Morning NOTE

GOOD MORNING

• USDZAR 15.8700
• EURZAR 16.7200
• GBPZAR 19.8600

SOUTH AFRICA   

• Record high SA PPI: Producer prices in South Africa rose 11.9 percent year-on-year in March of 2022.
  • The index accelerating from a 10.5 percent increase in the previous month and above market expectations of 10.8 percent.
  • It was the highest producer inflation since comparable records began in 2013. Stats SA
  • This will no doubt turn the attention to the SARB , who will pay close attention if it filters through into CPI.
    • Such a move will undoubtedly force the SARB hand to once again tighten monetary policy.
• Hospitality union group (FedHasa), has called on municipalities to lower rates and utility charges to aid recovery in the industry and further boost employment.
  • The group’s MD, Marc Wachsberger, said the tourism industry, had suffered significantly during the wake of the pandemic.
    • He also said the industry is struggling to recover because it is obligated to pay the same rising municipal rates, taxes,
    • As well as inflated utility costs as the sectors that survived and thrived during the pandemic. Moneyweb
• SA retail giant Clicks Group reported a 26% surge in diluted headline earnings per share (Heps).
  • The results were for the six months ended February 28 2022 on Thursday.
  • The company reported group turnover up 9% to R19.6 billion for the interim period, while retail sales showed a double-digit increase of 13.6%.
  • The group says it has been supported by the country’s ongoing vaccination programme, while its expanding customer base also contributed to the robust performance. Moneyweb
• SA energy giant SASOL said it is focusing on “green hydrogen” to take advantage of the opportunities provided via the War in Ukraine.
  • Europe’s scramble to find new sources of energy to reduce its reliance on Russia has given Sasol, South Africa’s biggest fuel producer, a new purpose to accelerate its green hydrogen plans.
  • Sasol is focusing on green hydrogen – made by machines called electrolysers that are powered by the wind and sun – in South Africa’s northwest coast.
  • The company is doing a feasibility study that it expects to complete in two years, according to Sasol’s chief executive officer Fleetwood Grobler. Reuters
• South African Airways (SAA), interim CEO Thomas Kgokolo is to leave the airline at the end of April 2022.
  • Kgokolo was appointed in April last year on an interim basis when SAA exited business rescue.
  • The move allows for the transition to the new 51% shareholder Takatso consortium. EWN

Stocks:

• US stocks extended gains in the final hour of trading on Thursday.
  • The market rallying on earnings and ignoring negative GDP numbers and inflationary concerns.
  • The Dow up as much as 614 points, the S&P 500 raising 2.5%, and Nasdaq climbing 3.1%.
    • Facebook-owner Meta Platform was more than 18% after the company posted upbeat earnings and user growth
    • Upbeat earnings lifted sentiment, despite an unexpected negative Q1 GDP print of -1.4%.
• However, after the bell, Apple shares fell after Tim Cook warned of a possible $8 billion hit from supply constraints.

• The yield on the 10-year US Treasury, consolidated around the 2.85% level.
  • It was not far from a 3-year high of 2.98 touched last week,
  • The theme remains with investors pricing chances of an increasingly hawkish Federal Reserve stance.
• The Fed meets next week, in the much anticipated FOMC meeting.
  • The door is  open for a 50bps interest rate hike. source: U.S. Department of the Treasury

• The Dow added 614 to close at 33,916
• The SP500 gained 103 points to close at 4,287
• The Nasdaq gained 382 points to close at 12,871
• image source: Trading Economics

• Asian markets trading higher following the rebound on Wallstreet.
  • • In addition, the ultra-loose monetary policy and the BOJ’s willingness to continue bond purchases sent stocks price soaring in Japan.
  • In Japan, the Nikkei 225 gained 1.75% to close at 26,848, recovering fully from sharp losses in the previous session.
    • Traders adding to long positions, after the BOJ doubled down on its massive stimulus program and a pledge to keep interest rates ultra-low to support a fragile economy.
    • The central bank said it will offer to buy unlimited amounts of 10-year government bonds to defend an implicit 0.25% yield cap around its zero target every market day.
  • In Australia, the ASX rose above 7,400 and in turn rising further from a 6 week low touched earlier this week.
    • Traders now turning its attention to next week RBA meeting after red-hot Aussie inflation data spooked the market.
    • Analysts now bringing forward their timeline for a 15 bps increase by the Central Bank. TE

• Crude oil futures traded above $105/bl  are up about 5% in April.

