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14/04/2020

Commodity desk update:
Prices of the West Texas Intermediate are navigating the area of multi-day lows in the vicinity of the $21.00 mark per barrel on today. Prices of the WTI are down for the third consecutive session on Tuesday, practically ignoring the recently clinched deal between the OPEC, Russia, Saudi Arabia and other oil-producer countries to cut the oil output by nearly 10Mbpd.

In fact, traders continue to deem as insufficient the agreement, as market chatter is already factoring in an oversupply of nearly 30Mbpd. Prices are therefore under extra downside pressure and it would not surprise anybody to see the barrel navigating the teens at some point in the short-term horizon. Also collaborating with the downside, Saudi Aramco cut further the May selling price for its Asian customers, as the coronavirus outbreak continues to hurt the demand for crude oil.

Later in the session, the weekly report by the API on crude oil inventories is due ahead of the DoE’s official release on Wednesday. The outlook on crude oil prices remains fragile to say the least and despite the recent agreement between the OPEC and other countries to cut the oil production in the next couple of months. However, scepticism and unease among oil players continue to hurt the sentiment around the commodity, leaving prices exposed to a deeper retracement amidst the absence of the slightest recovery in the demand.
At the moment the barrel of WTI is losing 2.67% at $21.77 and a breach of $19.29 (2020 low Mar.30) would expose $17.12 (monthly low November 2001) and finally $10.65 (monthly low December 1998). On the upside, the next resistance emerges at $29.11 (weekly/monthly high Apr.3) followed by $30.22 (23.6% Fibo of the 2020 drop) and then $36.99 (38.2% Fibo of the 2020 drop).

JSE Opening Bell:The local market catches a similar tone that started in last trading hour of US and Asian session overn...
08/04/2020

JSE Opening Bell:
The local market catches a similar tone that started in last trading hour of US and Asian session overnight opening in the red.

08/04/2020

Stock update:
The UK insurer Aviva plunges - 9.79% at the start of European trading. The decline comes after the company scarps 2019 final dividend payout, citing that until balance sheet normalization and stabilization then the company will payout for 2020 not 2019.

08/04/2020

Asian Trading update:
Asia-Pacific ignores the mildy positive equities in India, Japan and New Zealand. Although clues of further stimulus helped some of the Asia-Pacific shares, the MCSI’s gauge, ex-Japan, drops 0.7% by the press time of pre-Europe open on Wednesday. The reason could be traced from the latest coronavirus (COVID-19) data from the global hotspots like the UK, the US and Europe. While the early-week numbers raised hopes of recovery, the recent all-time high figures from the key economies renew fears of the pandemic. Japan’s NIKKEI cheers upbeat Machinery Orders and Trade Balance data together with hints of further aids from the government while flashing more 1.0% gains to 19,140 by the time of writing. Also joining the positive line are equity indices from India, Australia and New Zealand. On the other hand, the US 10-year treasury yields drop to 0.72% while stocks in Indonesia, China and Hong Kong also remain negative. Wall Street failed to cheer the previous day’s risk-on. Even so, US President Donald Trump asked Congress for an additional $250 billion in emergency economic aid for small U.S. businesses reeling from the pandemic. Moving on, traders and investors will keep eyes on FOMC minutes as well as virus data/headlines for fresh impulse.

07/04/2020

EM Currency Update:
The USD/MXN dropped during the American session to 23.81, reaching the lowest level since last Thursday. On Monday it hit a record high at 25.71. Volatility remains at extreme levels. During the last hours, USD/MXN bounced to the 24.00 but with the bearish tone intact. The very short-term technical outlook favors the downside, as price remains under an uptrend line seen at 24.30. If it rises back above, the bearish pressure will likely ease. On the downside, the immediate support is located around 23.80/85, below the next one emerges at 23.45. The slide on Tuesday is being driven by a decline of the US dollar across the board. An improvement in market sentiment weakened the demand for the greenback that is having the worst performance in more than a week. Not even higher US yields are helping the greenback. In Wall Street, the Dow Jones gaining 2.50% and the Nasdaq 1.50% at current moment.

