Markets WRAP: Rand closes at R13.93/$

The rand closed at R13.93 to the greenback on Thursday afternoon.

The day's range was between R13.85 and R13.99.

Bonang Mohale steps down from ACSA board

Bonang Mohale, former CEO of Business Leadership South Africa, has also resigned from the board of Airports Company South Africa  as a non-executive director.

Mohale's resignation is with effect of July 1, 2019, ACSA said in a notice to its bondholders. 

Talks with US to restart on basis of equality, China says

Bloomberg

China said trade negotiations with the US will restart, while stressing that its core concerns need to be addressed.

“The trade teams in the two nations will restart trade negotiations on a basis of equality and mutual respect, following the consensus agreed by their two state leaders in Osaka,” Gao Feng, a spokesman for the Ministry of Commerce, said on Thursday at a press conference.

The remarks signal that the lead negotiators from the world’s two biggest economies may soon get back to the negotiating table after talking via phone earlier this week. That call was the first confirmed contact since President Xi Jinping and President Donald Trump met last month and agreed to resume talks.

Gao didn’t say when the negotiations would be held, but said he hoped the US would implement its commitments with regards to Huawei, the Chinese company on an American blacklist, which restricts its access to products originating in the US.

Gao’s remarks indicate that the two sides are now preparing for the next round of negotiations, according to Zhou Xiaoming, a former Mofcom official and diplomat.

“A phone call is not an official restart of negotiations but rather a preparation. It seems the two sides are arm-wrestling about the basis on which they’ll resume talks, as well as when and where,” Zhou said.

US equity futures climbed alongside stocks in Europe and Asia as investors cheered fresh signs from central bankers that rates are headed lower. Treasuries were steady, while the dollar declined. Contracts on the main US gauges gained a day after the S&P 500 briefly topped 3 000 for the first time on signals that Federal Reserve Chairman Jerome Powell is willing to lower rates, citing a slowing global economy and trade issues.

The Stoxx Europe 600 Index headed for the first advance in five days, spurred by energy companies as crude rallied. Shares rose across most of Asia with the South Korean and Hong Kong markets outperforming and stocks in China edging higher.

Emerging-market stocks climbed along with currencies, while the pound continued its rebound from a two-year low. European government bonds were mixed.

Citigroup says Fed rate cuts may drive two-year Treasury yields to 1%. This year’s rallies across stocks, bonds and credit got a fresh jolt on Wednesday thanks to comments from Fed Chairman Powell that persuaded investors rates are headed lower by at least a quarter-point in July.

Minutes from the central bank’s last meeting further cemented expectations for a cut in borrowing costs. Traders will be eyeing ECB minutes and Powell’s testimony before the Senate Banking Committee on Thursday for further clues.

“There has been a total shift in monetary policy - quantitative tightening is off the table and we’re back to some mild form of quantitative easing or stable central bank balance sheets,” said Timothy Moe, chief Asia-Pacific equity strategist at Goldman Sachs. “That’s very supportive for equities.”

Elsewhere, oil extended gains on crude output cuts ahead of a potential hurricane in the Gulf of Mexico.

Here are the main moves in markets:

Stocks

Futures on the S&P 500 Index gained 0.2% as of 07:24 New York time, the highest on record.The Stoxx Europe 600 Index rose 0.2%, the first advance in a week and the biggest advance in more than a week. The Shanghai Composite Index climbed 0.1%.The MSCI Emerging Market Index gained 0.7%, the biggest rise in more than a week.

Currencies

The Bloomberg Dollar Spot Index declined 0.2%, the lowest in a week. The euro increased 0.2% to $1.1269, the strongest in a week. The British pound increased 0.4% to $1.2558, the strongest in a week on the largest climb in three weeks. The onshore yuan climbed 0.1% to 6.865 per dollar, the strongest in more than a week.The Japanese yen rose 0.3% to 108.14 per dollar, the strongest in a week.

Bonds

The yield on 10-year Treasuries decreased less than one basis point to 2.06%. The yield on two-year Treasuries declined two basis points to 1.81%, the lowest in a week.

Commodities

West Texas Intermediate crude gained 0.3% to $60.60 a barrel, reaching the highest in seven weeks on its sixth straight advance.Iron ore fell 1.4% to $113.07 per metric ton. Gold decreased less than 0.05% to $1,418.91 an ounce. - Bloomberg

Asian stocks rise, rand firms as rate-cut bets mount

Cormac Mullen and Laura Curtis

European equities climbed alongside US futures and Asian stocks as investors cheered fresh signs from central bankers that rates are headed lower.

Treasuries rose and the dollar fell.

The Stoxx Europe 600 Index advanced, with energy companies leading the way as crude oil prices surged. US futures climbed after the S&P 500 briefly topped 3,000 for the first time Wednesday as Federal Reserve Chairman Jerome Powell signalled a willingness to lower rates, citing a slowing global economy and trade issues.

Shares rose across most of Asia with the South Korean and Hong Kong markets outperforming, though stocks in China pared gains as the session progressed. The yield on 10-year Treasuries slipped to 2.05%.

Rand strengthens 

The rand strengthened to under R14/$ overnight after Fed Chairperson Jerome Powell hinted the bank may be preparing to cut interest rates.

"[Powell] surprised markets with an unexpectedly dovish address to congress [on Wednesday], following the solid employment data from the economy," said Bianca Botes of Peregrine Treasury Solutions in a morning note to clients. 

"The testimony quickly saw the rand strengthening by close to 0.8% in the afternoon, with the rally continuing in the overnight session to break below R14.00/$."

The local currency was trading at R13.95 at 08:15 on Thursday morning, its strongest level since late April 2019. 

"The rand is likely to lean towards more strength with the R13.80/$ level now becoming a realistic target."