Markets WRAP: Rand closes at R14.45/$, averaging between R14.45 and R14.79

The rand closed at R14.45/$ on Thursday afternoon, averaging between R14.45 and R14.79.  The rand firmed by as much as 2.17% at 16:19. This after the dollar fell the most since July.

The rand continued to rally on Thursday afternoon, firming by as much as 2.17% at 16:19. It was trading at R14.46 to the greenback, averaging between R14.46 and R14.79. This after the dollar fell the most since July, Bloomberg reported. TreasuryONE said earlier the weakening of the dollar had played into the rand's favour as it slid against the euro.

OVERVIEW: U.S. stock gains faded Thursday after a two-day rally, with investors assessing the latest manufacturing data and earnings before Apple reports after the close. The dollar fell the most since July.

The S&P 500 clung to its first three-day gains since September as it seeks to bounce back from the worst month in seven years. Carmakers slumped as October sales figures rolled in. Industrial firms held gains after manufacturing data disappointed. DowDuPont rallied the most since 2015 after posting strong earnings. The dollar slipped from a 16-month high, as the 10-year Treasury yield hovered around 3.16%. Sterling surged as the Bank of England signaled a faster pace of interest-rate increases.

Investors are looking for reasons to be positive after a tumultuous October, the worst month for global shares since May 2012. While risks abound from the likes of European politics and slowing Chinese growth, bulls are hoping some of the momentum garnered at the end of last month from firm U.S. economic data can be sustained. The focus turns to Apple Thursday, then to the monthly U.S. jobs report Friday.

In Europe, the Stoxx 600 Index advanced with telecoms and travel companies leading the way. While strong results from the likes of ING Groep NV helped buoy sentiment, not all the news was positive, with Royal Dutch Shell declining after profit fell short of expectations.

Elsewhere, oil extended a decline on reports of increased Russian output and gold jumped with emerging market assets. In China, the yuan rallied from the weakest level in a decade as the country’s leadership signaled that further stimulus measures are being planned. - Bloomberg

Share price slide for Sibanye

Sibanye Gold's [JSE:SGL] share price tumbled on Thursday following the release of its operating update the same morning, which showed adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) falling 40% to R1.6bn from R2.7bn a year earlier.

Production at its gold mines in SA also fell 24% from the previous year.

By 13:04, the share price had sunk 12.04% to R9.01, against a 52-week high of R19.78. By 14:37 Sibanye shares were changing hands at R9.40 a share, down 8.2% on the day. 

Grand Parade Investments adjourns AGM 

JSE-listed Grand Parade Investments announced on Thursday afternoon that it had adjourned is annual general meeting to a future date. 

In an update to shareholders, it said:

"Shareholders are referred to the general meeting which was held at 18h30 on Wednesday,31 October 2018 at the Samaj Centre, Balu Parker Boulevard, Athlone, Cape Town.

Shareholders are advised that at the request of the shareholders present at the meeting, the General Meeting was adjourned in order to, inter alia, allow for more information to be provided to shareholders in relation to the reasons for the proposed resolutions and the relevant non-executive directors' response thereto, before the proposed resolutions are voted on.

Shareholders will by tomorrow, 2 November 2018, be informed via SENS of the date, time and venue of the adjourned meeting."

Rand loses some steam, still up 1.4% against dollar

The rand, which earlier firmed by almost 2% against the dollar, lost some of its momentum in the early afternoon on Thursday. 

The local currency was still up 1.4% against the greenback, however. At 14:54 it was changing hands at R14.58/$. 

The JSE has suspended trading in Choppies securities following the company's failure to publish its audited financial statements timeously, the company said on SENS.

This follows the Botswana Stock Exchange also suspending trade in Choppies with immediate effect.

The financial statements were for the year ending June 30 2018.

