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Markets WRAP: Rand closes at R13.86/$

2019-01-09 08:48

"The overall tone in the markets is for some EM strength but as we have seen in the past, sentiment is fickle and it only takes one headline for it to change,” said TreasuryONE's Andre Botha.

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Last Updated at 10:15
09 Jan 17:18

The rand closed at R13.86 to the greenback on Wednesday. The day's range was R13.86 to R14.02.

Andre Botha, Senior Currency Dealer at TreasuryONE said earlier, “We saw the rand running out of steam yesterday, as it traded within a tight range and only briefly breaking above the R14.00 level.

"The sentiment is still in favour of risky assets as major stock indices all traded in the green and the US dollar is still trading in the mid 1.1450's. The current mood of optimism has been fuelled with the expectation that the US-China trade talks are going better than expected and that a deal could be reached between the two countries.

"This could be the catalyst for a renewed bout of risk-on sentiment and the rand could enjoy another surge lower.

"Today we have the US Fed minutes out in evening trade and we could gain some insights into the thinking of the Fed. Should the tone be more dovish than expected we could see sentiment favouring EM's again. The overall tone in the markets is for some EM strength but as we have seen in the past, sentiment is fickle and it only takes one headline for it to change.”


09 Jan 16:31

Brent oil extended its longest rally in a year and a half, rebounding above $60 a barrel, on hopes of a resolution in the US-China trade dispute. Futures in London - which last traded over $60 in December - are up for an eighth session, recovering from a 35% collapse in the last quarter of 2018.

The world’s two biggest economies wrapped up three days of trade talks in Beijing and are reportedly coordinating how to characterise the results publicly.

Meanwhile, an industry report Tuesday was said to show American crude inventories declined. Fears of a slowdown in oil demand are receding with an easing of the long-running trade tensions, which helped drag crude prices into a bear market after they hit a four-year high in October.

Confidence is also strengthening that the Organisation of Petroleum Exporting Countries and its allies including Russia will curb output enough to counter booming US supplies and avoid an oversupply.

“There is positive momentum in the oil market in the new year as economic optimism seeps back in,” said Harry Tchilinguirian, head of commodity markets strategy at BNP Paribas SA.

“If this state of affairs persists, OPEC and non-OPEC supply cuts that go into effect this month will prove more effectual in attenuating predicted implied global stock builds in 2019.”

Brent for March settlement rose as much as $1.63, or 2.8%, to $60.35 a barrel and traded at $60.25 on the ICE Futures Europe Exchange in London as of 13:56 local time. The global benchmark crude was at a premium of $8.71 a barrel to West Texas Intermediate for the same month.

WTI for February delivery climbed $1.42 to $51.20 on the New York Mercantile Exchange, the first time it’s back above $50 since December 17.

US-China trade negotiations have concluded after being extended by a day, showing both sides are serious, according to a Chinese foreign ministry spokesman.

The talks were originally scheduled for two days. President Donald Trump is said to be eager to strike a deal soon to perk up financial markets that have slumped on concerns over a trade war between the nations.

He earlier expressed optimism in a tweet, exclaiming, “Talks with China are going very well!”

“There is further upside to come in prices, as we see more evidence coming through that members of OPEC+ are complying with their new production cut,” said Warren Patterson, senior commodities strategist at ING Bank NV. “We see the market largely balanced over the first half of 2019.”

Meanwhile, the American Petroleum Institute was said to show crude stockpiles fell 6.13 million barrels last week. Still, the data also signaled substantial increases in American gasoline and diesel inventories, a bearish signal for demand. A government report on Wednesday is forecast to show crude inventories dropped 2.7 million barrels, though the hoard at the nation’s key storage hub may have increased. - Bloomberg


09 Jan 15:33

China and the US wrapped up three days of trade talks and are reportedly coordinating how to characterise the results publicly as officials from both nations expressed optimism that progress had been made.

People familiar with the discussions said positions were closer on areas including energy and agriculture but further apart on harder issues. As of 20:25 in Beijing, neither the Chinese side nor the Americans had released a statement - a possible sign of message coordination as the US delegation returned to Washington.

Stocks rose across Asia and Europe, and equity futures indicated an increase in the US on Wednesday, on signs the world’s two largest economies are trying to resolve their trade war. Chinese foreign ministry spokesman Lu Kang said a one-day extension in talks showed both sides are serious about the talks.

