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Markets WRAP: Mining production tumbles, rand slightly weaker

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18 Oct 2018

The rand ends the day weaker, mining production tumbles

The rand ended the day 0.60% weaker at R14.33 to the dollar.

The local currency which benefited from the emerging market rally the day before, opened weaker at R14.26 to the greenback on Thursday morning.

This was on the back of the release of the US Federal Reserve Bank's September meeting minutes – which revealed US officials had debated raising rates to prevent inflation, RMB economist Mpho Tsebe said in a market update.

The rand's trade ranged between R14.17 and R14.35.

Later during the day Statistics SA (StatsSA) released the mining production data for August, which tumbled by 9.1%, year-on-year (YoY). The largest negative contributors were iron ore (down 19.9%), gold (down 15.5%) and platinum group of metals which decreased 7%.

Tsebe said that the mining data would be a key indicator of third-quarter GDP growth.

Statistics SA (StatsSA) also released selected building data of the private sector, which showed a "moderate lift" of 6.2% YoY for August in building plans passed, according to Investec economist Lara Hodes.

"However the year to date reading indicates that building approvals are down 1.3% YoY," said Hodes.

Market closing indicators from TreasuryONE:

USDZAR 14.3281

EURUSD 1.1492

EURZAR 16.4584

GBPUSD 1.3064

GBPZAR 18.7082

AUDZAR 10.2132

CADZAR 10.9886

CNYZAR 2.0637

ZARJPY 7.8379

CHFZAR 14.3851

R186 9.17%

US 10 Year 3.19%

JSE -0.68%

FTSE 0.13%

S&P 500 -0.31%

Gold 1 225.96 

Plat 829.20 

Plad 1 078.00 

Rhod 2 480.00 

Irid 1 450.00 

Ruth 263.00 

Copp 6 146.00 

Brent 79.51 

Gold ZAR 17 556.85 

Plat ZAR 11 874.89 

18 Oct 2018

US stocks fall, dollar rises amid trade tensions

US stocks slumped for a second day as investors continue to grapple with rising Treasury yields at the same time the Trump administration’s trade war with China adds to concern over global growth. The dollar rose.

The S&P 500 fell back below 2 800 and the Cboe Volatility Index popped above 18 as equities remained on uneven footing following last week’s sell-off.

Earnings dictated the biggest individual moves, with Textron sliding the most in the benchmark after disappointing results. Philip Morris surged, while Sealed Air tumbled after citing rising costs for weak profits. The weakness in American stocks comes after China sank overnight, bringing losses in its major benchmark to 30% since January highs. European shares were mixed.

FULL STORY

18 Oct 2018

Implants announces results of AGM - no surprises

Platinum miner Implats has released the results of its sixty-second annual general meeting. There appeared to be no surprises, with all major resolutions passed. 

Find a link to the AGM results from a link on the Implats website below:  

Results of Implats AGM in PDF form

18 Oct 2018

Solidarity claims its Sasol strike has reduced fuel production 

Trade union Solidarity claimed on Thursday that its strike at Sasol had reduced fuel production. 

This after Sasol, in its production and sales metrics for the three months ended 30 September 2018, noted that a planned shutdown of its Secunda plant had taken longer than expected. 

"In Secunda, the planned full shutdown at our Sasol Secunda Operations West factory was longer than estimated mainly due to technical issues with the Steam Header 2 project and challenges with start-up which further delayed the commissioning date.

"The extended shutdown impacted our production and sales volumes across the value chain. We are however confident that we will achieve our planned production targets for the remainder of the year. The longer shutdown will result in annual production guidance reducing to 7.5 – 7.6 million tons."

Sasol did not refer to the strike by Solidarity members in its statement. The energy and chemical noted said it had benefitted from higher Brent crude oil and product prices during the quarter and a weaker average rand exchange rate against major currencies.

"We have seen higher productivity across most of our operations with an increased focus on safety, margins and cost control," said Sasol. 

But trade union Solidarity, in a statement, said the delay in the maintenance project at Secunda was a "direct consequence of Solidarity’s strike at Sasol". 

"A mandate by Solidarity members yesterday at three mass meetings, that Solidarity should increase the pressure on Sasol, will increase the uncertainty even further,” said Solidarity Chief Executive Dr Dirk Hermann in a statement. 

 Read one of Fin24's previous articles on the strike below: 
No agreement at CCMA between Solidarity and Sasol

18 Oct 2018

Rand still steady against the greenback 

Just after 14:00 on Thursday, the rand was still trading level against the dollar. The local currency has been in a tight band all day. At 14:20, it was changing hands at R14.25/$, after opening at R14.24/$. 

