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Markets WRAP: Rand closes at R13.87/$

2019-02-26 08:03

Senior dealer at TreasuryONE, Andre Botha said in terms of the rand, much of last week's volatility has started to peter out.

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Last Updated at 00:52
26 Feb 17:16

The rand closed at R13.87 to the greenback on Tuesday afternoon. 

The day's range was R13.82 to R13.89. TreasuryONE said earlier that positive sentiment over progress in the US-China trade talks continues to see currencies firm against the dollar. 

Senior dealer at TreasuryONE, Andre Botha said in terms of the rand, much of last week's volatility had started to peter out.

"We saw the rand gain ground yesterday as Emerging Markets were on the front foot as the US-China positive sentiment washed through the markets.

"The injection of good news on the trade front has caused world stock markets to close in the green and the EM currencies to enjoy a good day. We expect the Rand to trade in tight ranges as a lot of the negative news of the past few weeks has washed out of the markets and it seems that EM's will trade a lot more stable in the short term, but there is always the risk of events and headlines draining the EM sentiment as quickly as it started."


26 Feb 16:49

OVERVIEW: Global stocks dropped on Tuesday as the rush of optimism over US-China trade talks from earlier in the week faded. The pound rallied as UK Prime Minister Theresa May promised a vote to delay Brexit if her proposed deal fails.

S&P 500 Index opened in the red and European stocks edged lower after US President Donald Trump raised the possibility of signing a new trade deal with Chinese counterpart Xi Jinping, but cautioned an agreement “might not happen at all”.

Tesla fell after regulators asked a judge to hold Elon Musk in contempt for violating last year’s SEC settlement.

Equities slipped throughout Asia and the yen strengthened. Treasuries climbed while European bonds were mixed. The dollar held losses after data showed US housing starts tumbled in December.

The pound rallied to the highest level versus the euro since 2017 and traded near the day’s highs as UK Prime Minister Theresa May addressed Parliament, confirming there was a path to delaying Brexit.

The opposition Labour party also changed tack, coming out in favor of a second vote on the divorce.

Lacking fresh developments on trade after Trump’s announcement Monday that he will postpone the date for boosting tariffs on Chinese imports, investors are left contemplating a mixed picture in the world economy, such as ebbing forecasts for global growth. Monetary policy is also in focus, with semiannual testimony on the US economy from Federal Reserve Chairman Jerome Powell on Tuesday and Wednesday.

“The markets have really started to factor in the possibility of rate cuts,’’ Dwyfor Evans, a macro strategist at State Street Global Markets in Hong Kong, said on Bloomberg Television.

Powell if anything “needs to probably bring the market back on track to argue that, well, we’re just staying put for now,’’ he said.

Elsewhere, WTI crude was little changed after tumbling the most in four weeks on criticism from Trump that prices are too high. Iron ore retreated with Barclays warning it may erase all its dam-disaster gains this year.

These are the main moves in markets:

Stocks

The S&P 500 Index fell 0.2% as of 09:34 New York time, while the Nasdaq Composite Index dropped 0.3% and the Dow Jones Industrial Average eased 0.4%. The Stoxx Europe 600 rose less than 0.1%. The MSCI Emerging Market Index dropped 0.2%, the first drop in seven sessions. The MSCI Asia Pacific Index fell 0.4%. 

Currencies

The Bloomberg Dollar Spot Index fell less than 0.1%. The euro gained less than 0.1% to $1.1363. The British pound strengthened 0.6% to $1.3169. The MSCI Emerging Markets Currency Index fell less than 0.1%. 

Bonds

The yield on 10-year Treasuries dropped three basis points to 2.64%. Germany’s 10-year yield fell one basis point to 0.10%. Britain’s 10-year yield increased one basis point to 1.19%. 

Commodities

West Texas Intermediate fell 0.3% to $55.34 a barrel. Gold dropped less than 0.1% to $1,327 an ounce. The Bloomberg Commodity Index declined 0.1%. - Bloomberg


26 Feb 15:45

JPMorgan Chase & Co has increased its holding in Mr Price, the Mr Price Group said in a statement on Tuesday.

