Morning NOTE

GOOD MORNING

• USDZAR 15.4000
• EURZAR 16.4700
• GBPZAR 19.3700

SOUTH AFRICA   

• Opposition parties continue to pressure both SARS and the SARB on the stolen Rampahosa millions.
  • However, the country’s financial authorities, including SARS, have remained tight-lipped on whether they would investigate millions of US dollars kept on President Cyril Ramaphosa’s farm.
  • Pressure continues to mount on Ramaphosa to come clean about this saga.
  • SA political analysts saying this was severely damaging to the reputation of the sitting president. IOL
    • The EFF made a string of allegations against president Cyril Ramaphosa;
    • Some of it inlcuded accusing him of money laundering and tax evasion because of the large amount of money that had been stored at his Phala Phala farm.
    • Along with the DA , opposition parties wants President Cyril Ramaphosa to answer a list of questions in Parliament regarding money stolen from his farm in February 2020. EWN
• Following stronger than expected GDP figures, the International Monetary Fund (IMF) said on Tuesday that its staff concluded a visit to SA.
  • The fund said, its staff were increasingly concerned about the country’s economic growth outlook and the implications on employment, poverty and inequality.
  • It said, Africa’s most industrialised economy has recovered from the Covid-19 pandemic faster than many analysts had predicted. Moneyweb
• More than R35 million which was falsely claimed from the UIF Covid-19 Temporary Employee/Employer Relief Scheme (TERS) is to be reimbursed.
  • This after the CEO of the Eastern Cape Transport Tertiary Co-Operative Limited (ECTTC), Dr Nokuthula Mbebe, made numerous fraudulent applications.
  • The High Court of SA, EC Division, granted the NPA’s Asset Forfeiture Unit (AFU) a forfeiture order against the misappropriated money valued at R35m. CT
• Crypto scammer and Mirror Trading International (MTI) founder & CEO , Johann Steynberg’s attempted to be released from prison and placed under house arrest.
  • The application was heard while awaiting extradition to South Africa, but was denied by a judge in Brazil this week.
  • It was reported at the time of Steynberg’s arrest in December 2021 that he had a Brazilian girlfriend.
    • Brazil is known to be reluctant to extradite people with children born in Brazil.
  • However, the judge did not rule out extradition in Steynberg’s case merely because he had a family in that country.
    • MTI was the largest crypto scam in 2020, with investors losing more than R4.7bn. Moneyweb

GLOBAL MARKETS

Stocks:

• Shares rallied in New York with  the Dow + 0.8%, the S&P 500 + 0.95% and the Nasdaq + 0.94% for their second straight day of gains.
• • Ten of the 11 S&P sectors ended in positive territory, led by the energy, industrials and health sectors.
  • The stock market shrugged off a profit warning from Target after the retailer slashed its guidance and said it was planning to get rid of excess inventory.
• • Today, US equity futures lower on Wednesday after two straight days of gains on Wall Street, as investors continued to assess the impact of surging inflation.
    • Also an economic slowdown and tighter financial conditions on corporate earnings and the wider economy.
• Investors now look ahead to Friday’s price level readings for May, to see the crucial path of Federal Reserve policy beyond July.

• The US10-year yield held recovered 3% after falling below, following major announcements by Mega US retailer Target Corp.
  • The company warning investors about excess inventory and said it would cut prices, boosting bets that the worst of inflation may be in the past.
  • However, US CPI remains the focus on Friday and data this week that could strengthen the case for aggressive interest rate hikes by the Fed.
  • Investors all betting for a slowdown in the trajectory of inflation as growth slows. source: U.S. Department of the Treasury

• The Dow gained 264 to 33,180
• The SP500 added 39  to 4,160
• The Nasdaq  added 113 to 12,175

