Markets WRAP: Rand closes at R14.1772/$

The rand closed at R14.1772/$ on Wednesday. Andre Botha, senior currency dealer for TreasuryONE, commented that a reaction could be expected from the rand tonight, with all eyes on the Federal Reserve. 

Here's how Wednesday closed: 

USDZAR 14.1772

EURUSD 1.1135

EURZAR 15.7784

GBPUSD 1.2240

GBPZAR 17.3442

AUDZAR 9.7660

CADZAR 10.7922

CNYZAR 2.0581

ZARJPY 7.6561

CHFZAR 14.3118

R186 8.33%

US 10 Year 2.04%

JSE -0.68%

FTSE -0.77%

S&P 500 -0.11%

---

Gold 1 428.48 

Plat 874.82 

Plad 1 534.21 

Rhod 3 600.00 

Irid 1 470.00 

Ruth 248.00 

Copp 5 926.00 

Brent 65.22 

Gold ZAR 20 241.72 

Plat ZAR 12 396.22 

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July would have been a worse month for the rand if it weren’t for the Federal Reserve.

South Africa’s currency has weakened about 1% against the dollar this month, buffeted by Eskom's financial crisis and the strain it’s putting on government coffers. But the prospect of a Fed rate cut on Wednesday has capped the rand’s losses as money continues to flow into high-yielding assets.

Gold investors up the ante before critical Fed decision on rates

Ranjeetha Pakiam and Rupert Rowling

Gold investors are positioning for further gains in the lead up to the Federal Reserve’s first expected cut to interest rates in more than a decade.

Holdings in bullion-backed ETFs rose 4.8 tons to 2 350.1 tons, the highest since April 2013, according to data compiled by Bloomberg on Tuesday.

In silver, the combined volume of calls and puts has surged above 220 000 contracts this month, on course for the highest since November 2010, a sign of greater speculative interest in the metal.

Spot bullion was steady at $1 430.75 an ounce at 12:04 in London. Silver slipped 0.6% to $16.4685.

Gold may be poised for a breakout year, with prices on course for a third monthly gain, as investors anticipate rate cuts from the Fed as growth slows and trade-war frictions bite.

Bullion has also drawn investor interest as other risks mount, with tensions rising in Europe over Brexit, and in the Persian Gulf between Iran and western nations. Adding to signals of an economic slowdown, data from China Wednesday showed manufacturing in shrank again in July.

Gold will look for direction in the tone of the Fed chief’s rhetoric,” Alfonso Esparza, senior market analyst at Oanda Corporation, said in a note.

More-dovish statements “could lead to a weaker dollar and a higher price for gold, but neutral-to-hawkish comments on the economy could lead to a rebound in the dollar, putting downward pressure on the metal,” he said.

President Donald Trump stepped up his attacks on the Fed on Tuesday, demanding a “large cut” in rates to support the economy. He also hit out at China for what he said is its unwillingness to buy American farm products as the two nations resumed trade talks.

The JSE All-Share index was down 0.45% at 13:00 on Wednesday, while the Top-40 was trading 0.41% lower. 

The rand was trading marginally lower against the dollar at R14.22 after opening at R14.20. 

Analysts will be closely watching the US Fed to see if it cuts interest rates as expected later this evening. The announcement is expected to be made at 14:00 Eastern Time, which corresponds to 20:00 in South Africa.  

Euro-area economy left struggling as growth, inflation slow

Jeannette Neumann and Jana Randow, Bloomberg 

Economic growth in the euro area slowed dramatically in the second quarter, the latest in a string of reports flagging deteriorating economic prospects that increase the chance of more European Central Bank stimulus.

Cooling momentum risks extending a phase of too-low inflation that’s worrying policymakers.

At their last meeting, ECB officials ordered staff to study everything from interest-rate cuts to asset purchases as they look at ways to prop up the economy.

The latest data showed the 19-nation region expanded 0.2% last quarter, down from 0.4% in the previous three months. The pace, in line with expectations, left year-on-year growth at 1.1%, its weakest in more than five years.

Inflation slowed to 1.1% in July, the lowest since early 2018, and a gauge excluding volatile components such as food and energy was even weaker.

Concern about the state of the euro-area economy and expectations of ECB action have driven investors into the German bond market. The yield on the nation’s 10-year debt is below minus 0.4 percent, the current level of the ECB’s deposit rate.

Pick n Pay appoints new chief financial officer

Pick n Pay has appointed Lerena Olivier as the Chief Finance Officer and executive director of the company with effect from September 6, 2019.

Olivier will succeed current CFO Aboubakar Jakoet, who will be retiring. He has been part of the retailer for 34 years. He will take up a non-executive capacity on the board.

Olivier has been a senior executive within Pick n Pay’s group finance division for the past eight years, the group said in a shareholder notice.

Olivier is a qualified Chartered Accountant and has 18 years of experience with JSE-listed companies in the retail sector. She currently heads the group’s reporting and finance team. 

US, Europe stock futures edge up as Fed awaited

Bloomberg

US and European stock futures ticked higher, and the dollar and Treasuries marked time, ahead of the Federal Reserve’s projected interest-rate cut.

Stocks dropped in Asia as investors mulled pessimistic signs for U.S.-China trade talks and mixed corporate earnings. Equities retreated from Tokyo and Seoul to Sydney and Shanghai. 

Hong Kong shares were hit hardest before an early close due to a storm.

Samsung shares slid on a sharp decline in profit, with traders shrugging off the tech giant’s optimistic outlook for the memory business.

President Donald Trump set a negative tone for market sentiment, criticizing China just as his negotiators started talks in Shanghai. Crude oil extended its recent rally.

Old Mutual to appeal Moyo's reinstatement, interim CEO to remain in place

Old Mutual will immediately appeal the High Court ruling on Tuesday which re-instated Peter Moyo as CEO, a company spokesperson confirmed to Fin24.

This after Moyo won his bid against his former employer to be temporarily reinstated and his dismissal was declared unlawful.

“The filing of the appeal will suspend the operation of the court order. Mr Moyo has been informed that he is not required or permitted to resume his duties, pending the outcome of the appeal proceedings,” the firm said in a statement on Tuesday evening.