Markets WRAP: Rand closes at R13.89/$, after trading between R13.89 and R14.13/$

The rand firmed by 1.33% by 15:43 on Wednesday afternoon, changing hands at R13.90 to the greenback.

South Africa’s rand extended its advance, suggesting some traders may be expecting an interest rate increase on Thursday even after inflation data came in slightly softer than economists’ expectations.

Consumer prices climbed 5.1% in October from a year earlier, up from 4.9% but short of the 5.2% median estimate in a Bloomberg survey. Most of the increase was due to petrol prices, which surged to a record last month. The slump in crude since then will translate into a substantial decline in the price of petrol, suggesting that pressure to tighten policy will ease.

But the central bank looks past current data to expected future price pressures, and has repeatedly said it wants to see inflation closer to the midpoint of its 3% to 6% target range.

The rand advanced 0.4% to 14.0360 per dollar by 11:00. in Johannesburg, bringing its gain this month to 5.4%. Yields on benchmark 2026 government bonds edged two basis points lower to 9.09%. It was trading at R13.95 by 13:55. - Bloomberg

As UK Prime Minister Theresa May shakes off the threat of a leadership crisis, the pound is getting a chance to catch its breath.

With rebels in May’s party seeming to have failed to garner the 48 letters needed to trigger a confidence vote in her, strategists see the currency making its way back up to $1.30 - a level last seen in early November before the revolt.

Sterling steadied on Wednesday above $1.28 after dropping 1.1% last week, when ministers quit over a draft Brexit plan.

"A headline-driven pound can take some relief from a lack of letters going in and resignations," said Stuart Bennett, head of Group-of-10 currency strategy at Banco Santander SA.

Andre Botha, Senior Currency Dealer at TreasuryONE said in a morning note to clients, “The rand is finding itself drifting around the R14.00 level, with no real direction in the local unit. We have seen the US dollar sliding against the Euro yesterday which gave the rand a bit of a shot in the arm, it recouped its losses and the rand ended the day where it began.

"That seems to be the story for the most part that the market is waiting for a fresh stream of data or news before a new direction could be in the offing. We have also seen the oil price retreating on ample supply, which was in contrast to the reason why the oil price rallied in the first place when everybody expected supply shortages. Should the slide in the oil hold and the rand stay at current levels, there will be some reprieve at the pumps in store for next month.

"Today we have the release of the October CPI number from South Africa, and should this surprise to the upside it will make the interest rate decision a lot more straightforward tomorrow.  We continue with our base case that the Rand is currently stuck in ranges so we can expect more of the same today.”

Stats SA announced on Wednesday that annual consumer price inflation had come in at 5.1% for October, 0.2 percentage points higher than the 4.9% for September.

This slight increase was caused, in part, due to fuel price hikes in October, and was broadly line with analysts' expectations. 

Attention will now move to the SA Reserve Bank's repo rate decision, which will be announced at 15:00 in Pretoria on Thursday. 

Mouton to step down 

Businessman Jannie Mouton has stepped down from his roles as non-executive chairperson and director of the PSG Group, PSG Financial Services and Zeder. 

In an update to shareholders on Tuesday evening, PSG said: "Jannie leaves behind a remarkable legacy. He founded the PSG Group 23 years ago and has played a pivotal role in building various businesses which are rivalled by few others.

"We thank him for his outstanding contribution and leadership over many years. Jannie is an incredible individual who has inspired all of us at PSG Group, PSG Financial Services and Zeder to create rather than criticize.

We will miss him as director and chairman but willcontinue to interact with him as shareholder and friend. We wish him all the best with his health and retirement."

Tokyo stocks open lower after Wall Street rout

Tokyo stocks opened lower on Wednesday, weighed down by a sharp fall in US stocks as fears over weakness in the technology sector spread throughout the wider market.

The benchmark Nikkei 225 index was down 1.49% or 321.46 points at 21 261.66 in early trade, while the broader Topix index was down 1.58% or 25.67 points at 1 600.06.

"Global equity futures were flashing red on tech sector concerns," Stephen Innes, head of trading for Asia Pacific at Oanda, said in a note. He cited fears over trade tensions following an acrimonious exchange between China and the US at a recent summit of Asia-Pacific leaders and comments from the Federal Reserve that Trump administration fiscal stimulus will fade in 2019.

"There was no place to go but down for equities," said Innes.

Oil drops to one-year low on concern supply cuts won't stem glut

Oil tumbled below $53 a barrel for the first time in a year amid concern OPEC’s plans to cut production won’t be enough to stem a surge in stockpiles.

Futures fell more than 7% in New York and London. A government report Wednesday may show US crude inventories rose for a ninth straight week, according to a Bloomberg survey of analysts. President Donald Trump said that Saudi Arabia has been "responsive" to oil price requests.

A selloff in global equities added to the oil rout, adding to worries about slackening demand. The S&P 500 Energy Index slid as much as 3.5%, with all of its members down on the day. Devon Energy Corporation and Newfield Exploration Company fared the worst, losing more than 7% each.

“I think you’re going to see a risk-off type of market," Tariq Zahir, a New York-based commodity fund manager at Tyche Capital Advisors, said in an interview. “It wouldn’t be surprising to see new lows being printed on oil" if U.S. inventories jump.