25 Oct 2018
25 Oct 2018
OVERVIEW: U.S. stocks opened higher, led by gains in technology shares, in the wake of Wednesday’s rout that wiped out this year’s gains in the benchmark indexes.
Strong earnings results from Twitter, Microsoft and Tesla helped push the S&P 500 Index into positive territory. Intel, Amazon and Alphabet all report after the close.
Europe’s single currency fluctuated against the dollar as the ECB said it still intended to cap its bond-buying by year-end. The sentiment was darker in Asia, where shares headed lower for a third day, with Japan’s Topix index falling to the lowest in more than a year.
Oil advanced from a two-month low. Sentiment has been tested in October, with global stocks poised for their worst month in more than six years as the effects of trade tensions and geopolitical uncertainty begin to bite.
Investors remain apprehensive as a flood of earnings, while mostly stellar, have come with warnings about the future impact of tariffs and rising costs.
Central banks remain in the spotlight, with investors speculating what, if any, impact the market uncertainty will have on policy decisions.
“What makes the latest volatility more troubling is that it’s been difficult to identify one specific cause,” Kerry Craig, global markets strategist at JPMorgan Asset Management, wrote in a note. “Meanwhile, central banks will continue to get top billing as the Fed pushes on with normalising interest rates and the ECB is set to end its bond purchase scheme by year end. ”The euro fluctuated after European Central Bank President Mario Draghi downplayed recent slowdown in economic momentum and Italian fiscal risks, reiterating that growth is returning to potential. - Bloomberg
25 Oct 2018
Bloomberg reports that an equities rout that wiped out the year’s gains in U.S. stocks took a breather Thursday, as futures advanced with European shares, even as Asia gauges extended declines. The euro climbed ahead of a European Central Bank policy meeting.The Stoxx Europe 600 Index erased an earlier loss as carmakers rose, and futures on the S&P 500 Index also gained, with positive results from Tesla brightening the mood. The sentiment was darker in Asia, where shares headed lower for a third day, with Japan’s Topix index falling to the lowest in more than a year. Treasuries declined while European bonds climbed before the ECB gathering in Frankfurt, where the outlook for the euro-zone economy will be scrutinised. Sentiment has been tested in October, with global stocks poised for their worst month in more than six years as the effects of trade tensions and geopolitical uncertainty begin to bite. Investors remain apprehensive as a flood of earnings, while mostly stellar, have come with warnings about the future impact of tariffs and rising costs. Central banks are also in the spotlight, with investors speculating what if any impact the market uncertainty will have on policy decisions.
“What makes the latest volatility more troubling is that it’s been difficult to identify one specific cause,” Kerry Craig, global markets strategist at JPMorgan Asset Management, wrote in a note. “Meanwhile, central banks will continue to get top billing as the Fed pushes on with normalizing interest rates and the ECB is set to end its bond purchase scheme by year end.”Elsewhere, the pound climbed with Brexit negotiations in the balance, and oil held near the lowest in two months after inventories rose. Emerging market currencies and stocks slid.
25 Oct 2018
25 Oct 2018
PPI eases to 6.2%
The annual percentage change in the producer price inflation for final manufactured goods decelerated to 6.2% in September 2018, from 6.3% in August.
Analyst expected PPI to ease to 6.0% y-o-y.
On a monthly basis the PPI for final manufactured goods increased by 0.5%.
25 Oct 2018
October effect in full swing as stock markets bleed
October has been a terrible month for equity investors so far, with equity markets across the globe suffering losses.
Hussein Sayed, Chief Market Strategist at FXTM said the selloff in US equities seems shocking given the robust earnings season.
His comments follow after the S&P 500 and Dow Jones Industrial Average fell into negative territory for the year after yesterday’s steep declines. The Nasdaq composite entered into a correction territory of "more than 10% fall from the peak" but remained 2.9% higher year-to-date.
"Given the current environment, it's hard to say when the drama in equity markets will be over. Investors are selling first and evaluating later. Currently, the risks remain to the downside as further selloffs will trigger margin calls leading to further drops."
Sayed said what seemed to be profit taking in the beginning of the month started looking like panic selling with the volatility index ’VIX‘ more than doubled this month.
According Sayed one-third of S&P 500 companies have announced their Q3 results, showing 25.4% Y-o-Y growth. "This is more than double the historical average, but still, it’s not helping the bulls fight back.
"Investors do not seem to be taking their decisions based on the present numbers, but they’re looking into the future. The forecast for next year’s earnings shows they are expected to decelerate to half of this year’s rate, and analysts are likely to continue downgrading their expectations," he said.
Sayed said the macro environment is not helping either. "We have the Fed continuing to tighten monetary policy, Europe’s economy is clearly slowing down with yesterday’s composite flash PMI falling to a 25-month low, and lots of uncertainty in China, the UK, and Italy.