18 Oct 2018

Bloomberg on emerging markets carry 

While carry traders in emerging-market have had a good run this month, it may be too soon to conclude the rout is over. A Bloomberg currency index that measures carry-trade returns from eight emerging markets, funded by short positions in the dollar, has climbed 3.4% in the eight days through Tuesday, the longest winning streak since July last year.

Expected price swings in developing-nation currencies sank to a three-month low, despite volatile trading in US bonds and stocks in October, according to a JPMorgan Chase & Company index.

“One should be careful declaring that we are witnessing a sustainable revival of EM carry trade,” said Piotr Matys, a currency strategist at Rabobank in London. “This is a short-term recovery generated by specific domestic factors at the time when the external backdrop is likely to remain challenging for the EM.”

EM carry is on a roll, but it's too early to say rout is over

18 Oct 2018

Rand still level at noon 

Just after noon the rand was still trading level against the greenback. The local currency, which opened at 14.24/$ on Thursday morning, was changing hands at 14.22/$ at 12:13, up 0.13% on the day. 

18 Oct 2018

Mining production falls again 

Stats SA has announced that mining production decreased by 9.1% year-on-year in August 2018.

The largest negative contributors were iron ore, which decreased -19.9% year-on-year, and gold, which deceased -15.5%.

Mining production down 9.1% for August

18 Oct 2018

Mining statistics set for release

SA mining production statistics for August are set to be released by Stats SA on Thursday morning. The release was delayed by a week after data was not submitted in time. 

NKC African Economics,  in a morning note to clients, projected that overall production would fall by 7.3% year-on-year. 

Mining production fell by 5.2% in July 2018 when compared to July 2017, with major dips in gold and iron ore, and smaller dips in coal and platinum group metals.

18 Oct 2018

Barry Dumas, of GT247.com, says in a morning note to clients that the FOMC has signalled its intention to hike rates again before the year end. This may, in turn, put pressure on the rand. 

"The US Federal Open Market Committee released its meeting minutes on Wednesday evening. The minutes offered some interesting insights to the stance of the committee on its monetary policy moving forward.

The committee seems to be in an agreement on the current gradual path of rate increases and signalled its intention to hike rates again before the year end. The big picture –an increase in the US interest rate - might have a positive effect on the US dollar. Dollar strength will put pressure on emerging markets, so we can expect the rand to depreciate if the dollar starts to strengthen.

Minutes of the Federal Open Market Committee, September 25-26, 2018

18 Oct 2018

The rand is trading at 14.25/$ at 09:35, level for the day. 

18 Oct 2018

Bloomberg reported this morning that South Africans aren’t the only ones struggling through the country’s economic slump.

"South Africans aren’t the only ones struggling through the country’s economic slump. The fortunes of Lesotho, Namibia, and Eswatini - formerly known as Swaziland - are beholden to developments in their larger neighbour with their exchange rates pegged to the rand, the worst-performing major currency against the dollar this year. 

South Africa slump batters smaller neighbours protecting rand peg

18 Oct 2018

Allied Electronics Corporation Limited, better known as Altron, announced in an update to shareholders on Thursday morning that its CFO had stepped down: 

"Shareholders are advised that Mr Tim Jacobs has resigned as acting Chief Financial Officer of Altron to assume a permanent CFO role at a multinational group, as from 19 October 2018. Mr Andrew Holden, the current Chief Operating Officer of Altron will assume the joint role of COO and acting CFO on 19 October 2018. Mr Holden has extensive experience in the ICT sector, having been with the Altron group for the past 24 years.

18 Oct 2018

Mr Price has announced that its CEO will be retiring at the end of 2018. In a update to shareholders, the group said: 

"Stuart Bird, who has been Chief Executive Officer of the Group since August 2010 and an executive director since September 2006, will be retiring as CEO on 31 December 2018 and as an executive director at the end of March 2019, shortly before turning 60 years of age, as has been anticipated by the Group’s board of directors.

After a thorough succession process the Board has appointed Mark Blair (51) currently Group Chief Financial Officer as the incoming CEO, effective 1 January 2019.

Mark joined the Group as an executive director in 2006 and has held the office of CFO since 2007.

Chairman, Nigel Payne, paid tribute to Stuart Bird: 'Stuart's 25 year career with Mr Price, and particularly the past decade under his leadership as CEO, has seen the Group grow into one of the top performing retailers in Southern Africa, with a market capitalisation of over R60 billion.

Over the eight years of Stuart’s leadership earnings have grown at a compound rate of18.8%. Stuart's success has been as a consequence of focusing on our customers andensuring we provide the products that appeal to them. He has also taken key steps to create the infrastructure and capabilities upon which our future success will be built' he said.

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