"The total interest in the ordinary shares of Mr Price Group held by JPMorgan Chase & Co now amounts to 5.01% of the ordinary issued shares of the Company," it said.


26 Feb 13:31

Palladium’s ascent shows no sign of letting up as the metal notched another record on Tuesday, though analysts are warning of the growing potential for a correction. 

Used to control emissions in gasoline auto engines, it’s the top performing raw material on the Bloomberg Commodity Index this year as a supply deficit deepens and demand surges. With prices topping $1558.80 an ounce on Tuesday, banks including Saxo Bank A/S and Commerzbank AG say gains look increasingly unsustainable. 

Palladium has soared more than 20% this year, boosting its price relative to other precious metals such as gold and platinum to extreme levels. The global shortage that’s driven those gains now risks getting worse as a mining union threatens to strike in South Africa, a key producer along with Russia.

“Palladium has entered into bubble territory given its historical wide premiums to other metals, not least the near $700 premium over platinum,” Ole Hansen, head of commodity strategy at Saxo Bank, said by email.

“But as long we see no change in the outlook for tight supply or changing demand dynamics from consumers, the price could go higher.”

Spot palladium climbed 1% to set its fresh record on Tuesday before paring its advance to trade little changed at $1,544 an ounce at 10:19 in London.

Commerzbank also issued a warning, saying the commodity “is showing more and more signs of being a bubble.”

UBS Group AG strategist Joni Teves has said there’s scope for deep pullbacks even as market participants now talk about the potential for the metal’s price hitting $2,000.

Earnings to Come

Investors are due for updates on the outlook for the global market as leading producers report earnings this week. Russia’s MMC Norilsk Nickel PJSC is due to turn in figures later on Tuesday, while Impala Platinum reports on Thursday. Shares in both miners have surged this year.

Anglo American, which last week declared its biggest dividend since 2008, said that it expects the three major platinum-group metals -including rhodium - to be in a combined deficit again in 2019, as demand from the automotive industry increases, even with little or no growth in car sales, due to expanding average vehicle size and tightening emissions rules. More than 80% of palladium comes as a byproduct from nickel mining in Russia and platinum mining in South Africa, so supplies depend on the extraction level in other minerals. The viability of platinum as a substitute has also been downplayed - research has shown that technological advances are needed before it can match the performance of palladium-based catalytic converters, according to Johnson Matthey, which makes the devices.

“Palladium’s recent outstanding run is being given further impetus by the planned strike” in South Africa, said Gavin Wendt, senior resource analyst at MineLife Pty. “End-users and traders will be increasingly concerned about supply. Importantly, palladium’s rise has less to do with short-term speculative factors, and instead a fundamental imbalance in the market’s supply-and-demand outlook.”

In other metals, gold was little changed, while platinum for immediate delivery rose as much as 0.8% to $860.05 an ounce, the highest since November. Palladium’s rally has been so strong that after reaching parity with gold in December, it’s now over $200 an ounce more expensive. - Bloomberg


26 Feb 11:43

Shoprite on why first half results are below expectations

Interim results for the Shoprite Group for the six months ending December 2018 were negatively affected by increased financial pressure on its core customers and challenges with certain IT projects, among others factors, the group said on Tuesday morning. 

Shoprite described the interim results as below expectations. In a statement to shareholders it said 2018 was a "transformational year" for the group, adding the interim results should not be seen as a reflection of the fundamental strength of the business.

During the first half of its financial year the sale of merchandise increased by 0.2% to R75.8bn. The trading profit decreased by 19.0% to R3.3bn, while earnings before interest, tax and depreciation and amortisation (EBITDA) decreased by 12.2% to R4.7bn.


26 Feb 11:16

PIC ordered to recover the R4.3bn it invested in AYO - Business Day 

AYO Technology Solutions says it has not seen a compliance notice referred to in a Business Day article ordering the Public Investment Corporation to recoup the R4.3bn it invested in the IT firm. 

Business Day reported on Tuesday morning that the Companies and Intellectual Property Commission (CIPC) ordered the directors of state-run asset manager the Public Investment Corporation to recover the R4.3bn it invested in late 2017. 

