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ZAR NOTE

GOOD DAY

The ZAR strengthened further to reach 17.5000 on the back of record levels of SA government bond buying.

OPENING RATES

• USDZAR : 17.5500
• EURZAR : 19.4300
• GBPZAR : 22.6400

SOUTH AFRICA

SA FIXED INVESTMENT

• Investment in SA takes dramatic dive
  • It’s down 30% compared to a year ago – and we can only hope the projects actually get off the ground.
    • The latest analysis of the country’s capital projects by Nedbank shows that capital investment in SA is on the decline.
    • Adding up all the capital investment in fixed infrastructure – as announced by the private and public sector for the foreseeable future – shows that it has decreased by a massive 30% compared to a year ago.
    • “Fixed investment is spending on physical assets such buildings, infrastructure, plant, machinery and equipment, which adds to production capacity.”
    • The economy cannot grow without fixed investment.
  • The Nedbank survey aims to list all the capital projects announced by either the private or public sector, with the latest list showing a sharp fall in fixed investment activity in the first six months of the year.
  • “The value of new projects announced amounted to an annualised R173.1 billion, down from R248.5 billion and R392.7 billion recorded in 2022 and 2021, respectively,” according to the report. Source: Moneyweb

KARPOWERSHIP

• Karpowership will push ahead with bids to secure environmental approval to install two ship-mounted power plants in South African ports.
• South African Environment Minister Barbara Creecy dismissed appeals from five environmental groups.
• The groups t sought to block the company from applying for the approval to install a 450-megawatt gas-fired facility at the port of Richards Bay on the northeast coast, according to a ruling seen by Bloomberg. News24

RUSSIA-AFRICA SUMMIT

• Africa’s food security high on agenda as dozens of heads of African states are expected to attend the gathering, with food production on the continent and Russia’s support in agriculture technology set to be up for discussion on the first day.
• Food security in Africa will be high on the agenda when the second Russia-Africa summit begins in St Petersburg on Thursday.
• The gathering will be attended by dozens of heads of African states, including President Cyril Ramaphosa.
• Russia’s foreign affairs ambassador at large, Oleg Ozerov, said food production on the continent and support from Russia in agricultural technology will be up for discussion on the first day. Source EWN

GLOBAL MARKETS

Stocks
Stocks nervous ahead of the Fed .

• In regular trading on Tuesday, the S&P 500 and Nasdaq Composite gained 0.28% and 0.61%, respectively.
• The Dow also edged up 0.08%, extending its winning streak for the 12th straight session which is the longest in more than six years.
   
• US stock futures edged lower on Wednesday as caution dominated sentiment ahead of a key interest rate decision from the Federal Reserve.
   
• Dow and S&P 500 futures were down about 0.1%, while Nasdaq 100 futures lost 0.2%.  source Reuters

Bonds
Yields steady ahead of the FED tonight.

• The yield on the US-10 year Treasury note topped 3.9% in the last week of July, the highest in two weeks, as traders brace for the FOMC monetary policy decision due Wednesday.
• A 25bps increase in the fed funds rate is already priced in, but all eyes will be on the Fed’s next steps.
• Policymakers signalling another hike will probably be necessary although traders remain divided.
• Bets for a September increase currently stand at about 19% and for November around 30%.
• Meanwhile, the yield on the US two-year note, the most sensitive to short-term policy moves, was around two-week highs of 4.87%

Yesterday

• DOW +26 to 35,438
• SP500 +12 to 4,567
• NASDAQ  + 85 to  14,144

  image: Trading economics

OVERNIGHT HEADLINES

Asian markets

Asian markets lower with investors booking profit ahead of the Fed.

• In Japan, the Nikkei 225 Index lost 0.04% to close at 32,668, with Japanese shares struggling to gain traction as investors braced for an expected interest rate hike from the US Federal Reserve later in the global day.
  • The Bank of Japan will also decide on monetary policy on Friday, where it is widely seen maintaining ultra-easy monetary settings.
  • Nearly all sectors declined, with notable losses from index heavyweights such as Advantest (-1.7%).
     
• In China, the Shanghai Composite fell 0.28% to close at 3,223, giving back some gains from the previous session, as caution dominated investor sentiment ahead of an expected interest rate hike from the US Federal Reserve.
  • Meanwhile, mainland stocks rallied more than 2% on Tuesday after China’s Politburo pledged to ramp up policy support for the country’s flagging economy.
  • The PBoC a focus on boosting domestic demand and helping the ailing property market.
  • High-growth technology and consumer-related stocks led the decline on Wednesday. Source : Reuters

Energy

• Brent crude futures fell toward $83/bl and US WTI crude futures fell toward $79/bl.
  • US crude inventories increased by 1.319 million barrels last week, defying expectations for a 1.969 million barrel decline.
  • Investors also lightened holdings on risk assets ahead of an expected interest rate hike from the US Federal Reserve later on Wednesday.
  • Still, the US oil benchmark remains close to three-month highs as the prospect of tighter global supplies and stronger Chinese demand buoyed prices.
  • The oil market remains supported by output cuts from OPEC+, with the group signalling readiness to take additional measures if needed.
  • On the demand side, China pledged to ramp up policy support for its flagging economy, with a focus on boosting domestic demand and helping the ailing property market. Source : Gulf news

Metals

• Gold steadied above $1,960/oz Wednesday as investors braced for interest rate decisions from major central banks this week.
  • The US Federal Reserve is widely expected to raise interest rates by 25 basis points on Wednesday, while traders will listen closely to Fed Chair Jerome Powell’s comments after the meeting for clues on the central bank’s next steps.
  • The European Central Bank is also seen lifting rates by another quarter-point on Thursday, while the Bank of Japan will likely keep its policy of ultra-low interest rates unchanged on Friday.
  • Moreover, markets look ahead to the Fed-preferred PCE inflation gauge and advance estimate of Q2 GDP growth in the US this week. Source : Trading economics and Kitco

Currencies

• The US dollar index steadied above the 101 mark on Wednesday, holding recent gains as investors geared up for a key policy decision from the Federal Reserve.
  • The Fed is widely expected to raise interest rates by another 25 basis points.
  • However, doubts persist on whether the central bank will stop its tightening campaign or increase rates further beyond July.
  • Meanwhile, the US economy continued to show resilience, with consumer confidence jumping to a two-year high in July amid a strong labour market and easing inflation in the US.
  • Elsewhere, the European Central Bank is also due to raise borrowing costs by another quarter point on Thursday, while the Bank of Japan is expected to maintain its ultra-loose monetary policy on Friday.
  • The dollar remained sideways against the euro, sterling and yen, while it gained sharply against the Aussie after softer-than-expected Australian inflation data. source Forex news