Some disagreements remain on structural issues and they need to be addressed when more senior negotiators meet later on, according to Chinese officials involved in the discussions who asked not to be identified.

The editor-in-chief of the Global Times, a state-run Chinese newspaper known for its nationalist leanings, said on Twitter around 16:00 in Beijing that he’d heard the two sides were still consulting on the wording of coordinated statements.

China and the US plan to release a message on trade talks at the same time Thursday morning in Beijing, he said later in another tweet. The talks, though arduous, were conducted in a pleasant and candid atmosphere, he said.

Later this month, US Trade Representative Robert Lighthizer is expected to meet with Vice Premier Liu He, President Xi Jinping’s top economic aide who is leading negotiations for China, a person familiar with the situation said last week. Liu made a brief appearance at the talks in Beijing on Monday, boosting optimism that China was serious about making progress on a deal.

The mid-level talks were the first face-to-face meeting between the two sides since their leaders met on December 1. Prior to the meeting, China made a number of concessions to US demands including temporarily cutting punitive tariffs on US-made cars, resuming soybean purchases, promising to open up its markets for more foreign investment, and drafting a law to prevent forced technology transfers.

The negotiations were extended from the two days initially scheduled, according to the Chinese. President Donald Trump tweeted, “Talks with China are going very well!” late on Tuesday in Beijing.

The US president is increasingly eager to strike a deal with China soon in an effort to perk up financial markets that have slumped on concerns over the trade war, according to people familiar with internal White House deliberations. The S&P 500 Index has fallen about 8% since Trump and Xi agreed on a 90-day truce at their meeting in Argentina last month. - Bloomberg


09 Jan 14:26
The rand is set for a third straight year of currency turbulence in 2019 with a number of global economic uncertainties perpetuating the volatility, according to corporate treasury manager at Peregrine Treasury Solutions, Bianca Botes.

09 Jan 13:34

OVERVIEW: Stocks gained from Europe to Asia and US futures rose as America and China concluded three days of trade talks on an optimistic note. West Texas oil climbed above $50 and most industrial metals advanced after the Asian nation stepped up measures to spur consumption.

The Stoxx Europe 600 Index increased a second day led by carmakers and technology companies after Hong Kong stocks set the pace for Asian benchmarks. Futures on the S&P 500, Dow Jones and Nasdaq all extended gains, with US President Donald Trump’s address to the nation on border security doing little to disrupt the risk-on mood.

The dollar dipped and Treasury yields edged higher before the release of minutes from the Federal Reserve’s December meeting that may offer insight into the decision to raise interest rates in the face of plunging equities and pressure from Trump.

Trade developments between the US and China remain a focal point, with Trump reportedly eager to strike a deal to help revive the flagging stock rally he took credit for. The two countries were said to be closer on some issues as discussions wrapped up in Beijing Wednesday. While concerns linger about the impact of protectionist tensions on global growth, it sets up a potential Goldilocks scenario for markets after Fed Chairman Jerome Powell’s apparent dovish shift last week eased fears about tightening financial conditions.

“We could get some more stabilisation and a floor in the market if we make strides towards an agreement” on trade, Kate Moore, chief equity strategist at BlackRock said on Bloomberg Television. “But this is going to be an issue overhanging markets I believe for multiple years.”

Meanwhile, Trump demanded in his televised address that Congress provide billions for a border wall with Mexico, but stopped short of declaring a national emergency. Parts of the government continue to be shut thanks to the impasse over funding.

Elsewhere, emerging-market stocks extended a rally that’s taken MSCI’s gauge to the highest in more than a month. The Bloomberg Commodity Index rose for a sixth straight day, but gold continued to retreat after reaching a seven-month high last week. - Bloomberg


09 Jan 12:01

China and the US wrapped up three days of trade talks, with people familiar saying their positions were closer on areas including energy and agriculture but further apart on harder issues.

Beijing will be releasing a statement soon on the negotiations, Chinese foreign ministry spokesman Lu Kang said, adding that a one-day extension shows both sides are serious about the talks. Some disagreements remain on structural issues and they need to be addressed when more senior negotiators meet later on, according to Chinese officials involved in the discussions who asked not to be identified.

