DAILY COMMENTARY - 24 APRIL 2019
Merchant West Capital Markets
USD/ZAR 14.3782 | EUR/ZAR 16.1185 | GBP/ZAR 18.5806
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24 April - SA BERConsumer Confidence
25 April - SA PPI | US - Durable Good Orders | Initial Jobless Claims
26 April - US GDP Annualised | Personal Consumption | GDP Price Index
After news broke out about Eskom and its financial trouble (again) – the open in the New York trading session saw ZAR breach the 14.30 levels as a stronger U.S. Dollar compounded woes for the Rand with rates as well as bonds weaker with the R186’s consolidating some 7/8bps higher. We eventually closed 0.75% weaker on the day but we have already lost 0.75% this morning with a high of 14.38 traded – this sends us to the bottom of the list when compared to EM peers. Markets will be cautious as this is the first real directional break in the past couple of weeks with risk very much fragile could see the Rand open up towards 14.50. Investors will be watching for further developments around the Eskom saga as well as this USD climb (BNP Paribas).
Equity markets in Asia faltered on Wednesday amid losses in South Korea and uncertainty over China’s plans for further stimulus as the economy shows signs of regaining its footing. MSCI’s broadest index of Asia-Pacific shares outside Japan was 0.3 percent lower, erasing early gains in the wake of record closing highs on Wall Street overnight. European indexes were also expected to weaken. In Asia, the biggest regional loser was South Korea’s KOSPI, which fell 1 percent. Investors shrugged off the government’s proposed supplementary budget aimed in part at supporting exports, and worried after chipmaker Texas Instruments said it expects a slowdown in demand for microchips could last a few more quarters. Shares of Samsung Electronics were down 1.6 percent. Chinese equities flitted between gains and losses as investors debated whether Beijing would slow the pace of policy easing following stronger-than-expected first-quarter economic growth. Australian shares outperformed the rest of the region, jumping as much as 1.1 percent to a more-than-11-year high after a sharp slowdown in Australian inflation raised the likelihood of an interest rate cut (Reuters.com).
The mixed day in Asia came after upbeat earnings from Coca-Cola, Twitter, United Technologies and Lockheed Martin helped the Nasdaq and S&P 500 indexes reach record closing highs on Wall Street overnight. The Dow Jones Industrial Average rose 0.52 percent to 26,647.97, the S&P 500 gained 0.91 percent to 2,934.31 and the Nasdaq Composite added 1.35 percent to 8,123.25. Analysts said that alongside better-than-feared corporate earnings, a more supportive policy environment has helped to boost risk appetites. Equity market gains had been bolstered on Tuesday by rising energy shares after Brent crude, the global benchmark, hit its highest level since Nov. 1. Oil prices surged after the United States ended six months of waivers that allowed Iran’s eight biggest buyers, most of them in Asia, to continue importing limited volumes of Iranian oil. Gulf OPEC members said that rather than offset any shortfall resulting from the U.S. decision on waivers, they would raise output only if there was demand. On Wednesday, Brent gave up some gains, trading down 0.34 percent at $74.26 per barrel. U.S. crude dipped 0.39 to $66.04 a barrel. The U.S. dollar index, which tracks the greenback against a basket of six major rivals, was flat at 97.644, near a 22-month high, following strong U.S. housing data. The dollar was 0.4 percent weaker against the yen at 111.81, while the euro dropped 0.14 percent to buy $1.1209. Spot gold fell about 0.2 percent as the dollar strengthened, with one ounce fetching $1,269.92 (Reuters.com).
Range for the day: 14.25 – 14.50