"While the US economy seems to be the only one firing on all cylinders, yesterday’s home sales data may indicate that we have reached the peak of the current economic cycle."
New home sales in the US fell to a two-year low in September as higher prices and mortgage rates began to hit demand.
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The October effect is a theory that stocks tend to decline during the month of October. The October effect is considered mainly to be a psychological expectation rather than an actual phenomenon as most statistics go against the theory. Some investors may be nervous during October because the dates of some large historical market crashes occurred during this month. - Investopedia
25 Oct 2018
European stock markets slid at the open on Thursday, though losses were not as sharp as in Asia or overnight on Wall Street, as traders await policy updates from the European Central Bank.
London's benchmark FTSE 100 index dropped 0.8% to 6 907.60 points.
In the eurozone, Frankfurt's DAX 30 index shed 0.8% to 11 098.68 points and the Paris CAC 40 lost 0.4% to 4 933.95.
- AFP
25 Oct 2018
JSE tracks global stock bloodbath
The Gold Mining Index was among a few lifeboats floating in a sea of red as the JSE tracked a global stock meltdown.
By 10:00 the JSE All-share and Top-40 indices were both 0.63% at 50 555 points and 44 387 respectively, while Resources, Industrials and Financials all clocked losses.
The Gold Mining index 1.89% to 1 233 points.
On the global front, Asian markets went into freefall on Thursday, tracking a plunge on Wall Street, with trading floors awash with negativity on geopolitical concerns and following weak US economic and earnings data, reports AFP.
READ: Asian markets bleed on trade, geopolitical fears
In Australia, the leading share index tanked, wiping out this year's gains as traders tracked a global sell-off, with financial services giant AMP plunging almost 25%.
The rout follows a sell-off on Wall Street, which saw the S&P 500 now having dropped around 8% in the last month.
25 Oct 2018
PPI, US jobless numbers to direct markets
Local PPI as well as US jobless claim figures will drive the rand during trade this afternoon, says Peregrine's Bianca Botes.
Seeing the local unit leaning towards testing R14.68 to the greenback, Botes said the rand is expected to remain under pressure as the US dollar also managed to gain some ground in overnight trade as poor Wall Street performance and weak Eurozone data bolstered the greenback.
Her expected range for to today is between R14.50 to R14.68 against the US dollar.
NKC Africa Economics expects SA’s producer inflation rate to decelerate to 6.0% y-o-y in September from 6.3% y-o-y in August.
On the international data front, NKC estimates that US durable goods orders declined 0.6% m-o-m in September following a 4.6% jump in the previous month. More importantly, core orders (non-defense capital goods excluding aircraft) probably fell for a second consecutive month, down 0.2% after a 0.9% decline in August.
NKC sees the rand trading between R14.45/$ - R14.75/$.
25 Oct 2018
What are we waking up to?
The medium-term budget speech provided volatility yet again as the ZAR weakened from 14.20 to around 14.55 during the course of yesterday afternoon and is currently still hovering around this mark after touching R14.63 against the greenback earlier in the session.
The R186 yield weakened to its highest level this year with government’s latest debt projections painting an unattractive picture and the benchmark bond now yields 9.38%.
Equities in the US and Asia saw another sell-off and the rout continued into the Asian markets earlier today. The recent slump has now seen the S&P 500 drop around 8% in the last month, much to the benefit of gold who in return has been trading stronger as safe haven play assists the commodity.
The EUR is still under pressure since the EU rejected the Italian budget.
Exchange rates at 06:30:
USDZAR 14.5520
EURUSD 1.1405
EURZAR 16.5897
GBPUSD 1.2883
GBPZAR 18.7379
AUDZAR 10.2947
CADZAR 11.1676
CNYZAR 2.0945
ZARJPY 7.6925
CHFZAR 14.5870
- TreasuryONE
25 Oct 2018
Debt projections may concern ratings agencies -Bloomberg
The rand weakened the most among emerging-market peers on Wednesday and bond yields climbed to the highest this year as the government’s latest debt projections increased the probability of a credit-rating downgrade that would move South Africa’s local-currency debt into junk status.
In his medium-term budget policy statement, Finance Minister Tito Mboweni said government debt will peak two years later, and higher, than previously forecast, the fiscal gap will widen further and state revenue will continue to undershoot.
The news is likely to weigh on rating companies including Moody’s Investors Service, which delayed reviewing the country’s debt rating earlier this month. Moody’s is the only one of the three major rating firms to assess South Africa’s debt at investment level.
25 Oct 2018
Rand weakens in early trade
The local currency, which lost over 2% against the dollar on Wednesday in the wake of new Finance Minister Tito Mboweni's maiden mini budget speech, was trading 0.23% weaker against the greenback at 08:17.
It opened at R14.56/$ and was changing hands at R14.60 at 08:17.