Markets WRAP: Rand closes at R13.88/$

The rand closed at R13.8869/$ after falling by more than 1% on Wednesday afternoon. The day's closing indicators:

USDZAR 13.8869

EURUSD 1.1296

EURZAR 15.6788

GBPUSD 1.2903

GBPZAR 17.9094

AUDZAR 9.8802

CADZAR 10.4929

CNYZAR 2.0520

ZARJPY 7.9719

CHFZAR 13.7917

R186 8.90%

US 10 Year 2.71%

JSE 1.03%

FTSE 0.90%

S&P 500 0.53%

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Gold 1 313.12 

Plat 786.50 

Plad 1 406.00 

Rhod 2 555.00 

Irid 1 470.00 

Ruth 268.00 

Copp 6 120.00 

Brent 63.53 

Gold ZAR 18 226.11 

Plat ZAR 10 916.62

 Brought to you by TreasuryONE

The rand fell by more than 1% on Wednesday afternoon. By 16:04, it was changing hands at R13.90. The day's range so far was between R13.70 to R13.90. It had weakened by 1.25%.

TreasuryONE's Andre Botha said earlier that it was clear that there were opposing forces in the market at the moment, which could lead to "very choppy trading in the short to medium term".

"While the sentiment is slightly in favour of the rand pulling back a little this morning, the dark clouds are still hovering and the rand could follow its own lead during the day,” he said.

Heineken, the world’s second-largest brewer, reported full-year earnings that beat analysts’ estimates, helped by the fastest sales growth of its namesake brand in a decade.

Adjusted operating profit rose 6.4% on an organic basis to 3.87 billion euros ($4.4 billion) in 2018, beating the average analyst estimate of 3.84 billion euros. Full-year beer volume rose 4.2% on an organic basis, the Dutch company said.

Analysts expected 4% growth.

Key Insights

The rise of low- and no-alcohol beers is increasing demand for Heineken 0.0, helping the brewer’s flagship brand boost volumes 7.7%. Heineken was also helped by acquisitions in countries such as Mexico that helped distribution, Chief Executive Officer Jean-Francois Van Boxmeer said in a phone interview. One driver of gains was Brazil, where Heineken became the second-largest brewer in 2017 when it bought Kirin Holdings’s business there. Other markets that had double-digit growth included South Africa, Russia and the UK. Higher input costs have hampered consumer-goods companies reporting this quarter, including Unilever and Carlsberg.

Heineken reported that profit growth was partly due to running its business more efficiently as commodity expenses rise. The company forecast mid-single-digit growth in operating profit this year as it tries to manage those costs.

Market Reaction

The stock rose as much as 4.4% in Amsterdam. The shares have gained 10% over the past month. - Bloomberg

Sanlam has announced the appointment of new members to its executive committee.

In a SENS announcement, it said Sydney Mbhele will join Sanlam in the position of Chief Executive: Brand effective April 1, Jeanette Modise will take up the position of Chief Executive: Human Resources with effect from July 1 and Thinus Alsworth-Elvey will join the Group as Chief Executive: Special Projects with effect from April 1.

Group CEO, Ian Kirk, said, “These appointments will bring increased diversity to the Group and they affirm that our commitment to transformation is both at business and at executive level."

Andre Botha, Senior Dealer at TreasuryONE said there are still "dark clouds" hovering over the rand in light of Eskom's load shedding while President Donald Trump has injected some volatility in the market.

By 11:27, the rand was changing hands at R13.79 to the greenback.

“If all else fails, leave it to President Trump to inject some volatility in the market. We have seen that President Trump has stated that he is willing to extend the 1 March deadline should they be within arm’s reach of agreeing on a trade deal.

"This has snapped the US dollar rally and we have seen the USD back above the 1.13 level against the Euro after trading close to the 1.1250 level earlier yesterday.

"Obviously, this has a positive effect on riskier assets and we have seen Asian Markets jumping on this news and are all trading in the green.

"However, we heard on the wire that S&P yesterday stated the ruling party's policies are credit negative. Against this backdrop and the Eskom load-shedding debacle, we have an upcoming budget speech next week.

"It is clear that there are opposing forces in the market at the moment and this could lead to very choppy trading in the short to medium term.

