Markets WRAP: Rand closes at R14.44/$

The rand closed at R14.44 to the greenback on Monday afternoon.

The day's range was between R14.38 to R14.48.

TreasuryONE said earlier that the rand would most likely be a "bystander" to international events such as the ongoing US-China trade war.

"The only shining light for our local unit can be that our newly elected president, Cyril Ramaphosa announces a Cabinet later in the week that can really turnaround SA and the slippery slope we're on."

OVERVIEW: Stocks rose in Europe on Monday after markets traded mixed in Asia as investors mulled three weeks of global declines amid escalating US-China trade tensions. Core sovereign bonds in the European Union advanced after mainstream parties held their ground against populists in elections. The Euro Stoxx index climbed, helped by Fiat Chrysler’s proposed merger with France’s Renault, which drove up both carmakers’ shares.

US stock futures drifted. Italian bond yields jumped as the country was said to face a $4 billion fine over failure to rein in debt. The yuan steadied after a senior Chinese economic official said speculators "shorting the yuan will inevitably suffer from a huge loss". The yen fell as the US and Japan discussed a trade deal.

The euro held most of its gains from Friday, while the dollar rose against a basket of major currencies. With holidays in the UK and America on Monday, trading volumes could be lighter than usual. Investors are looking for signs of stabilisation after trade frictions and mixed economic data put global stocks on course for their first monthly decline of 2019.

On a visit to Tokyo, President Donald Trump said the US is making "great progress" in trade negotiations with Japan even though a deal could come only after the country’s elections in July. At the same time, he said America isn’t ready to make a trade deal with China.

"There was a lot of speculation about an early US-China trade deal," Paul Donovan, chief economist at UBS Global Wealth Management said in a research note. "The problem now is that while individual deals are helpful, the general uncertainty created by trade taxes is creating economic damage."

Elsewhere, Brent oil futures turned higher. Iron ore continued its rally in Singapore, on concern there’s a global shortage in the seaborne market. And Bitcoin climbed to the highest level in a year, after surging almost 70% this month.

These are the main moves in markets:

Stocks

The Euro Stoxx Index climbed 0.2% as of 09:41 New York time. Futures on the S&P 500 Index declined 0.1%. The Shanghai Composite Index increased 1.4%, the largest climb in more than a week. The MSCI Asia Pacific Index advanced 0.2%. The MSCI Emerging Market Index climbed 0.2%. 

Currencies

The Bloomberg Dollar Spot Index gained 0.2% to 1,204.60. The euro declined 0.1% to $1.1189, the largest fall in more than a week. The British pound dipped 0.3% to $1.2673. The onshore yuan gained less than 0.05% to 6.899 per dollar. 

Bonds

Germany’s 10-year yield fell three basis points to -0.14%, the lowest in almost three years. France’s 10-year yield declined two basis points to 0.26%, the lowest in more than two years. Italy’s 10-year yield climbed six basis points to 2.614%, the biggest increase in more than two weeks. 

Commodities

Brent crude increased 0.5% to $69.01 a barrel. Iron ore advanced 0.4% to $105.70 per metric ton. Gold gained 0.1% to $1,286.42 an ounce. - Bloomberg

The rand received a boost from the EU election results, Peregrine Treasury Solutions's Bianca Botes said on Monday while all eyes are still on President Cyril Ramaphosa and his Cabinet announcement later this week.

By 10:54, the rand was changing hands at R14.44 to the greenback.

"The rand has received some assistance from the euro this morning, which has rebounded from a two-year low as EU parliament election results indicate that a pro-European Union majority remains.

"There is no critical data due for release today, as the US celebrates Memorial Day and UK businesses close for the spring bank holiday. 

"Larger focus remains on the US/China trade dynamic, with emerging markets remaining under pressure," she said.

The rand was expected to trade between R14.32 and R14.48 for the day.

Asian stocks mixed; euro steady after EU elections

Adam Haigh and Andreea Papuc, Bloomberg

Stocks in Asia kicked off Monday in mixed fashion as investors mulled three weeks of declines after the escalation in US-China trade tensions.

The euro held onto gains after mainstream European Union parties held their ground against populists in elections.

Shares rallied in China, edged higher in Japan and were little changed in Hong Kong. European equity futures gained after the elections, though with holidays in the UK and US Monday, trading volumes could be lighter than usual.

The yuan steadied after one of China’s senior-most economic officials said that speculators “shorting the yuan will inevitably suffer from a huge loss.” 

The comments come just as pressure on the currency mounts amid the trade tensions and softening economic growth. The yen declined as the US and Japan discussed a trade deal.

Traders are looking for signs of stabiliSation after trade frictions and mixed economic data sent global stocks toward their first monthly decline of 2019.

On a visit to Tokyo, President Donald Trump said the US is making “great progress” in trade negotiations with Japan even though a deal could come only after the country’s elections in July.

“The trade conflict and the resent escalation is definitely putting downward pressure on the economy” in China, Tuuli McCully, head of Asia Pacific economics at Scotiabank in Singapore, told Bloomberg TV. “It’s starting to impact business confidence more broadly.”

Elsewhere, the pound extended Friday’s gain. UK Chancellor of the Exchequer Philip Hammond refused to rule out backing a no-confidence motion against the government if the next prime minister tries to force a no-deal Brexit on Parliament.

And Bitcoin climbed to the highest level in a year, with its recent rally giving it a gain of almost 70% for the month.