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Markets WRAP: Rand and emerging market currencies fail to hold gains

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19 Oct 2018

Rand and emerging market currencies end the week on the backfoot

The rand closed at R14.41 to the greenback.

Earlier this week it had flirted with the R14/$ mark, but could not hold onto the gains as concerns of rising US interest rates.

RMB economist Mpho Tsebe said in a market update on Friday that emerging market currencies would likely remain on the backfoot given growth concerns in China.

China's GDP growth slowed to 6.5% year-on-year.

Earlier on Friday SA Reserve Bank Governor Lesetja Kganyago who was speaking at the Association of Black Securities and Investment Professionals defended the central bank's inflation targeting mandate. He said a number of countries that he said continue to pay the price for populist economic policies, including Zimbabwe, Peru and Venezuela.

“If you don’t think inflation matters, go try some. Or ask all the Zimbabweans or Venezuelans who had to leave their countries when their economies collapsed. Unorthodox policies have totally orthodox consequences, as those people can confirm,” Kganyago said.

Closing indicators from TreasuryONE:

USDZAR 14.4168

EURUSD 1.1496

EURZAR 16.5653

GBPUSD 1.3042

GBPZAR 18.7930

AUDZAR 10.2769

CADZAR 10.9905

CNYZAR 2.0794

ZARJPY 7.8025

CHFZAR 14.4544

R186 9.21%

US 10 Year 3.20%

JSE -0.24%

FTSE 0.49%

S&P 500 0.79%

19 Oct 2018

Stocks rally on boost from earnings, bonds decline

US stocks rebounded from Thursday’s sell-off as the latest batch of earnings provided evidence of corporate strength.

The dollar and Treasuries fell on signs of easing trade tensions with China.

The S&P 500 headed for its first weekly gain in a month as strong results from American Express, industrial heavyweight Honeywell and consumer giant Proctor & Gamble bolstered confidence in the economy.

Financial technology company Paypal Holdings surged after beating analyst expectations, pushing the tech-heavy Nasdaq 100 to outperform.

European shares were mixed as simmering concern over Italy’s budget crisis sent the nation’s stocks to a 19-month low and its bonds lower. China’s stock rout eased even after disappointing economic-growth data.

FULL STORY

19 Oct 2018

Rates may need to rise on CPI risks, says SARB deputy governor - Bloomberg

South Africa’s monetary policy stance remains accommodative and interest rates will need to increase to keep inflation within the target band if the central bank’s current forecasts play out, Reserve Bank Deputy Governor Francois Groepe said.

While the economy is relatively weak, the factors keeping growth below potential are primarily structural and lower rates wouldn’t offer much stimulus, he said in a speech posted on the central bank’s website on Friday.

A weaker currency and higher oil prices have compounded a dilemma for South African policy makers as they try to balance containing inflation that’s projected to accelerate toward the top end of its target range of 3% to 6%, and domestic demand that remains benign after the economy fell into a recession this year. Economic growth is seen slowing to 0.7% in 2017.

FULL STORY

19 Oct 2018

Rand 0.7% stronger against dollar in early afternoon 

The rand, which opened at R14.45/$ on Friday, was changing hands at R14.34/$ at 13:48, up 0.7% on the day. 

19 Oct 2018

US equities futures rise - Bloomberg 

US equity futures rose on Friday, pointing to a stronger open in New York as European shares dropped and Asian peers were mixed. Treasuries were steady as the dollar edged lower. 

19 Oct 2018

China sneezes...

Although the US economy and Wall Street markets remain healthy, there are warnings the troubles in China - where the yuan is heading to seven per dollar for the first time since the start of 2017 - could spread.

"While the US markets have been somewhat insulated from China equity market meltdowns this year, that strong historical correlation that 'when China sneezes the rest of the world catches the flu' is starting to take hold," said Stephen Innes, head of Asia-Pacific trade at OANDA.

Traders are keeping an eye on Europe where Brussels hit out at the big-spending budget of Italy's populist government, which has fuelled concerns of another crisis in the bloc at the same time it struggles to agree a Brexit deal with Britain.

On foreign exchanges the dollar pressed ahead against high-yielding and emerging market currencies, which have been hit by rising Fed rates.

FULL STORY

19 Oct 2018

Clover shares up on news of possible acquisition

Shares in clover [JSE:CLR] were trading 13.3% higher on Friday at 11:38 after the company put out a stock exchange news announcement to say it was in talks with a 3rd party about buying the company's entire share capital. 

It did not say which company it was in negotiations with.  