• image : Trading economics

• Asian markets higher, following the overnight rally on Wallstreet.
  • In Hong Kong the Hang Seng rallied 1.5% and in Japan the Nikkei advanced for the 4th straight session.
    • The Nikkei 225 rose 0.8% to 28,160, hitting fresh two-month highs and taking cues from a higher overnight session on Wall Street.
      • A weaker ¥en and an unwavering commitment to monetary easing also helped local equities.
      • BOJ Governor Kuroda insisting a weak Yen will benefit pandemic-hit service providers, as Japan is set to reopen its doors to foreign tourists from Friday.
      • Moreover, investors assessed data which showed Japan’s economy contracted less than initially estimated in the first quarter of this year.
  • In Australia, the ASX200 rallied 0.8% to around 7,150 on Wednesday, recouping some losses from the previous session.
    • Wednesday’s gains also followed a sharp decline on Tuesday when the RBA delivered a larger-than-expected 50 basis point rate hike to 0.85%.
    • The hike seen as a shock and awe move meant to get ahead of inflation.
    • Leading the rebound were tech stocks and energy shares continued to outperform on the back of  firm oil prices, with gains from Woodside Energy (1.6%).

• Crude oil spiked again!

  • Brent futures trading at $121/bl, supported by tight global supplies and the prospect of higher demand from China after relaxation of Covid curbs and the summer driving season in the US.
  • Markets are also gearing up for the release of official US crude inventories, which is expected to show another drawdown last week.
    • The theme remains tight supply as Asia’s refining margins for diesel hit a fresh record on Tuesday.
    • The CEO of global commodities trader Trafigura warned that the oil market could see prices surging to record highs and triggering a slowdown in economic growth.
    • He added that energy markets were in a “critical” state ,citing Russia and by years of under-investment. Source : Energy News
• Gold retreated to $1850/oz, as the dollar and US yields regained upward momentum.
  • Still, investors looking ahead to US inflation data to guide the outlook for interest rates.
  • The US CPI for May due out on Friday is expected to have gained 8.3% YOY on the year, after an annual rise of 8.3% in April, based on consensus forecasts.
  • The data will be crucial for the path of Federal Reserve policy and whether the central bank will keep raising interest rates beyond July.
  • Meanwhile, geopolitical risks continued to attract flows into the yellow metal as well as inflation. Source : Kitco Metals
• The US Dollar firmed up around 102.5 after struggling to hold onto levels reached in the previous session.
  • Traders firmly braced for US inflation data later this week that could strengthen the case for aggressive interest rate hikes by the Federal Reserve.
  • Across the pond, investors cautious ahead of the European Central Bank meeting on where it is expected to at least lay the groundwork for rapid rate rises.
    • Investors also aware of a better-than-expected US jobs report from last week, which signalled economic resiliency and supported the Fed’s stance against inflation.
    • While markets priced in another 50 basis point rate hikes both in June and July.
    • NB: A high inflation reading would bolster expectations of further tightening in the second half of the year.

• Ukraine-Russia

  • Radiation detectors in the Exclusion Zone around Ukraine’s defunct Chornobyl nuclear power plant are back online.
    • It was back in operation for the first time since Russia seized the area on Feb. 24, and radiation levels are normal, the U.N. nuclear watchdog said. Reuters
  • U.S. starts training Ukrainian troops to use rocket systems
    • The U.S. military has begun training Ukrainian forces on the sophisticated rocket systems that the Biden administration agreed last week to provide.
    • However, Russia has said could trigger wider airstrikes in Ukraine. CNBC
  • Fiji’s top court allowed the U.S. to take possession of a $235 million, 350-foot yacht said to be owned by Russian billionaire Suleiman Kerimov.
    • The superyacht Amadea quickly was sailed out of a port in Fiji, bound for the United States, the Department of Justice said.
    • The seizure is the latest in a series of actions taken against the assets of Russia’s elite as punishment for their country’s invasion of Ukraine. CNN
    • Globally asset grabs continues with the proceeds of the sales going towards the Ukrainian WAR effort.

• WORLD 536,613,318 / 6,323,467 / 507,760,825
• USA 86,782,404 / 1,034,284 / 82,754,408
• SA 3,970,993 / 101,397 / 3,844,040