In a note to shareholders, Choppies said, "The trading of the Company’s shares will remain suspended until it complies with the BSE Listing requirements, or until further notice. Consequently, Choppies’s trading status on both the BSE and the JSE shall be annotated with “S” to indicate the suspension from trading.

"Shareholders are referred to the announcement released on Friday, 27 September 2018 and are advised that the Company is still unable to determine when it will be in a position to publish audited financial statements for the year ended 30 June 2018. The Company’s primary listing is on the Botswana Stock Exchange and its secondary listing is on the Johannesburg Stock Exchange."

Choppies is a multi-national grocery and general merchandise retailer, headquartered in Botswana but also owns a centralised in house distribution network in SA, Zimbabwe, Zambia and Kenya.

The rand firmed by 1.6% on Thursday morning as the weakening of the dollar played into its favour.

Hussein Sayed, Chief Market Strategist at FXTM has echoed some of the earlier sentiment on global equity markets, which ended a scary October on a slightly brighter note following a rebound on Wall Street during the final two trading days of the month. 

Sayed wrote, "The Dow Jones industrial average rallied 933 points from Monday’s lows, the S&P 500 bounced more than 4%, and similarly the heavy Tech weighted Nasdaq composite bounced 5.5% after a 14.4% decline. 

"Robust corporate earnings and bargain hunting for undervalued stocks led the pullback, but the fundamental story hasn’t changed a lot yet.

"U.S. interest rates remain on the rise, trade tensions are not over, and global economic growth still looks weak.

"This will create a tricky environment for investors on whether to focus on the macro outlook or valuations which are becoming much more reasonable than a year ago.

"What investors may be certain about is for volatility to remain elevated especially with the U.S. midterm elections just around the corner. 

"Despite the rally in equities, the dollar rose to its strongest level in 16 months, reaching a high of 97.20 on Wednesday. The greenback was supported by a larger than expected ADP employment report showing the U.S. private sector payrolls increased by 227 000 in October, the highest in eight months.

"However, the greenback couldn’t hold its gains today as many major currencies reached significant support levels, particularly the euro. For the dollar to keep rallying, it requires Friday’s nonfarm payrolls report to beat economists’ expectations, especially on wages.

"If wage growth accelerates further the Federal Reserve may have no excuse to turn less hawkish, thus providing further push to U.S. Treasury yields.

"The pound rallied sharply today on reports that Theresa May had struck a deal with Brussels for British financial services companies to continue operating in European markets after Brexit. However, with the U.K. remaining far from striking an agreement to resolve the Irish border issue, the currency gains may quickly evaporate.

"Traders’ attention will turn to the Bank of England monetary policy decision today which is expected to keep interest rates on hold. While Marc Carney’s speech and the Quarterly Inflation Report may move the pound slightly, it’s still all about the Brexit deal that will decide the fate of the currency."

Andre Botha, Senior Dealer at TreasuryONE says, “The rand weakened to R14.85 yesterday on the back of a bullish US dollar some weak South African trade data and the effects of the Chinese Yuan depreciating against the US dollar. 

"Our first look is the US dollar, and with emerging markets under pressure and the US threatening more tariffs against China, we have seen the sentiment turn negative against EM's and investors moving into the US dollar. This has led the US dollar to strengthen to 1.1300 against the Euro and add further pain to the Rand.

"The trade balance that came out yesterday printed a small deficit when the expected number was slightly positive. This miss only increased the risk-off sentiment and the rand lost a bit of ground on the back of that.

"The main concern though for the rand is the contagion effect that it can feel from the Chinese Yuan sliding against the US dollar. China is one of South Africa's biggest trading partners and should things turn more negative in China, it will only be a matter of time before it spills into South Africa. 

"Looking at the rand this morning we have seen that the rand has clawed back some of its losses, as global stock markets have ended October on the front foot and this could boost risky assets again.

"However, seeing that the US dollar is the main driver of the rand at the moment, the PMI numbers and initial jobless claims out of the US could have a bearing on the rand movements today.”

