2019-08-12 18:42:20The rand closed at R15.34/$ on Monday, battered by the US/China trade war and a range of local issues that have led to it underperforming among its emerging market peers. Read more here.2019-08-12 14:43:29
US stock futures decline as Hong Kong sours mood
US equity futures reversed an advance on Monday alongside European stocks as mounting unrest in Hong Kong weighed on investor sentiment. Treasuries and the yen extended gains while gold and the dollar both turned higher.
Contracts for all three main US equity indexes retreated after Hong Kong airport authorities cancelled remaining flights for the day. A Chinese official said the city was at a "critical juncture" and that there were signs of "terrorism."
The change in mood wiped out the Stoxx Europe 600 Index's jump of as much as 1%. Stocks had earlier increased in Shanghai and edged higher in South Korea and Sydney, though Hong Kong shares dropped and many other markets across Asia were shut for a holiday.
The yen extended its rally for a fourth day, while the offshore yuan nudged lower as China's central bank fixing continued to signal its determination to manage an orderly depreciation. Italian bonds led gains in European debt after Fitch affirmed the country's credit rating on Friday. The pound strengthened following three sessions of declines.
FULL STORY2019-08-12 13:50:15
The trade war has entered a new phase: the blame game.
As tensions escalate again, there’s been a flurry of finger-pointing and flag-waving between Washington and Beijing with both sides eager, for domestic political reasons, to assign blame for the slowly emerging economic damage.
In the US, Trump is presiding over an economy slowing to the very sort of middling growth he promised to turbocharge. Yet few would argue his trade policies aren’t contributing to the slowdown. Just ask Federal Reserve Chairman Jerome Powell, who blames trade uncertainty for the need for at least one interest-rate cut, maybe more.
The trade-war blame game has several arenas:Dissing the dollar. Trump blames the Fed for causing the dollar’s appreciation — a headwind for exporters. The reality is that expectations for his tax cuts and deregulation juiced the economy (and the dollar) in late-2016 into 2017 before the sugar high wore off. The buck came down a bit as the trade wars heated up in mid-2018 but has stayed elevated. Meanwhile, his trade policies have contributed to weaker economies (and currencies) from Australia to South Korea to Germany.Investment sours. The great promise of Trumponomics was that the tax cuts and protectionism would unleash business investment. But that hasn’t happened in a sustainable way. If anything, uncertainty is causing a pause, which helped drag down second-quarter growth. Goldman Sachs economists blame it for boosting recession concerns. Even some around Trump recognize this. Kevin Hassett, the former head of Trump’s Council of Economic Advisers, once called uncertainty the bitter lemon the U.S. had to bite into to fight the “scurvy” of imbalanced trade.Factories downshift. By some measures, American manufacturing is in a technical recession with industrial production contracting in the first two quarters of the year. Trump blames the Fed and harps on the dollar’s strength. But that ignores a chief culprit. U.S. manufacturers are getting hit on both the cost and revenue side. Tariffs have driven up the cost of inputs ranging from steel to electronic components from China. Meanwhile, exports are being hit not just by the dollar but by retaliation from China, the EU and other trading partners.If blame is indeed the name of the game for now, Beijing knows how to play, too. Chinese state media in recent days has unloaded on the U.S. for “reneging on promises” after Trump said he would impose 10% additional tariffs on $300 billion in Chinese exports starting in September.
2019-08-12 13:48:43
Naspers leads $125m in funding for Indian e-commerce platform Meesho
Naspers has taken the lead in raising $125m in funds for India's Meesho, an e-commerce marketplace.
Other investors include Facebook, SAIF, Sequoia, Shunwei Capital, RPS, Venture Highway and former Vodafone Group CEO Arun Sarin.
Continue Reading 2019-08-12 11:55:30
Oil declines as trade tensions continue to stoke demand fears
Heesu Lee and Grant Smith
Oil dropped as US President Donald Trump said planned trade talks with China next month could be called off, stoking concerns the deepening dispute will damage global growth.
