Closing the loop
Shireen Darmalingam
Market highlights:
- The rand is stronger at R15.66/$ (R15.74/$*) today; it ranged between R15.62/$ and R15.85/$.
- The currency is above its 50-day, 100-day and 200-day moving averages (R15.28/$, R15.29/$ and R15.25/$).
- EM currencies are mixed today; the RUB (+2.9%), PLN (+0.8%) and CZK (+0.8%) are the biggest gainers; the TRY (-1.4%), CLP (-0.3%) and KRW (-0.2%) are the biggest losers.
- The UK manufacturing PMI slipped to 54.6 pts in May from 55.8 pts in April.
- The composite index fell to 51.8 pts in May from 58.99 pts in April.
- The services PMI also fell more than expected in May 51.8 pts from 58.2 pts in April.
- The economy continues to face several obstacles which could weigh on economic growth ranging from the lockdowns in China to soaring energy and food prices.
- The Russia-Ukraine war as well as a drive by global central banks to tighten policy in order inflation are amongst key risks to the UK’s growth.
- The Eurozone composite PMI slipped to 54.9 pts in May, from 55.8 pts in April.
- Both the manufacturing and services PMI fell in May.
- The US FOMC May meeting minutes are due tomorrow.
- The minutes will likely provide further clarity on the committee members’ sentiment regarding the rates outlook.
- Several policymakers have expressed their support for a steady path to achieving a neutral rate.
- Fed Chair Jerome Powell has become increasingly more hawkish since the 4 May meeting on the back of the higher-than-expected April CPI print.
- Powell has, however, ruled out the possibility of a 75 bps increase at the June meeting.
- Investors will also be keeping an eye on the bank’s growth and inflation outlooks.
- Locally, the SARB’s leading economic indicator increased to 128 pts in March from 127.2 pts in February.
- The largest positive contributors were an increase in the USD-denominated export commodity price index and the acceleration in the 6m smoothed growth rate in the real M1 money supply.
- The largest detractors were a deceleration in the 6m growth rate of the job advertisement space and a narrowing in the interest rate spread.
- The coincident indicator, which measures current economic conditions, remained unchanged at 95.9 pts in February.
- The lagging indicator increased to 93.7 pts in February from 92.8 pts in January.
- Stage 2 loadshedding will be implemented from 17h00 until 22h00 due to capacity constraints.
- The oil price is up by 0.2% today, and up by 46.1% in the year-to-date.
- The gold price is up by 0.8% today, and up by 1.9% in the year-to-date.
- Brent crude oil is at $113.67/bbl ($113.42/bbl*).
- Gold price is at $1864/oz ($1850/oz*).
- SA CDS is at 267bps (265bps*), Brazil 243bps (243bps*), Turkey 728bps (705bps*).
- Yields: US 10yr at 2.76% (2.85%*), German bund at 0.983% (1.017%*) and SA 10-year generic at 10.14% (10.17%*), SA’s R186 is at 8.23% (8.17%*).
- The JSE ALSI is down by 1.1% today (+1.2%*).
* Denotes yesterday’s close.
Key events and data:
- 07h00: Japan leading and coincident indices (March final)
- 13h00: US MBA mortgage applications (20 May)
- 14h30: US durable goods orders (April)
- 20h00: US FOMC meeting minutes (4 May)
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