Markets WRAP: Rand closes at R13.39/$

The rand closed at R13.39 to the greenback on Monday afternoon. The day's range was between R13.32 and R13.42. 

Bianca Botes, Corporate Treasury Manager at Peregrine Treasury Solutions said earlier that the local currency opened slightly weaker than Friday, starting the day at R13.33/$.

"This followed stronger-than-expected jobs data from the US which boosted the USD. Chinese markets will be closed for the whole week as the Asian giant celebrates Lunar New Year, typically resulting in less activity and volatility. Things are quiet on the data front with no major releases due for today. The expected range is R13.22 to R13.38."

OVERVIEW: US equity futures and European stocks held steady and the dollar rose as investors awaited fresh catalysts after digesting solid American economic data on Friday and inconclusive trade talks in Washington. Treasury yields pushed higher.

The Dow, S&P 500 and Nasdaq were little changed after US President Donald Trump over the weekend told CBS that trade talks with Beijing are “doing very well” and sounded confident an agreement with North Korea was on the horizon.

Carmakers were the biggest losers in the in the Stoxx Europe 600 Index. Oil and gas companies climbed as Brent crude touched an intraday high for 2019 before paring its gains. In Asia, trading was subdued as much of the region headed into Lunar New Year holidays.

After a busy few days that included relatively dovish Federal Reserve comments and US-China trade talks in Washington, there’s a notable lack of drivers for markets on Monday, particularly in Asia, where China is off and other markets will be shut for days. Investors may again look for direction from a corporate earnings season that’s been mixed so far.

Elsewhere, Venezuelans marched in dueling protests Saturday, with the two men who both claim to be the nation’s leader each exhorting followers to hold firm. The country’s outlook is being followed by oil traders given the country’s share of global exports. Emerging-market currencies and shares fell.

Among key events in the coming days:Earnings season continues, including reports from Alphabet (Google), Twitter, Hasbro, Ryanair, Disney, Philip Morris, SoftBank, BNP Paribas, ING, MetLife, Societe Generale. US President Donald Trump delivers a delayed State of the Union address Tuesday. On Wednesday, Federal Reserve Chairman Jerome Powell hosts a town hall meeting with educators, his first public comments following the January FOMC meeting and rate decision. Central banks in Australia, India and the UK set rates this week. Markets across Asia, including China, Hong Kong, Singapore, Taiwan, South Korea, Malaysia and Vietnam, will close for part or all of the week to mark the start of the Year of the Pig.

These are the main moves in markets:

Stocks

Futures on the S&P 500 Index climbed less than 0.05% as of 07:04 New York time, the highest in two months. The Stoxx Europe 600 Index declined 0.1%, the first retreat in a week. The MSCI All-Country World Index dipped 0.1%, the first retreat in a week. The MSCI Emerging Market Index fell 0.3%, the first retreat in a week.

Currencies

The Bloomberg Dollar Spot Index jumped 0.2%, the largest climb in more than a week. The euro decreased 0.1% to $1.145. The Japanese yen sank 0.3% to 109.87 per dollar, the weakest in more than five weeks. The British pound dipped 0.1% to $1.3064, the weakest in almost two weeks. The MSCI Emerging Markets Currency Index fell 0.2%.

Bonds

The yield on 10-year Treasuries jumped one basis point to 2.69%. Germany’s 10-year yield dipped less than one basis point to 0.16%. Britain’s 10-year yield was unchanged at 1.248%. The spread of Italy’s 10-year bonds over Germany’s rose one basis point to 2.5882 percentage points to the widest in almost three weeks.

Commodities

The Bloomberg Commodity Index declined 0.3%, the biggest fall in a week. Brent crude was unchanged at $62.75 a barrel, the highest in more than 10 weeks. LME copper declined 0.5% to $6,109.00 per metric ton. Gold sank 0.5% to $1,310.97 an ounce, the weakest in a week on the largest decrease in more than two weeks. - Bloomberg

Oil holds gains at two months high - Bloomberg 

Oil held gains near a two-month high on Monday after data showed US production growth slowing at a time when OPEC cuts and American sanctions on Venezuela have already eased concerns over a supply glut.