  • The US oil benchmark is heading for its fifth straight monthly gain after another volatile period marked.
  • Traders citing, the geopolitically driven supply disruptions and Covid-induced demand slowdown in China.
    • The Russia-Ukraine war has entered its third month despite diplomatic efforts for a ceasefire
    • Russia has also recently halted gas supplies to Bulgaria and Poland after the EU-member countries refused to pay gas imports in Rubles.
    • Lockdowns in China also weighing on demand from the world’s biggest crude importer. ENERGY NEWS
• Gold prices recovered to trade above $1,900/oz.
  • Earlier the yellow metal had slipped below $1,880/oz and in turn hit a 2 month low.
  • General US Dollar strength cited as the reasons, fueled by the expectations that the Federal Reserve will be more hawkish than peers.
  • Analysts suggested that recent currency moves indicated a flight to safety out of other currencies into the US dollar, putting downward pressure on bullion prices. KITCO METALS
• The US dollar tested the 104 mark for the first time since December 2002.
  • Traders betting that the Fed would deliver the first of many 50bps interest rate hikes next week to curb inflation.
  • A tightening jobs market reinforced such a view, with initial claims for unemployment benefits remaining at historically low levels.
  • Safe-haven buying also adding to Greenback strength, after authorities in Beijing expanded virus testing to most of the city, raising concerns about a lockdown of the capital.
  • Meanwhile, the American economy unexpectedly contracted an annualized 1.4% in Q1 of 2022. FX NEWS

• Conflicting Central bank views leads to chaos in the currency markets:

• The Japanese yen hit the key 130 /$ mark on Thursday for the first time since April 2002.
  • The Bank of Japan doubled down on its massive stimulus program and a pledge to keep interest rates ultra-low to support a fragile economy.
  • The BOJ’s firm dovish stance stood in stark contrast with the Federal Reserve, which is expected to aggressively hike interest rates.
• The Euro traded below 1.0500 and continues to slide as ECB President Lagarde said the exact end-date for the APP hasn’t been determined.
  • Also, the timeline for potential increases in interest rates has not been set, contradicting board member Guindos.
  • The ECB however noted, inflation pressures have intensified and inflation has increased significantly and will remain high over the coming months.

RUSSIA / UKRAINE

• Russia’s President Vladimir Putin has warned the West of a “lightning fast” response to any country that intervenes in its war against Ukraine and creates what he called “strategic threats for Russia.”
• U.S. President Joe Biden has asked Congress to approve $33 billion in additional money for the Ukraine war, which includes funding for U.S. military support to the embattled nation and a mix of direct cash and supplies for Ukraine. Reuters
• Also, U.S. President Joe Biden said he will visit a Lockheed Martin plant in Troy, Ala. on Tuesday to thank the workers who are manufacturing Javelin missiles being sent to Ukraine. NBC
• In dismissing threats from Putin, NATO Secretary-General Jens Stoltenberg said Finland and Sweden would be “welcomed with open arms to NATO” .
  • “It’s their decision,” Stoltenberg said. “But if they decide to apply, Finland and Sweden will be warmly welcomed, and I expect that process to go quickly,” he said, without offering a timeline.
  • He said the Nordic nations are NATO’s closest partners and already have “strong and mature democracies.” CNN

• WORLD 511,599,167 / 6,253,610 / 465,318,900
• USA 82,888,247 / 1,019,774 / 80,585,919
• SA 3,776,298 / 100,351 / 3,638,087