Closing the loop 01 August 2022

Closing the loop

Shireen Darmalingam

Market highlights:

The rand is stronger at R16.46/$ (R16.62/$*) today; it ranged between R16.43/$ and R16.66/$.
The currency is above its 50-day, 100-day and 200-day moving averages (R16.24/$, R15.76/$ and R15.62/$).
EM currencies are mixed today; the THB (+2.2%), HUF (+2.2%) and RUB (1.3%) are the biggest gainers; the ARS (-0.5%), KRW (-0.4%) and CNY (-0.4%) are the biggest losers.

The UK’s final manufacturing PMI estimate for July fell to a 25-month low to 52.1 pts from 52.8 pts in June.
The slippage comes as the intake of new workers and new export business both continued to decline in July.
The data also reflected weaker market demand, difficulties in sourcing components and transportation delays.
The composite index also slumped in May to 53.1 pts from 58.2 pts in April.
The data is unlikely to have an impact on the BOE’s thinking on monetary policy this week; the bank is expected to hike rates by 50 bps to 1.75%.
Policymakers have to weigh inflationary pressures against the rising risks of recession.

The Eurozone manufacturing PMI fell into contractionary territory in July for the first time since June 2020.
The index fell to 49.8 pts in July from 52.1 pts in June.
The Eurozone unemployment rate remained steady at a historic low of 6.6% in June.

Locally, the BER manufacturing PMI overshot expectations slipping to 47.6 pts in July from 52.2 pts in June.
Manufacturing sentiment is now below the 50-benchmark line for the first time since July last year.
The slippage comes on the back of the power crisis in July; the employment index entered contractionary territory once again in July.
The new sales orders and the expected business conditions in 6 months’ time dropped further during the month.
The business activity index was below the 50-benchmark line for the fourth consecutive month.

Vehicle sales overshot expectations in July coming in at 30.9% y/y after having increased by 7.6% y/y in June.
43,593 vehicles were sold in July; this compares with 33,312 sold in July 2021 and 41,052 vehicles sold in June 2022.
31,455 passenger cars were sold in July, compared to 20,938 passenger cars sold in July 2021; 9,547 light commercial vehicles were sold, down from 10,257 in July 2021.
Vehicle exports were up by 177.7% y/y to 31,242 units in July, compared with 11,252 units in July 2021.
Naamsa noted that the vehicle market performance in July was distorted by the riots in July 2021 as well as the cyberattack on Transnet operations in July last year.

Brent crude oil is at $99.56/bbl ($110.01/bbl*).
Gold price is at $1767/oz ($1765/oz*).
SA CDS is at 286bps (301bps*), Brazil 273bps (274bps*), Turkey 778bps (822bps*).
Yields: US 10yr at 2.61% (2.64%*), German bund at 0.79% (0.82%*) and SA 10-year generic at 10.93% (10.80%*), SA’s R186 is at 9.07% (8.91%*).
The JSE ALSI is down by 0.6% today (+0.5%*).

* Denotes Friday’s close.

Key events and data:

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