"Shareholders are advised that the Company has entered into negotiations with a 3rd party regarding the potential acquisition by the relevant 3rd party of the entire issued share capital of the company. Shareholders are advised to exercise caution when dealing in the Company's securities until a full or further announcement in this regard is made."

<p><strong>Clover shares up on news of possible acquisition</strong></p><p>Shares in clover [JSE:CLR] were trading 13.3% higher on Friday at 11:38 after the company put out a stock exchange news announcement to say it was in talks with a 3rd party about buying the company's entire share capital.&nbsp;</p><p>It did not say which company it was in negotiations with.&nbsp;&nbsp;</p><p><em>"Shareholders are advised that the Company has entered into negotiations with a 3rd party regarding the potential acquisition by the relevant 3rd party of the entire issued share capital of the company. Shareholders are advised to exercise caution when dealing in the Company's securities until a full or further announcement in this regard is made."</em></p>

19 Oct 2018

Once-richest woman becomes biggest loser in China wealth rout, Bloomberg reports 

IPhone and Tesla touchscreens once made her China’s richest woman. The US-China trade war has made her the biggest loser in 2018 among Chinese billionaires.

Zhou Qunfei, the chairperson of consumer electronics supplier Lens Technology, has lost 66% of her fortune, or $6.6bn, this year - the biggest drop in percentage terms among China’s wealthy - according to the Bloomberg Billionaires Index.

Once-richest woman becomes biggest loser in China wealth rout

19 Oct 2018

Rand regains some losses

The rand regained some of its overnight losses to trade below R14.40 to the US dollar.

“International factors weighed in on the ZAR overnight as weaker than expected Chinese growth, Italian budget concerns and rising US treasury yields all combine to push the ZAR close to 14.50,” commented Gerard van der Westhuizen, dealer at TreasuryONE.  

The Chinese economy growth missed the mark for the third quarter when it came in at 6.5% (6.6% expected) and slowed down from the second quarter.  The Chinese Yuan has been under pressure lately testing the CNY7.00/$ mark on a couple occasions this week and the weaker growth number could put more pressure on the Yuan, said Van der Westhuizen.

In Europe, the European Commission criticised Italy's free-spending budget and mentioned that it was in serious breach of the EU budget rules. Van der Westhuizen said this sparked a sell-off in the euro and the single currency tested lows around the 1.1450 mark, “far from the 1.16 level we saw a couple of days ago”.   “On a technical perspective, the 1.430 level is critical as a sustained break below this could open up to a possibility of to the 1.13 figure.”

The local unit was trading as low as R14.33 to the US dollar before moving back to R14.39/$ by 10:15.

19 Oct 2018

VISIT Fin24 for more market indicators

19 Oct 2018

The JSE opened firmer, reversing losses from the previous session.

Indices across the board gained, with the JSE All-share index and the Top-40 index adding 0.26% and 0.23% respectively. Financials were up 0.24% and Resources 0.2%.

Intu Properties (+13%) was the biggest winner after announcing a possible cash offer for the company of 210.4 pence per share.

19 Oct 2018

The US dollar was firmer across the board on Friday, driven by the prospect of higher US interest rates as well as renewed global growth concerns, said TreasuryONE.

"Emerging market currencies have also reversed some of their gains, with the rand falling to 14.47 against the greenback in early trade."

The local unit, however, firmed 0.3% to trade at R14.40/$ by 09:37.

"Equity markets in the US closed in the red again and this has carried through to the Asian markets."

Photo: Aamir Qureshi, AFP

 
<p>The US dollar was firmer across the board on Friday, driven by the prospect of higher US interest rates as well as renewed global growth concerns, said TreasuryONE.</p><p>"Emerging market currencies have also reversed some of their gains, with the rand falling to 14.47 against the greenback in early trade."</p><p>The local unit, however, firmed 0.3% to trade at R14.40/$ by 09:37.</p>"Equity markets in the US closed in the red again and this has carried through to the Asian markets."<p></p><p><strong><em>Photo: Aamir Qureshi, AFP</em></strong></p><p></p>&nbsp;
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Rand - Dollar
18.97
-0.2%
Rand - Pound
24.06
+0.2%
Rand - Euro
20.57
+0.1%
Rand - Aus dollar
12.35
+0.6%
Rand - Yen
0.13
+0.8%
Platinum
900.98
-0.2%
Palladium
1,000.76
-0.5%
Gold
2,153.55
-0.3%
Silver
24.91
-0.5%
Brent Crude
86.89
+1.8%
Top 40
65,669
-0.9%
All Share
71,900
-0.7%
Resource 10
52,931
-0.7%
Industrial 25
99,286
-1.2%
Financial 15
16,575
-0.3%
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