Morning NOTE

GOOD MORNING

The ZAR consolidated near weaker levels of 16.8500 as traders continue to digest Powell’s comments at the Jackson Hole symposium.

• USDZAR 16.8300
• EURZAR 16.8400
• GBPZAR 19.7100

SOUTH AFRICA   

• Phala-Phala

  • President Cyril Ramaphosa prepares to face Members of Parliament yet again about the burglary at his Limpopo farm.
    • Opposition parties failed to get details from Ramaphosa during his budget vote debate in June.
    • Even though the African Transformation Movement has succeeded in starting a Section 89 process against him, it’s not giving up on pressing him for answers.
    • He has so far remained silent on details about the theft of foreign exchange at his Phala Phala farm in February 2020, citing due process.
    • Political parties have until Thursday to nominate experts to sit on a panel that will consider the veracity of the evidence that could lead to an inquiry. EWN

• State capture

  • The National Prosecuting Authority (NPA)’s Investigating Directorate believes it has a watertight case against corruption accused Brian Molefe and Anoj Singh.
    • The pair were arrested on Monday and are among eleven that have appeared in the Palm Ridge Specialised Commercial Crimes Court.
    • They face charges of fraud, corruption and the contravention of the Public Finance Management Act linked to a questionable locomotive deal at Transnet in 2012. Moneyweb
• Like Massmart, the JSE is faced with the prospect of another large de-listing.
  • Grindrod Shipping, announced it had entered into exclusive talks with London-listed Taylor Maritime Investments.
  • The talks for a cash offer for the business, meaning it will delist from JSE if the deal goes ahead. Business day live

GLOBAL MARKETS

Stocks:

• Equity futures all trading higher in early session trading.
  • On Monday, the Dow fell 0.57%, the S&P 500 dropped 0.67% and the tech-heavy Nasdaq Composite tumbled 1.02%.
  • The move ensuring all three benchmarks closing at one-month lows and sliding toward their 50-day moving averages.
• Investors remain on edge factoring in the Federal Reserve’s determination in bringing down inflation with higher interest rates, even at the risk of some economic pain.
  • Futures contracts tied to the three major indexes were all trading in positive territory.
• Investors now await the highly-anticipated monthly jobs report on Friday for an update on the strength of the US labour market.

Bonds:

• The US10YT yield traded lower to 3.08% on the back of some safe-haven buying.
  • The Fed ‘s commitment to bringing inflation back down to 2%, most likely to keep yields elevated for longer than expected.
• In Europe, the ECB’s hawkish pivot to a likely chance of 75 bps hike saw German yields also spiking.
  • The 10 Year Bund yield rising past 1.5% in the end of August.
  • The yield lifted by expectations of higher interest rates as major central banks signalled the need to bring inflation down despite increasing recession concerns.
  • ECB policymakers made the case for a 75bps rate hike for the central bank’s next meeting in September, citing the elevated risks of inflation becoming entrenched in expectations. Reuters

YESTERDAY

• The Dow declined 184 to 32,098
• The SP500 fell 27 to 4,030
• The Nasdaq  fell 124 to 12,017

Futures Trading:

• image : Trading economics

OVERNIGHT HEADLINES

• Asian markets recovering with markets trading higher across the region as traders wait for more data ( slowing inflation ) that could alter the Fed’s policy direction.
  • In Japan, the Nikkei 225 gained 1.14% to close at 28,196. The index recovering some losses after a sharp fall in the previous session.
    • Traders ignoring, fears about aggressive Federal Reserve monetary tightening at least momentarily.
    • Investors also digested data showing Japan’s unemployment rate stood at 2.6% for the third straight month in July, as widely expected.
      • Energy firms also gained as oil prices jumped overnight on supply concerns, with sector leader Inpex Corp rallying 4.3%.
  • In Australia, the ASX 200 rose 0.47% to close at 6,998 the index also recouping some losses from the previous session.
    • It was helped by gains in energy and technology stocks as investors brushed aside hawkish expectations from the US Federal Reserve for now.
    • Energy stocks also advanced as oil prices jumped overnight on supply concerns, with sector leaders Woodside Energy and Santos Ltd each rising about 1.5%.  Reuters
       
• Crude oil declined to trade $97/bl. the US WTI contract lower a sharp rally in the previous session.
  • Traders weighed a global effort to stamp out inflation against various supply concerns.
  • Oil is on track to decline for the third straight month as investors fretted about a global economic slowdown. A recession is widely understood to have damaging repercussions for demand.
  • Last week, Saudi Arabia flagged possible OPEC+ production cuts to stabilize volatile markets. The news resulting in a +4% spike in crude prices on Monday.
  •  The oil cartel will meet on September 5 to decide on production policy. Gulf Energy news
     
• Gold prices lower ahead of the European open. The Yellow metal remains under pressure following the spike in US yields on the back of a hawkish Fed.
  • Bullion however recovered from its lows on Monday to close at $1736.52/oz and this morning the yellow metal trades 0.18% lower.
    • Silver is also slightly weaker trading at $18.70/oz. In the rest of the commodities complex, both copper (-0.47%) and spot WTI (-0.05%) are trading lower.
    • Prices remaining under pressure from a strong Dollar amid expectations that US interest rates will remain elevated for longer.
    • During his speech at the Jackson Hole symposium, Federal Reserve Chair Jerome Powell stressed the need to raise and maintain rates at a restrictive level until inflation falls substantially.
    • He added that it may hurt growth and soften the job market.  Kitco Metals
       
• The US dollar declined below 109 on Tuesday after pulling back from a 20-year high of 109.48 reached in the previous session.
  • Traders balanced the Fed’s aggressive plan to stamp out inflation against speculations that the European Central Bank is considering a more aggressive move in September.
  • Traders now await the monthly jobs report on Friday, where Non-farms could once again create volatility, which could give further clues on the Fed’s next steps.
  • The Euro, also recovered to trade above parity vs the Dollar, after ECB policymakers also made the case for a more aggressive response against surging inflation.
    • Opening the door for a larger hike , i.e. 75 basis point rate hike in September.
    • The Euro, which is the most heavily weighted component of the dollar index,
      • The single currency, enjoyed some respite following reports that ECB policymakers are considering a supersized 75 basis point rate hike next month. FX news