By 10:21, the rand was trading by R14.62 to the greenback.

What are we waking up to?

The pound is sharply higher this morning on Brexit hopes while the euro is off yesterday’s lows. Turkey has announced tax cuts despite their runaway inflation problems and the lira has weakened. This has not fed through to other emerging markets yet and the rand is trading firmer at 14.7200 to the US dollar at present.

US stock markets closed higher, led by the Nasdaq which was up 2%. Asian markets have continued this rally in equities. Yields in the US continue to rise with the 10 -year now at 3.16%.

Oil fell sharply to $74.00, while gold is unchanged from yesterday. The market focus will be on tomorrow's jobs data out of the US.

- TreasuryONE

The rand, which started on the back foot closer to R17.80/$, has seen some early gains, strengthening 0.47% to R14.71 to the greenback.

Bianca Botes, Corporate Treasury Manager at Peregrine Treasury Solutions sees a bias towards the weaker end of the spectrum. She says US data in the afternoon could see the local currency stumble once more and expects the rand to trade between R14.64 and R14.82 to the dollar.

On Wednesday, trade balance figures disappointed, with South Africa recording a R2.9bn deficit.  This, coupled with a stronger global environment, saw the rand come under pressure, even trading above R14.80/$ during the US session.

The dollar reached a 16-month high yesterday as robust economic data continues to boost the greenback, says Botes. "With the rand trending toward euro performance, it is always interesting to see how a slump in the European common currency is reflected in the South African rand. The euro lost 2.5% against the dollar over the past month, to trade at its worst levels in five months.

"Additional pressures such as the increasing strain faced by the local government to service foreign debt obligations also took the spotlight yesterday following on from the mini budget," she says.

Latest currency moves

USDZAR    14.7221

EURUSD    1.1345

EURZAR    16.6938

GBPUSD    1.2850

GBPZAR    18.9084

AUDZAR    10.4872

CADZAR    11.1967

CNYZAR    2.1124

ZARJPY    7.6581

CHFZAR    14.6110

- TreasuryONE

Good morning, welcome to Fin24's Markets LIVE blog.

Here's a snapshot

The rand has seen some early gains, trading closer to R14.70 to the US dollar despite the greenback reaching 16-month highs on robust economic data.

Wall Street stocks rose solidly for the second straight session on Wednesday, easing the losses from a bruising month following good employment data and mostly solid earnings.

READ: US stocks gain for 2nd day, trimming October losses

In Asia, Hong Kong stocks surged on Thursday morning, extending the previous day's strong gains as investors welcomed a pledge by China's leadership to support the stuttering economy, reports AFP.

The Hang Seng Index jumped 1.84% to 25 439.97, having risen 1.60% on Wednesday. The Shanghai Composite Index jumped 1.13% to 2 632.22, building on the gains of more than 2% in the previous two trading days.

READ: Most Asian markets rally after a punishing October

Notable quotes

"Even after this morning's gains, global equity markets are left licking their wounds after a brutal month," XTB analyst David Cheetham told AFP.

"The question going forward now is whether the worst of it is over or if there's another wave of selling into year-end?"

Key figures around 02:30 GMT

Tokyo - Nikkei 225: Down 0.8% at 21 749.78 (break)

Hong Kong - Hang Seng: Up 1.5% at 25 361.66

Shanghai - Composite: Up 1.1% at 2 630.97

Euro/dollar: Up at $1.1331 from $1.1322 at 20:30 GMT

Pound/dollar: Up at $1.2845 from $1.2771

Dollar/yen: Down at 112.76 from 112.86

Oil - West Texas Intermediate: Down 31 cents at $65.00 per barrel

Oil - Brent Crude: Down 34 cents at $74.70 per barrel (new contract)

New York - Dow: Up 1.0% at 25 115.76 (close)

London - FTSE 100: Up 1.3% at 7 128.10 (close)