According to the newspaper, the compliance notice said that PIC directors had knowingly caused harm to Africa’s largest asset manager.

Neither the PIC nor the CIPC immediately replied to a Fin24 request for comment on Tuesday morning. Fin24 has not seen the compliance notice. 

AYO's share price was unchanged at R17.99 a share on Tuesday morning. 


26 Feb 10:15

The rand is trading at R13.85 to the greenback, largely thanks to positive sentiment over the progress in the US China trade talks which continues to see currencies firm against the dollar, says TreasuryONE.

"The euro is at 1.1360, the pound at 1.3130 and the rand at 13.8550. The pound was further boosted by news that Theresa May is now prepared to delay the Brexit exit date as well as the news that the Labour party would support a second referendum.

"Trump meeting with North Korea’s Kim is also seen as positive for markets. Wall Street closed up across all three indices and the futures have opened higher.

"Palladium has jumped to $1567.00 on supply concerns while Gold is unchanged at $1 329.90. Oil is lower at $64.56 after Trump’s statement that the price was too high."


26 Feb 08:20

Nampak has appointed two new independent non-executive directors with effect from March 1, it announced on Tuesday.

They are CD Raphiri and SP Ridley.

"Mr Raphiri (PGDip Mechanical Engineering, BSc (Honours) Mechanical Engineering and MBA) was the Manufacturing and Technical Director of South African Breweries and is currently the executive director of Phetogo Investments.  He also serves as a non-executive director and chairman of Adcock Ingram Holdings and a non-executive director of the Thesele Group," Nampak said in a note to shareholders. 

"Mr Ridley (B Comm, Dip Acc (post graduate) CA (SA)) was the Group Financial Director of the Standard Bank Group until his retirement. He currently serves on a number of boards, including as non-executive director and chairman of Standard Advisory London Limited, Standard Bank London Holdings Limited and non-executive director of Liberty Holdings Limited and Liberty Group Limited."


26 Feb 08:04

Stocks mixed on trade talk fatigue

Andreea Papuc. Bloomberg

Asian stocks drifted Tuesday as the rush of optimism on US-China trade talks from early Monday faded.

India’s rupee dropped as border tensions with Pakistan flared. Equities fell in Japan, Hong Kong and Australia while Chinese shares posted modest gains after jumping yesterday.

S&P 500 Index futures fell after the gauge closed at the highest in almost four months and European futures pointed lower. While US President Donald Trump raised the possibility of signing a new trade deal with Chinese counterpart Xi Jinping, he also said an agreement “might not happen at all.”

The yen edged higher and Treasury yields dipped.

Traders will be looking for any signs that the progress on trade is enough to build on a global rally in equities that has been tested by slowing economic growth. Also in focus this week will be a hearing from Federal Reserve Chairman Jerome Powell, where investors will get the latest read on monetary policy and discussion of the central bank’s balance sheet.

“The markets have really started to factor in the possibility of rate cuts,’’ Dwyfor Evans, a macro strategist at State Street Global Markets in Hong Kong, said on Bloomberg Television. Powell if anything “needs to probably bring the market back on track to argue that, well, we’re just staying put for now,’’ he said.

Meanwhile, India’s rupee declined and stocks dropped after Pakistan claimed airspace violation by its neighbour.

Indian fighter jets destroyed a major terrorist camp in Pakistan, the ANI news agency reported, as tensions between the nuclear-armed rivals rose following an attack in Kashmir earlier this month.

Elsewhere, the pound climbed as Prime Minister Theresa May is considering a plan to delay Brexit and stop the UK leaving the European Union with no deal next month, according to people familiar with the situation. Oil extended losses after tumbling the most in four weeks on Trump’s criticism that prices are too high.


26 Feb 08:04

Mboweni spoke directly to rating agencies in Budget speech - tax expert

With an election looming in South Africa, many expected that Finance Minister Tito Mboweni's 2019 Budget speech would largely be composed of populist messages aimed at voters.

However, he actually spoke directly to rating agencies with the goal of addressing some of their most important concerns, in the view of David French, director of tax consulting at Mazars. The first of these messages, according to French, was about the future of state-owned entities.


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