Markets WRAP: Rand gains in late trade, JSE up 0.79%

After falling to a three-month low of R14.70/$ earlier on Thursday, the rand clawed back its losses to end the day firmer against the dollar, while the JSE ended in positive territory.

The local currency opened the day at R14.461/$ and fell to a low of R14.70/$ before starting to firm. It ended the day at R14.30 to the greenback, up 1%.  

The JSE All Share index ended Thursday up 0.79%, with all major indices posting gains. 

Oil retreated from a two-week high amid increasing concerns over economic growth in China, the world’s second-biggest consumer of crude.

Futures in New York decreased 0.7%, recouping some of its earlier losses of as much as 2.6%. European stocks and US equity-index futures slumped as Apple cited an unforeseen slowdown in China and cut its sales outlook, just days after data showed weakening factory conditions across Asia.

Crude gained on Wednesday on signs that OPEC made an early start on its pledged output curbs.

Apple’s forecast cut is the latest sign that a long-running trade war between the US and China may be hurting the world’s two biggest economies.

Along with political turmoil in Washington and higher interest rates by global central banks, the spat has weighed on crude. While output from the Organisation of Petroleum Exporting Countries plunged by the most in almost two years last month, investors remain wary over the effectiveness of the group’s strategy as America pumps at a record pace.

After falling to a three-month low against the greenback in early trade, the rand has been clawing back losses to trade only 0.3% weaker against the dollar by midday. 

The local currency opened at 14.46/$ and initially fell to a low of R14.70/$. By midday, it was changing hands at R14:50 to the US currency. 

The JSE All Share index, which suffered along with European and Asian stocks on Wednesday on concerns around a possible slowdown in China, was up 0.8% by midday, with all major indices in positive territory. 

China easing expected as $625bn 'liquidity hole' looms

China will cut the reserve requirement ratio and improve funding conditions this month, as liquidity tightens toward the Spring Festival holidays, the country’s largest securities firm says.

Fresh demand for funds will amount to nearly 4.3 trillion yuan ($625bn) in January, according to Citic Securities and Bloomberg calculations.

Mainland residents will withdraw 1 trillion yuan of cash in preparation for the holiday, when money is gifted in red envelopes. Corporate tax payments and maturities of lenders’ interbank debt will also mop up liquidity, prompting authorities to step up cash injections.

ICYMI: Apple cuts outlook, sees 'challenges' in China, emerging markets

Apple cut its revenue outlook for the latest quarter Wednesday, citing steeper-than-expected "economic deceleration" in China and emerging markets.

The rare revenue warnings from Apple suggested weaker-than-anticipated sales of iPhones and other gadgetry, in part because of trade frictions between Washington and Beijing.

Apple shares slid some 7.6% in after-hours trade on the news.The company slashed its revenue guidance for the first fiscal quarter of 2019, ended December 29, to $84bn - sharply lower than analyst forecasts averaging $91bn.

Rocky start for euro

The US dollar strengthened 1.15 against the  euro on Wednesday, due to weak factory data from the Eurozone, Andre Botha, senior currency dealer at TreasuryONE noted in a market update.

"This suggests that 2019 will have a rocky start for the single currency bloc," he said.

"Other interesting data out of China yesterday showed that China’s factory activity contracted for the first time in 19 months in December as domestic and export orders continued to weaken.

"This has flared up the debate of slowing growth in the world which normally sees a run to safe havens which the US dollar is one."

In early morning trade the rand weakened beyond R14.60, as Asian Markets started the day in the red as the slowdown in China has caused a ripple in the Asian Markets, he explained.

Apple  is the first company to cut its outlook on revenue due to their belief that there is a steeper than expected economic deceleration in China and emerging markets.

"The tone at the moment is that the market is starting off the year on a risk-off footing which can cause some rand weakness in the short term," Botha concluded.  

Rand comes under pressure

The rand came under pressure as most emerging markets slipped following a downturn in the euro, Bianca Botes of Peregrine Treasury Solutions noted in a market update.

"This easier trend was reinforced by weak data from China," she added.

"During the overnight session, the rand quickly lost ground, slipping from R14.40/$ to R14.52/$."

US initial jobless claims and new home sales data is expected to be released this afternoon, and may possibly lead to volatility.

The rand opened at R14.46/$, it's expected range of trade for Thursday is between R14.40/$ and R14.65/$.

Apple CEO Tim Cook faces his toughest challenge yet

Apple's Tim Cook confirmed Wednesday that the latest iPhones, his flagship product, are not selling up to expectations.

Apple sold fewer than anticipated new iPhones, and is expected to cut its holiday quarter sales outlook by as much as $9bn.

Cook plans to address Apple staff about the situation on Thursday at an all-hands meeting where he will take questions from workers, according to a person familiar with the matter.

Apple shares tank on the back of slowing sales in China

Most Asian markets rose Thursday after the previous day's sharp losses but technology firms fell after Apple slashed its revenue forecasts blaming slowing China sales.

The yen pared early sharp gains from a flash crash, which saw the dollar briefly plunge to its lowest level since March after the Apple announcement, while the Australian dollar hit a 10-year low against the greenback.

Investors trod cautiously as bargain-buyers capitalised on Wednesday's hammering across Asia, while sentiment remains weak owing to uncertainty over a number of issues including China-US trade, China's economic woes, the US government shutdown and Brexit.