Futures in New York rose as much 0.9% to reach the highest intraday level since November 21, after adding 2.7% Friday.

OPEC’s crude output fell the most in two years in January, according to a Bloomberg survey of officials, analysts and ship-tracking data.

Oil has rebounded this year as OPEC’s production cuts have taken effect, clawing back more than half of its 40% slump last quarter.

The rally has seen hedge funds slash bearish bets on crude, although gains are being capped by slowing global growth and uncertainty over the US-China trade war.

Venezuela has become the wildcard in the supply-demand equation as its deepening political crisis threatens to weigh further on production.

“You still have the issue of the sanctions on Venezuela on top of the supply cuts from Saudi Arabia so that is providing some support,” said Olivier Jakob, managing director of Petromatrix. 

AngloGold Ashanti said full-year profit, excluding some one-time items, climbed more than sevenfold from 2017, after it shut and sold mines in South Africa and lowered amortisation in Brazil.

Headline earnings for the period are expected to be between $207 million and $224 million, up from $27 million the previous year, the Johannesburg-based miner said in a statement on Monday.

Key Insights

The closure of its TauTona mine and sale of Moab Khotsong and Kopanang in South Africa is already bearing fruit as AngloGold focuses on its lowest-costs mines. The performance of the No. 3 gold producer was also buoyed after income from its Kibali operation in the Democratic Republic of Congo rose by $95 million.

The turnaround at AngloGold lays down a marker as the Johannesburg-based miner weighs listing in either London or Toronto. That may come as the company hives off its remaining South African operations, people familiar with the situation said in December.

Market Reaction

AngloGold shares fell 1% as of 09:56 in Johannesburg, paring their gain over the past 12 months to 45%. - Bloomberg

The dollar is firmer this morning, boosted by good employment numbers released on Friday. This morning we have the euro trading at 1.1445 and the pound at 1.3075.

The rand has retreated from last week's best levels and is at 13.3800 this morning. By 10:21, it was trading at R13.34.

US stocks closed relatively flat but Asian stocks are stronger as Trump’s positive comments around the trade talks as well as North Korea helped sentiment.

Trump may be meeting with Xi later this month to discuss the trade deal. US Treasury yields also closed higher on the back of the strong jobs numbers.

Markets will be interested in Trump’s State of the Union address tomorrow. Gold has slipped to $1 313.30 while Brent is up at $62.74.      

Asian markets rise 

Asian markets rose Monday as investors were cheered by a blockbuster US jobs report last week, while trade was thin owing to the three-day Lunar New Year break.

Expectations that the Federal Reserve will take its foot off the gas in raising interest rates and optimism that China and the United States will eventually hammer out a deal to resolve their long-running trade war were also providing support.

With most of the region closed this week for an extended holiday there are few catalysts to drive business, though dealers took heart from Friday's strong US non-farm payrolls numbers.

The world's biggest economy added 304 000 new posts in January, almost double what was expected and the strongest reading for almost a year, while growth in pay held steady above inflation. All three main indexes on Wall Street ended with gains and that filtered through to Asia.

Hong Kong added 0.3% in the morning, Tokyo went into the break 0.5% higher, Sydney climbed 0.5% and Singapore was up 0.2%.

Jakarta edged up but there were small losses in Wellington and Manila. Shanghai, Seoul, Taipei and several other markets were closed for the holidays.

Peter Wilmshurst, a portfolio manager at Templeton Global Equities in Melbourne, said 2019 could see a recovery in equities. "If we see some sort of inflection in economic growth stabilising, then people can have more confidence in earnings," he told Bloomberg TV. - AFP

UK says talks will go to wire as Nissan warns on Brexit doubts

The UK government is warning that Brexit negotiations are likely to go down to the wire, with the threat of a chaotic no-deal split casting a shadow over businesses right up to next month’s deadline.

“I’m afraid it’s inevitable that in these types of negotiations things do get decided close to the last minute - that’s when the maximum political pressure is,” Chief Secretary to the Treasury Liz Truss told BBC Radio 5 Live.

For businesses the stakes are getting higher every day. Nissan, who once viewed Britain as its gateway to Europe, is now citing growing uncertainty over Brexit in its decision to scrap plans to build a new model in the country.