Markets WRAP: Rand closes at R13.77/$
The rand closed at R13.77 to the greenback on Monday afternoon. The day's range was between R13.58 and R13.77. The rand weakened by 1.04%.
TreasuryONE said earlier that emerging market currencies started the day on the back foot and the rand was likely to come under pressure.
"The rand was unchanged after SONA as the focus now moves to the budget speech on February 20."
The rand weakened by just over 1% on Monday afternoon, changing hands at R13.75 to the greenback. By 14:13, the day's range was R13.58 to R13.75.
TreasuryONE's Andre Botha said earlier that it seemed as though emerging market currencies had run out of steam.
"This week we have the resumption of the US-China trade talks, which always places a little headline risk in the mix, but looking at the market at the moment the feeling is that the EM rally has run out of a little steam.
"We have seen the dollar on the front foot for the past seven sessions, which if it continues, will place the rand under some pressure. There are some data releases out this week that are crucial for South Africa when looking at the country's economy. These numbers include unemployment and manufacturing data.
"While these numbers may not be market moving, unless they are terrible or shooting out the lights, it will shed some light on the plight of the South African economy.”
OVERVIEW: Stocks rose in Europe and US equity futures turned higher at the start of a week that could be pivotal for the global trade outlook. The dollar strengthened for an eighth day. The Stoxx Europe 600 gained and contracts on the S&P 500, Dow Industrials and Nasdaq Composite all reversed earlier declines as earnings season is set to resume with the likes of Michelin reporting today.
Equities rallied in China as exchanges reopened after a holiday and ahead of high-level trade talks this week between Chinese Vice Premier Liu He, Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer in Beijing. The rest of the region traded mixed.
Japan’s securities markets are shut for a holiday. Yields on Treasuries and core European sovereign bonds edged higher. The pound stayed lower after the UK economy unexpectedly shrank in December. Trade tensions are ratcheting up as investors evaluate the prospects for a US-China deal before the March 1 deadline for higher tariffs, as warnings mount that the dispute is curbing the global economic expansion and denting corporate profits.
Washington is also in focus, with the US government potentially headed for another shutdown as political tensions flare between Congress and the president.
“We still have concerns about global growth and that centers on those US-China negotiations,” Kerry Craig, global market strategist at JPMorgan Asset Management, told Bloomberg TV from Melbourne.
“We’re unlikely to see any massive moves this week saying we’re going to get a deal on that.”
Elsewhere, WTI oil futures slipped toward $52 a barrel, while gold headed for its first drop in three sessions. The Swiss franc swooned almost 1% at the start of Asia trading Monday in a mini-recurrence of the “flash crash” that roiled FX markets early last month.
Here are some key events coming up: Earnings season continues with reports from companies including Michelin, Nissan, Cisco, Vivendi, Nvidia, Nestle, Coca-Cola and Credit Suisse. Sweden’s Riksbank is expected to keep interest rates at minus 0.25% on Wednesday after the first increase in more than seven years in December. Data Wednesday is expected to show US consumer prices rose 0.1% in January, after falling 0.1% in December.
If no deal is reached on the US-Mexico border wall, parts of the federal US government may shut down again later this week when stopgap government funding expires.
These are the main moves in markets:
The Stoxx Europe 600 Index rose 0.8% as of 11:19 London time. Futures on the S&P 500 Index rose 0.3%. The Shanghai Composite Index surged 1.4%, hitting the highest in almost 10 weeks. The MSCI World Index of developed countries rose 0.1%.
The Bloomberg Dollar Spot Index rose 0.2% with its eighth straight advance. The euro fell 0.1% to $1.131. The Swiss franc fell 0.2% to $1.0029. The British pound fell 0.1% to the weakest in three weeks. The Japanese yen declined 0.4% to the weakest in more than six weeks on the largest drop in more than a week.
The yield on 10-year Treasuries rose one basis point to 2.64%, the first advance in a week. Germany’s 10-year yield jumped two basis points to 0.11%, the first advance in a week. Italy’s 10-year yield sank seven basis points to 2.892%, the first retreat in a week.
Gold decreased 0.5% to $1,307.30 an ounce. West Texas Intermediate crude fell 0.7% to $52.33 a barrel. LME nickel rose 0.2% to $12,595 per metric ton. LME copper decreased 0.8% to $6,162.50 per metric ton. - Bloomberg
Woolworths announced on Monday that independent non-executive directors Gail Kelly and Patrick Allaway have resigned from the company with immediate effect.
