Markets WRAP: Rand ends the day at over 1% weaker at R14.89/$

Rand closes at R14.89/$

The local unit which opened at R14.65/$ on Wednesday ended the day 1.6% weaker at R14.89/$.

The day's trade ranged between R14.62 and R14.91.

Treasury partner at Peregrine Treasury Solutions Bianca Botes commented in a rand note that a public spat between the leadership of the ANC regarding the mandate of the SA Reserve Bank (SARB) is adding pressure to the already strained local currency. 

"Both the finance minister (Tito Mboweni), and the ANC’s head of economic transformation (enoch Godongwana) denied that the mandate of the SARB has been broadened to include quantitative easing measures to drive growth and employment, as previously stated by the party’s secretary-general Ace Magashule.

"The spat points to severe divisions within the ruling party at a time when South Africa desperately requires political stability and policy certainty," she said.

Treasuries rally amid mixed data, stocks advance

Treasuries rallied as traders assessed mixed data from the world’s largest economy. Stocks rose on bets Mexican tariffs will be avoided.

The 10-year bond yield fell back below 2.1% as weak private jobs data outweighed a report showing service industries beat estimates. The Dow Jones Industrial Average outperformed major gauges as Boeing surged after Bloomberg News reported the company has been negotiating one of the largest orders ever of wide-body jetliners with Chinese airlines.

The Mexican peso rose after White House trade adviser Peter Navarro told CNN the Trump administration’s plan to impose tariffs may not have to go into effect.

Investors have aggressively increased bets the Fed will ease after a string of weak reports on retail sales, factory orders and home purchases indicated growth is slowing as the trade war weighs on businesses.

While the service industries expansion report was robust, the ADP data suggest payroll gains in Friday’s jobs report in the Labour Department could be lower than expected.

EOH appoints new chair to steer group on 'ethical leadership' path 

EOH has appointed Dr Xolani Mkhwanazi as group chairman, this after founder and former chairman Asher Bohbot stepped down earlier this year.

The IT services group on Wednesday issued a shareholder notice indicating that Mkhwanazi will take on his new position with immediate effect. Among the things he is tasked with, Mkhwanazi will lead the group's deliberations following an internal investigation into public sector contracts.

"We are very pleased with the appointment of Dr Mkhwanazi to the board. His track record of providing courageous leadership in challenging business environments, coupled with his commitment to sound corporate governance, were key drivers for his appointment.

"We believe Dr Mkhwanazi is a strong addition to the board and will reinforce the newly-appointed executive team on our journey to ethical leadership and building the EOH of the future," CEO Stephen van Coller said in the notice.

Over 3 000 gold mine workers affected by Sibanye-Stillwater restructuring

Sibanye-Stillwater has concluded a section 189 process in its gold operations in SA which will affect over 3 000 workers.

The mining company on Wednesday issued a shareholder notice indicating that it had concluded a consultation process with relevant stakeholders about the retrenchments.

The company in February 2019 announced it would restructure its SA gold operations and associated services. The section 189 process was initiated due to financial losses at some of its Beatrix and Driefontein shafts since 2017.

At the time the mine expected over 6 000 workers, including contractors, would be affected.

Tencent counts on smash hit call of duty to quicken global push

Tencent plans to roll out marquee title Call of Duty Mobile to markets from the US and Europe to Latin America, accelerating efforts to plumb new avenues of growth as uncertainty grips its Chinese home market.

The world’s largest game developer plans to tap the marketing and distribution network it built when rolling out hack-and-slash hit Arena of Valor. Tencent now plans to expand that team by hiring more developers abroad, and also explore other genres to target international gaming aficionados, said Palo Alto-based Vincent Gao, overseas marketing director for TiMi and Arena of Valor.

After years of importing games in their entirety to entertain its billion-plus social media users at home, Tencent is reversing its playbook by adapting popular titles for mobile and then exporting them overseas. It's a move that helps the WeChat-operator hedge against slowing growth and regulatory clampdowns at home, as the government weeds out violent content online and curbs screen time for teenagers.

