : Expect a range of 16.6300-17.1500
- Importers 16.7500-16.6300
- Exporters 16.9300-17.1500
- GBPZAR : Expect a range of 20.0200-20.2500
- Importers 20.0200-19.8800
- Exporters 20.1200-20.2500
- USDZAR 15.7000
- EURZAR 16.8500
- GBPZAR 20.0200
- The KwaZulu-Natal government said it had made an “honest mistake” when it estimated that the cost of repairing flood damage would be R950 billion.
- The cost has been revised down to R17 billion.
- The admission of the error had Anti-corruption campaigners raising warning signs of more corruption following the pandemic.
- In addition, Prasa said it has lost an estimated 300km of rail infrastructure in the province. News24
- SA motorists are welcoming a petrol price cut.
- However data from the central energy fund indicates the price hikes are far from over.
- Both Diesel and Petrol remains under pressure as the ZAR started to weaken and oil prices are once again above $100/bl
- US stock futures drifted lower on Tuesday after Wall Street started the week on a positive note.
- Traders looking forward to earnings reports from big tech firms.
- In regular trading on Monday, the major averages reversed early losses to close higher, led by the Nasdaq Composite’s 1.3% rise, while the Dow and the S&P 500 gained 0.7% and 0.6%, respectively.
- The moves came as tech names rallied in the afternoon amid falling bond yields and ahead of an intense week of earnings for mega cap tech stocks.
- Twitter also jumped 5.7% after its board accepted Tesla CEO Elon Musk’s offer to take it private.
NB: Traders await fresh PCE inflation data due Friday to guide the outlook for monetary policy.
- The 10-year US yield declined toward 2.8%, retreating from an over 3-year high of 2.98% hit last week.
- Fed policy tightening for now remains a concern. Yields lower after investors piled back into safe-haven bonds.
- Analysts also flagged concerns on whether the US and global economy can withstand an increasingly hawkish Fed and the commodity-shock caused by the Russia-Ukraine war.
- US Treasury yields remained near multi-year highs as Fed Powell indicated last week that the central bank is committed to raising rates “expeditiously” to bring down inflation.
- The Dow added 238 to 34,049
- The SP500 added 24 to 4,296
- The Nasdaq added 165 to 13,004
- image source: Trading Economics
- Asian markets traded mixed on the back of a higher close on Wallstreet.
- In Japan, the Nikkei 225 rose 0.4% to close at 26, recouping some losses from the previous session.
- Musk buying Twitter sent tech stocks higher, as Japanese technology stocks tracked overnight gains on Wall Street.
- China however remains a concern.
- In China, the Shanghai market initially rose 0.5% to around 2,944, before declining 1.25% to 2,892 , after facing accelerated selling in the previous session.
- The PBoC said it will keep liquidity reasonably high to ensure stable financial markets and provide support for the nation’s Covid-afflicted economy.
- The bank also said it will add 100 billion Yuan in relending to support coal development and increase storage capacity.
- On Monday, the benchmark indexes each plunged more than 5% on fears that Beijing may join Shanghai in Covid lockdowns. TE
- Traders ignoring the PBoC pledge to increase support for the economy.
- However authorities in Beijing expanded virus testing to most of the city, raising concerns about a lockdown of the capital.
- Energy analysts however firmly of the opinion, that the supply picture remains tight and that bargain hunters appeared to be taking advantage of sharp falls in oil prices. Energy news
- Gold bounced back above $1,900/oz after a 3-day slide that drove prices below the key psychological level.
- Gold recovering after a dip in the US dollar as Treasury yields drifted lower.
- Investors are also monitoring a worsening Covid situation in China after authorities in Beijing expanded virus testing to most of the city.
- Adding to Gold’s safe haven appeal, Russia told the world not to underestimate the considerable risk of nuclear war.
- Foreign minister, Lavrov, said it wanted to reduce and warned that conventional Western weapons were legitimate targets in Ukraine. Kitco metal
- The US dollar eased from a 2-year high scaled in the previous session,
- On the back of a retreating US yields, down from 3-year highs as investors weighed expectations of faster Fed policy tightening.
- The dollar steadied at 101.7 on Tuesday after hitting a fresh 2-year high in the previous session.
- Fed Chair Jerome Powell said last week the central bank is committed to raising rates “expeditiously” to bring down inflation.
- In Europe, the euro weakened to below $1.075 against a dollar, and failed to get a boost from pro-EU Macron’s re-election.
- Risk sentiment remains clouded by the war in Ukraine that is entering the third month, surging European inflation. FX news
- In conflicting statements, Russia said the threat of Nuclear War remains real, but that it could also be exaggerated by the West.
- Foreign Minister Sergei Lavrov stressing the risks should not be underestimated.
- And said ; “… the Risk of nuclear war now ‘very, very significant…”
- But later added that there was a danger the risks were being “artificially” inflated.
- In addition, US Defence Secretary Lloyd Austin, said, Washington wants to see Russia “weakened” as it arms and supports Ukraine, following a visit to Kyiv.
- It was the first high-level visit to Ukraine from a U.S. official since the war began.
COVID-19 SOURCE https://www.worldometers.info/coronavirus/
Cases / Deaths / Recoveries
- WORLD 510,116,702 / 6,245,643 /463,415,800
- USA 82,733,863 / 1,018,582 / 80,506,936
- SA 3,764,865 / 100,333 / 3,634,446