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Closing the loop 06 December 2021

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is stronger, at R15.90/$ (R16.08/$*) today; it ranged between R15.87/$ and R16.10/$.
  • The currency is above its 50-day, 100-day and 200-day moving averages (R15.27/$, R14.96/$ and R14.65/$ respectively).
  • EM currencies were mixed today; the ZAR (+1.1%), COP (+0.5%) and SGD (+0.2%) were amongst the biggest gainers; the BRL (-0.8%), TRY (-0.7%) and INR (-0.3%) were amongst the biggest losers.
  • Markets have been fluctuating on mixed signals about the impact of the Omicron variant.
  • Data from SA has prompted some cautious optimism that the new variant causes mostly mild illness.
  • Eurozone GDP growth for Q3:21 (final estimate) is due out tomorrow and is expected to come in at 2.2% q/q form 2.1% q/q in Q2:21.
  • Markets will also keep an eye on German industrial production for October tomorrow.
  • The German economic recovery has been held back by severe supply disruptions.
  • It is expected to take some time before these shortages recover; industrial output remains 9.5% below its pre-recession peak.
  • The automotive industry has been the hardest hit.
  • The German ZEW survey for December is expected to dip in both the expectations and current indices as the nation battles rising Covid infections.
  • UK GDP data for October is due out on Friday; it is expected to reflect a slight moderation in growth.
  • Locally, the spotlight is on Q3:21 GDP tomorrow, which is expected to have contracted by 0.7% q/q, from a 1.2% q/q increase in Q2:21.
  • The adverse impact of the July unrest on both economic activity and sentiment is likely to have impacted GDP in Q3:21
  • We are, however, concerned about downside risk, which was underscored by the sharp contraction in employment in Q3:21.
  • We are also concerned about the weakness in indicators such as electricity consumption which has relapsed towards the 2020 trend.
  • The SARB’s gross and net reserves for November are also due out tomorrow.
  • Net reserves are expected to have slipped to $55.2bn in November from $55.43bn in October.
  • The oil price is up by 2.2% today, and up by 37.9% in the year-to-date.
  • The gold price is down by 0.3% today, and down by 6.3% in the year-to-date.
  • Brent crude oil is at $71.43/bbl; ($69.88/bbl*).
  • Gold price is at $1778/oz ($1783/oz*).
  • SA CDS is at 231bps (229bps), lower than Brazil 238bps (236bps*) and Turkey 543bps (539bps*).
  • Yields: US 10yr at 1.38% (1.34%*), German bund at -0.382% (-0.388%*) and SA 10-year generic at 9.91% (10.01%*), SA’s R186 is at 7.88% (7.95%*).
  • The JSE ALSI is up by 0.3% today (-0.3%*).

* Denotes Friday’s close. 

Key events and data:

  • 07h00: Japan leading and coincident indices (October)
  • 08h00: SA gross and net reserves (November)
  • 09h00: Germany industrial production (October)
  • 11h30: SA GDP (Q3:21)
  • 12h00: Eurozone GDP, employment (Q3:21)
  • 12h00: Germany ZEW survey expectations (December)
  • 15h30: US trade balance (October)
  • 22h00: US consumer credit
  • China trade balance (November)

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