Among emerging market currencies, the biggest gainer is the South African rand (USD/ZAR down 2.45%) followed by the Czech corona (USD/CZK -2.25%) and then comes USD/MXN with a decline of 2.30%.

The USD/ZAR price action over the past few months allows analysts, investors and creditors to use the 2011-2016 rally as...
07/04/2020

The USD/ZAR price action over the past few months allows analysts, investors and creditors to use the 2011-2016 rally as a yardstick to obtain higher targets with a relatively high degree of confidence.
Looking at the 2011-2016 rally as a yardstick, USD/ZAR has already exceeded the Fibonacci 61.8% extension and is on track to revisit the 76.4% extension at 19.4868. Before the 100% extension at 21.9515 comes into focus, USD/ZAR would have to clear the psychological level of 20 first. The only issue we have with the bullish view on USD/ZAR is the rapid pace of recent gains that resulted in a parabolic move higher. The higher USD/ZAR trades in the coming days, the bigger the risk of a sudden correction.

06/04/2020

Currency Desk Update:
Emerging markets currencies have experienced a whiplash in the last 2-3 weeks, Mexican Pesos though the central injected liquidity the spiraling weakness continued into 3rd week, at press time USDMXN was up 1.18%, while the South African Rand 1.38% by 6AM local time, the Singapore Dollar lost 1.09% all these three currencies have endured parabolic moves in the last weeks, a short term correction will appease the local markets which in current environment of high uncertainty these high risk and yielding currencies had lost ground in astronomical levels.

Cross Asset Analysis:The JSE closed today's session in the green after news broke early in the morning that China is sto...
02/04/2020

Cross Asset Analysis:
The JSE closed today's session in the green after news broke early in the morning that China is stock piling on Crude Oil. The Libor spread breaks up to 200bps since the FED started floading the market with liquidity measures to combat the downturn in economic development rising from the impact of Coronavirus and with higher demand for dollars. On the other side emerging market currencies takes nosedive amid credit repayment and surge in demand for dollars. The impact of Coronavirus has plunged major flights across EM's in cross asset allocations and several nations being downgraded and others facing downgrades including some developed markets.

ZAR outlook:The ZAR has had multiple fair value levels since the 2008 GFC, to date the 15-level seems to gain much conse...
02/04/2020

ZAR outlook:
The ZAR has had multiple fair value levels since the 2008 GFC, to date the 15-level seems to gain much consensus with the investment community. Idiosyncratic elements, ratings and global pandemic on the shores, has sparked weakness in local currency, while demand for safe haven has shot the roof. In light of the above, possibility of a major stimulus or IMF baillout might be the alternative to resuscitate the struggling economy.

02/04/2020

Bonds & Currency Update:
The widening spread between EURZAR & USDZAR can very much be attributable to the amount of foreign denominated debt held by SOE's and Public Listed Corporations which have borrowed heavily in dollars and euros. The impact will be devaluation of the Rand as corporations and SEO's attempt to repay and honor their debt obligations, which the implication is the short selling of the currency while credit spreads are widening on the 10yr bonds. As of April 1st the credit spreads has widened as high 800bps levels last seen during the 2008 Global Financial Crisis.

As Wall Street is on lunch break US major averages turns negative for the day, in worst 1st-Q since the crash '87 driven...
31/03/2020

As Wall Street is on lunch break US major averages turns negative for the day, in worst 1st-Q since the crash '87 driven down by data impact on Coronavirus recorded cases. The local JSE closed in positive territory, following strong bid from European Session and with the Rand strengthing 0.47% against dollar and major currencies.

31/03/2020

Stock update:
Deutsche Bank and Commerz Bank both downgraded by Fitch Rating agency, citing earnings contraction, liquidity strain and deravitives book exposure risk should recession hits the German economy. Though the two largest lenders are trading higher for the week despite the downgrade. On other news Royal Dutch Shell to suspend dividend payout and doesn't expect any significant virus impact on Q1 demand.
Shell +4.91%
Deutsche Bank +2.14%
Commerz Bank +1.95%

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