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Closing the loop 23 June 2022

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is weaker at R15.96/$ (R15.91/$*) today; it ranged between R15.89/$ and R16.05/$.
  • The currency is above its 50-day, 100-day and 200-day moving averages (R15.74/$, R15.36/$ and R15.38/$).
  • EM currencies are mixed today; the BRL (+0.3%), IDR (+0.2%) and RUB (+0.2%) are the biggest gainers; the HUF (-1.4%), CLP (-1.2%) and PLN (-0.8%) are the biggest losers.  
  • The UK manufacturing PMI slipped to 53.4 pts in June from 54.6 pts in May.
  • The composite index remained unchanged at 53.1 pts in June; the services PMI also remained unchanged at 53.4 pts in May.
  • The economy continues to face several obstacles which could weigh on economic growth including lower healthcare output; growth is expected to contract in Q2:22.
  • Still, this is unlikely to deter the central bank from hiking rates further.
  • The Russia-Ukraine war as well as a drive by global central banks to tighten policy in order to tame inflation are amongst key risks to the UK’s growth.
  • The Eurozone composite PMI slipped to 51.9 pts in June, from 54.8 pts in May.  
  • Both the manufacturing and services PMIs fell in June.
  • The Turkish Central Bank kept interest rates unchanged at 14% today as expected.
  • The current political leadership is demanding lower rates despite inflation soaring.
  • The central bank is expected to continue utilising alternative measures to try to tame inflation and support the weakening lira.
  • The US University of Michigan consumer sentiment index (final estimate) is due out tomorrow and is expected to have fallen to 50.2 pts in June from 58.4 pts in May.
  • The final estimate is likely to incorporate a period when gasoline prices increased to $5 per gallon (from $4.75 per gallon).
  • Households also grappled with high inflation in June.
  • Eskom will continue with Stage 2 loadshedding until midnight.
  • The oil price is down by 0.4% today, and up by 43.2% in the year-to-date.
  • The gold price is up by 0.2% today, and up by 0.7% in the year-to-date.
  • Brent crude oil is at $111.36/bbl ($111.74/bbl*).
  • Gold price is at $1842/oz ($1838/oz*). 
  • SA CDS is at 284bps (283bps*), Brazil 289bps (285bps*), Turkey 795bps (807bps*).
  • Yields: US 10yr at 3.08% (3.15%*), German bund at 1.42% (1.63%*) and SA 10-year generic at 10.61% (10.58%*), SA’s R186 is at 8.60% (8.57%*).
  • The JSE ALSI is down by 0.6% today (-1.6%*).

* Denotes yesterday’s close. 

Key events and data:

  • 01h01: UK GfK consumer confidence (June)
  • 08h00: UK retail sales (June)
  • 09h00: China current account balance (Q1:22 – final)
  • 16h00: US University of Michigan consumer sentiment, 1 yr and 5-10 yr (June – final)
  • 16h00: US new home sales (May)

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