It did not say why the two chose to step down.
"Both Gail and Patrick have made significant contributions to the Group and the Board thanks them for their service and wishes them both well in their future endeavours," it said in a notice to shareholders. "Gail served as a member of the nomination, remuneration, sustainability and risk and compliance committees and Patrick served as a member of the audit, treasury, remuneration, and risk and compliance committees during their respective tenure on the board."
"The board has been continuing to seek to supplement its composition by the appointment of additional independent non-executive directors and will be making further announcements in this regard."
Woolworths shares were trading at R46.63 at 12:37 on Monday, down 1.54% on the day.
Tongaat Hulett has announced the appointment Rob David Aitken as its chief financial officer and as an executive director of the company with effect from March 1 2019.
"Mr Aitken is an experienced senior financial executive within Tongaat Hulett and has been acting in the CFO role since August 2018. He is a qualified CA (SA) with 14 years’ experience, 9 of which have been in the sugar industry and within an organisation previously listed on the JSE," the group said in in notice to shareholders on Monday morning.
Tongaat Hulett shares were trading at R47.15 on the JSE at 09:36, down 0.5%.
Bianca Botes, Corporate Treasury Manager at Peregrine Treasury Solutions said in a morning note to clients that the dollar is still holding firm at six-week highs, as trade tension and global growth concerns continue to rattle markets.
"The Sino-US trade dynamic will take centre stage once more this week as US negotiators are set to engage with China regarding US companies’ intellectual property.
"The rand is at R13.60/$, however cautious market sentiment is likely to add pressure to the local unit, opening potential for a move towards R13.80.
"A light data calendar today will see most of the attention falling on UK GDP and the Eurogroup meeting this afternoon.
"The expected range for the day R13.56 to R13.72."
Asian markets sluggish -AFP
Trade uncertainty weighed on Asian stocks Monday, at the start of a week that sees crunch China-US talks take place in Beijing aimed at averting fresh tariff escalations.
Mainland Chinese markets reopened from their week-long Lunar New Year break to renewed concerns over the trade row and a series of bearish global growth forecasts. Top US economic officials travel to the Chinese capital this week for the third round of talks on Thursday and Friday, where preparatory talks among deputies were due to start Monday.
Failure to agree a deal between the two economic superpowers before March 1 would see punitive US duties on $200bn in Chinese goods more than double.
"There's a sense of urgency to this round," said Jeffrey Halley, senior market analyst at OANDA.
He added: "If no deal is agreed by then, a belligerent President Trump and US Congress will be more than willing to simply extend the trade war so China will need to make the first move if they are to reach a detente."
Analysts say the imposition of the tariffs could weaken the global economy. US President Donald Trump said last week he does not expect to meet his Chinese counterpart Xi Jinping before the deadline, while White House economist Larry Kudlow said Washington and Beijing were a "sizeable distance" apart in talks.
Hong Kong traded flat, while Seoul dropped 0.1% and Sydney was down 0.4%. But Shanghai edged up 0.2% after its week-long break. Tokyo was closed for a holiday.
Storm may be on the way
Meanwhile, the International Monetary Fund warned governments to prepare for a possible economic "storm" as growth forecasts dip. It cited the trade row as one of four "clouds" overshadowing the global economy, along with Brexit uncertainty, the accelerated slowdown in China and financial tightening.
"The bottom-line - we see an economy that is growing more slowly than we had anticipated," IMF managing director Christine Lagarde told the World Government Summit in Dubai at the weekend. The EU, Britain and Australia all slashed growth forecasts late last week.
Adding to market trepidation is the spectre of a repeat of the 35-day partial US government shutdown that ended January 25 -- the longest in the country's history. -AFP
Eskom plans 13 hours of stage 2 load shedding for Monday
Eskom has announced it will implement 13 hours of stage 2 load shedding from 09:00 to 22:00 on Monday.
"The power system remains constrained following a number of plant breakdowns [Sunday]," said spokesperson Khulu Phasiwe. Stage 2 allows for up to 2000 megawatts to be cut from the national grid.
On Sunday the power utility instituted load shedding for the first time since December.
This came three days after President Cyril Ramaphosa announced that Eskom would be split into three in his State of the Nation Address.