"While the sentiment is slightly in favour of the rand pulling back a little this morning, the dark clouds are still hovering and the rand could follow its own lead during the day.”

The rand is trading at R13.73 to the greenback.

TreasuryONE said in a morning note to clients, "The dollar is softer across the board as risk-on sentiment picked up in Asian markets this morning after President Trump said he is willing to extend the 1 March deadline if they were close to a deal.

"The Volatility Index, which is seen as the “fear gauge”, dropped to its lowest point in over four months (14.95) last night and with stocks in the US also receiving a welcome reaction to the risk-on phase the Dow Jones and S&P ended the day over 1% stronger.

"Japan’s Nikkei and the Shanghai Composite also both closed higher around 1.41% and 0.4% earlier today. The positive 8-day run on the dollar index came to a halt as a result of the above and allowed for some breathing room on the currency front. 

"EURUSD bounced off yesterday’s lows around 1.1260 and EM’s ended the day on the front foot.  ZAR at the moment testing around 13.70 after reaching a high of 13.84 yesterday with the local stock exchange also closing higher in the territory of around 1%."

Meanwhile Peregrine Treasury Solutions's Bianca Botes said the marginal decrease in local unemployment figures went unnoticed by the local currency as the market barely flinched.

"The dollar is finally taking a breather after continuously edging higher against all currencies over the past week, after President Trump alluded to a potential extension of the deadline for a trade agreement with China. 

"Key December local retail sales, due for release today, are expected to show a slight decline after the November figure surprised to the upside.

"US CPI and real earnings data will set the tone for the dollar as we head into the US trading session this afternoon.

Botes said the day's range for the local unit was expected to be between R13.70 to R13.85.

Curro [JSE:COH] announced in a note to shareholders on Wednesday morning that it had boosted learner numbers and increased revenue for the year ended December 31, 2018. 

"For the period ended 31 December 2018, learner numbers increased by 12% from 45 870 to 51 305, increasing revenue by 19% from R2 099m in 2017 to R2 496m," it said. 

Headline earnings per share from continuing operations increased 23% from 49.0 cents to 60.1 cents.

The independent schools and education group announced a maiden dividend of 12c per share from income reserves. 

Asian shares rise as Trump boosts US-China talks - AFP

Asian stocks climbed Wednesday as US President Donald Trump said he could extend the deadline for a trade deal with China, appearing to boost the prospects of an agreement.

Trump said "things are going well" at preliminary talks in Beijing, where top economic officials will gather Thursday seeking an accord to stop sharp US tariff hikes that could damage the global economy.

"If we're close to a deal, where we think we can make a real deal ... I could see myself letting that slide for a little while," the US president said of his March 1 deadline.

He added that he expects a meeting with counterpart Xi Jinping to happen "at some point". The comments all improved market sentiment on the likelihood of a deal to prevent US tariffs on $200 billion in Chinese imports more than doubling next month.Washington is demanding changes from Beijing on what it says are unfair commercial practices.

Tokyo added 1.5%, Hong Kong rose 0.4% and Shanghai gained 0.2% on the news, following Wall Street's lead. However, some analysts struck a cautious tone, noting that much work needs to be completed before a framework agreement is in reach.

"The rally in stocks has been based on hope rather than any concrete agreements overnight," warned Oanda senior analyst Jeffrey Halley, predicting short-term volatility to come as headlines emerge from Beijing.

Sydney shed 0.3%, with calls for a snap election amid political tensions over refugees adding to underwhelming corporate earnings and subdued metal prices.

Nonetheless, renewed global investor confidence saw a movement away from the greenback, which has enjoyed a strong rally in the past week, to riskier currencies. - AFP

Momentum Corporate CEO to step down

MMI Holdings announced on Wednesday morning that Thinus Alsworth-Elvey, the chief executive of Momentum Corporate, tendered his resignation effective March 31, 2019.

"The process to appoint a successor will commence immediately," the MMI group said in a note to shareholders.

It did not say why Alsworth-Elvey was resigning. MMI holdings is set to publish its interim results on March 8. 

Load shedding to continue Wednesday 

Eskom will continue with stage 3 load shedding on Wednesday between 08:00 and 23:00 as it continues to battle capacity shortages.

The power utility said in an early morning statement that a number of generating units were still out of service due to breakdowns.