Oceana board appoints CFO

The Oceana Board of directors on Wednesday announced the appointment of Elton Bosch as Chief Financial Officer and executive director of the company. His appointment is with effect from June 17, 2019.

"Bosch has held a number of executive positions, including that of a Chief Financial Officer and executive for Business Development, Risk, Africa, HR, and IT at Clover Industries Limited," the shareholder notice read.

Bosch was also an Audit and Advisory Partner at Deloitte & Touche and director and shareholder of Gobodo. 

Tiger Brands board changes

Tiger Brands on Wednesday announced the appointment of Monwabisi Fandeso as an independent non-executive director of the company. Fandeso's appointment is with effect from July 1, 2019.

Fandeso is currently a non-executive director of Thebe Investment Corporation and SABSA Holdings. he previously served as Lead Independent Director of South African Breweries from 2001 to 2013.

Between 2011 and 2017, he also served on the Boards of Santam, Compass Group SA, Senwes and ABSA Africa Group as independent non-executive director. He was also previously the chief executive officer of the Land and Agricultural Development Bank of South Africa and Thebe Tourism Group.

His more recent responsibilities include being country chair of Shell South Africa and executive director of SABMiller South Africa/ABInBev Africa.

Stocks extend gains as dollar steadies, oil falls

A global stock rally sparked by Federal Reserve Chairman Jerome Powell’s dovish comments continued into Wednesday, though the pace of gains slowed amid lingering trade-war concerns.

Treasuries edged higher, while the dollar steadied after four days of decline. Technology shares led the advance in the Stoxx Europe 600 as software companies including SAP and Micro Focus jumped after a positive sales forecast by US peer Salesforce.

Futures on the S&P 500 indicated a higher US open after the underlying index climbed the most since January on Tuesday as Powell said the central bank is monitoring the trade war’s impact and would act appropriately to sustain the US expansion.

Japan led the charge in Asia, with the Topix index up 2.1%, though gains elsewhere in the region were more modest. European government bonds were mixed, while the euro strengthened.

The shot in the arm for equities from Powell punctuates a week with similar comments from his colleagues that the Fed is willing to take action, though not yet. Bond markets, which have been signalling the risk of a significant global slowdown, are already pricing multiple rate cuts by the Fed this year.

If the US-China trade dispute persists, it will lead to slower growth and more uncertainty, Blackstone President Jonathan Gray said.

May PMI drops

The Purchasing Managers' Index in May dropped to 49.3 compared to the 50.3 recorded in April. This is a sign that business conditions deteriorated.

"Nevertheless, firms are hopeful that the new government will bring some much-needed stability to the markets. Future sentiment rose to the highest for 13 months, showing that there is still confidence in the South African economy. Nevertheless, recent PMI readings show that the government faces a difficult struggle to reignite growth this year," David Owen, economist at IHS Markit noted.

Yesterday’s Q1 GDP number, which showed that growth in the South African economy contracted by 3.2%, resulted in the Rand weakening from 14.4000 levels up to 14.7700 before closing at 14.6500. This was the biggest contraction in a decade and will most likely force the SARB to cut rates earlier than expected.

Growth forecasts for 2019 will certainly be lowered from the 1.0% SARB expectation and heighten the ratings agencies concerns. On the global front, we have the Dollar still trading softer after Fed Chairman Jerome Powell hinted at possible rate cuts in the US in a speech last night. Wall Street closed sharply higher on the news, with the S&P up 2.14%, the Dow up 2.06% and the Nasdaq up 2.65%.

Stocks in the Far East have followed and are all up this morning. Gold is holding on to its recent gains and is trading at $1 326.82 at present. Market focus will switch to the US employment data out in Friday and the G20 finance ministers meeting over the weekend.

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