Futures lost as much as 1.8% in New York, snapping a two-day gain, as a stronger dollar curbed the appeal of commodities priced in the US currency. Trump’s threat to cancel negotiations came after the International Monetary Fund on Friday warned of downside risks to the Chinese economy if trade tensions escalate.
Crude rallied late last week after Saudi Arabia signalled it would seek to halt the price slump, and constrain its exports next month. Still, prices are down this month because of fears the US-China spat may expand into a currency war.
The International Energy Agency on Friday trimmed its forecasts for oil-demand growth this year and next, and warned that it may lower the estimates further as the trade conflict drags on.
“Oil is facing severe global headwinds at the moment from the escalation of the trade war, weak macro data and a strong US dollar,” said Jens Naervig Pedersen, a senior analyst at Danske Bank A/S in Copenhagen. “It is difficult to see what can break the downward spiral near-term as the market seems to be waiting for the next round of bad news.”
2019-08-12 09:02:53The local unit started the day at R15.25/$, and broke through the R15.30/$ in early morning trade.2019-08-12 08:59:33
Rand is bruised and battered - economist
"The rand was bruised and battered last week following a spate ofnegative domestic news flows and an escalation in US-China trade tensions," RMB Global Markets Research economist, Mpho Tsebe noted in a market update.
"Therand has been on the back foot since Moody’s released a statement that theadditional Eskom bailout made available through the Special Appropriation Billis credit-negative for SA.
"This was followed by news that Fitch Rating Agencyrevised the country outlook to negative from stable, only to be exacerbated byworsening trade relations between the US and China, as negotiations broke down," she said.
"The rand closed Friday’s trading session 3.1% weaker relative to the weekbefore, making it the worst-performing emerging market currency. In contrast, peercurrencies like the Brazilian real and Argentine peso closed the week 1.3% and1.5% weaker," Tsebe said.
On a year-to-date basis, the rand has depreciated by 5.9%, making it thethird worst-performing emerging market currency, behind the Argentine peso and South Koreanwon that have weakened by 16.9% and 7.8% year-to-date.
"The rand and other emerging market currencies remain vulnerable to risk sentiment, as theescalation in trade tensions between the US and China has reignited fears ofthe US economy falling into a recession," Tsebe added.
"The weaker currency is offsetting the benefits emanating from falling Brentcrude prices. The daily fuel price, as reported by the central energy fund,shows that the price of 95 unleaded petrol will increase by about ten cents inSeptember, following the 11 cents increase in August.
"This is because the 10.2%month-to-date decline in the price of Brent crude oil has been offset by a 6%depreciation in USD/ZAR."
This week, focus turns to the US-China trade developments. The US, UK and China’s retail sales data for July will be released this week and will provide clues on how the global economy is likely to fare in the thirdquarter, Tsebe said.
Locally, June’s retail sales data will be released this week, it should reinforce last week’s mining and manufacturing data that showedsecond-quarter GDP is likely to increase by 2.4% q/q saar, Tsebe added.
Rand 3% weaker after 'tsunami' of domestic, international events2019-08-12 07:54:36
Rand starts the day at R15.25/$
The rand appears to be testing the R15.30/$ mark, treasury partner at peregrine Treasury Solutions, Bianca Botes noted in a market update on Monday.
"All eyesstill squarely on investor sentiment hinging on trade dynamics and globalgrowth," she commented.
"It’s quiet on the data front today, with the Federalmonthly budget statement being the only noteworthy event on the calendar.
"Donald Trump’s comment on Friday that trade talks withChina due to start on 1 September might be cancelled, after also havingannounced additional tariffs on China, is adding pressure to the fragility ofinvestor sentiment.
"Trump also made it clear that the US is in no way ready orwilling to make a deal at this stage but that if talks continue it will be onan open basis," she said.
The general consensus is that the rand is oversold at its current level and a retracement is on the cards. "The only question,however, is whether the global geopolitical environment will allow for thiscorrection," she added.