Later this month, US Trade Representative Robert Lighthizer is expected to meet with Vice Premier Liu He, President Xi Jinping’s top economic aide who is leading negotiations for China, a person familiar with the situation said last week. Liu made a brief appearance at the talks in Beijing on Monday, boosting optimism that China was serious about making progress on a deal.

Stocks gained from Europe to Asia and US futures rose on fresh hope for a breakthrough in the negotiations.The mid-level talks were the first face-to-face meeting between the two sides since both presidents met on December 1.

Prior to the meeting, China made a number of concessions to US demands including temporarily cutting punitive tariffs on US-made cars, resuming soybean purchases, promising to open up its markets for more foreign investment, and drafting a law to prevent forced technology transfers.

The negotiations were extended from the two days initially scheduled, according to the Chinese. President Donald Trump tweeted “Talks with China are going very well!” late on Tuesday in Beijing. - Bloomberg


09 Jan 10:19

Bianca Botes, Corporate Treasury Manager at Peregrine Treasury Solutions said in a morning note to clients, "The rand has remained fairly flat during trade, after edging just above R14.00/$ on Tuesday. 

"Today the focus will squarely fall on the minutes of the Fed’s December meeting. Although they [are] due to be released only at 21:00 tonight, members of the Fed will start giving their statements from 15:00 this afternoon.

"The tone of the central bank will once again prove to be important, with markets expecting the Fed to have a more dovish stance than in the past. Locally we will also keep a watchful eye on manufacturing PMI this morning to give us an indication of the activity in the sector heading into 2019. 

"With the US and China both feeling optimistic about the trade talks currently underway, the dollar has clawed back some lost ground. However, for now it remains subdued due to the expectation that interest rates in the US will pause, or rise at a slower pace. 

"The rand's expected range for the day is R13.85 to R14.05, while it is trading at R15.94 and R17.73 to the euro and pound respectively."


09 Jan 08:59

Markets seem optimistic for positive news on the trade front, TreasuryONE said in a morning note to clients. The rand has firmed and was trading at R13.90 to the greenback by 08:58.

"Forex markets are trading in narrow ranges as they await the outcome of the US-China trade talks and the release of the Fed minutes later today. Markets seem optimistic for positive news on the trade front and signs that the Fed will slow down on their tightening policies and we are seeing some risk on sentiment returning to markets.

"The Turkish Lira is weaker on the back of political disagreements with the US over Syria. The Dow, S&P and Nasdaq all closed up around 1.0% and Asian stocks along with US futures are higher this morning.

"Gold has softened slightly to $1 282.35 while Oil is higher  at $59.55.


09 Jan 08:48

Asian markets power ahead on rising trade-talks hopes

Increasing optimism that China and the US will be able to hammer out a deal to help ease their trade war provided the impetus for more gains across Asian markets on Wednesday.

After taking a battering in December and suffering a shaky start to 2019, confidence is slowly returning to equity trading floors, though dealers remain on edge.

Federal Reserve boss Jerome Powell provided the platform for a rally last week when he said the central bank had no "pre-set" plan for lifting interest rates and was "listening" to markets, signalling that the pace of hikes could slow this year.


09 Jan 08:48

World Bank cuts global growth outlook as trade expansion falters

The World Bank cut its forecast for the global economy as slowing growth in trade and investment and rising interest rates sapped momentum, especially in emerging markets.Downside risks to the world economy have become more acute, including the threat of “disorderly” market movements and an escalation of trade disputes, the development lender said Tuesday in its semi-annual update to its global outlook.

Debt vulnerabilities in emerging markets and developing countries have increased, it said.The Washington-based bank expects global growth of 2.9% this year, down from 3% in 2018 and a reduction of 0.1% point from its forecast in June.

The bank lowered its projection for growth in emerging markets by 0.5% to 4.2%, and slightly downgraded its outlook for expansion in the euro area.


09 Jan 08:48

Hong Kong gains -AFP

Hong Kong surged more than one percent in the opening minutes of business Wednesday, extending a rally into a fourth day on hopes for success in China-US trade talks.

The Hang Seng Index gained 1.40%, or 361.84 points, to 26 237.29.The benchmark Shanghai Composite Index added 0.39%, or 9.96 points, to 2 536.42 and the Shenzhen Composite Index, which tracks stocks on China's second exchange, put on 0.29%, or 3.75 points, to 1,303.64.


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