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In the loop 24 January 2023

In the loop

Shireen Darmalingam

What you should know this morning:

  • The rand is stronger this morning, at R17.18/$, after closing weaker yesterday (R17.20/$*).
  • EM currencies were mixed yesterday; the COP (+0.9%), MXN (+0.3%) and CZK (+0.3%) were the biggest gainers; the PEN (-0.7%), HUF (-0.7%) and ARS (-0.5%) were the biggest losers.
  • Asian equity markets the Nikkei, Hang Seng and Shanghai Composite are up.
  • Eurozone consumer confidence improved in January but remained in negative territory.
  • The confidence index increased to -20.9 in January, from -22.2 in December.
  • The improvement to the highest level since February 2022 signals some resilience as the region tries to avoid a recession this year.
  • Nonetheless, consumer sentiment remains low by historical standards and below the long-term average. 
  • Consumers are still particularly concerned about inflation continuing to erode purchasing power. 
  • However, recent gains add to evidence that this regional economy is performing better than expected despite the energy-price shock.
  • The US leading index slid by 1% in December, after a 1.1% slippage in November.
  • The biggest positive contributor to the leading index was orders for non-defence capital goods.
  • The coincident index, which measures current conditions, rose 0.1% in December, following no change in November.
  • Pakistan’s central bank raised its key rate by 100 bps, to 17%, the highest in over 24 years. 
  • The increase comes as this economy grapples with rising inflation, supply shortages, and stalled foreign financing. 
  • The government has an economic growth estimate of 2% for this year; the risks here, however, are to the downside. 
  • Japan’s Jibun Bank composite PMI increased to 50.8 in January, from 49.7 in December.
  • Both the manufacturing and services PMI improved in January.
  • PMI data for several countries, due out today, is likely to exhibit a mixed picture.
  • The Eurozone composite PMI for January is expected to have edged up, to 49.8, from 49.3 in December. 
  • Falling energy costs have boosted prospects for consumers and factories. 
  • The UK manufacturing gauge is seen rising to 48.5 in January, while the composite PMI is expected to slip to 48.8.
  • The US manufacturing PMI is expected to have increased in January, while the services component likely slipped further in January.
  • Locally, the SARB’s leading indicator for December is scheduled for release today; the index slipped to 123 in November, from 124.1 in December.
  • Eskom: loadshedding has been downgraded to Stage 3; Stage 4 loadshedding will commence at 4pm until 5am tomorrow.
  • Brent crude oil is down this morning, and up by 2.5% year-to-date.
  • The gold price is up this morning, and up by 6.1% year-to-date.
  • Brent crude oil is currently at $88.05/bbl; ($88.19/bbl*).
  • Gold is at $1934/oz ($1923/oz*).
  • SA CDS 254bps*, Brazil 244bps* and Turkey 551bps*.
  • Yields: US 10yr at 3.50%*, German bund at 2.20%* and SA 10-year generic at 10.51%*, SA’s R186 at 8.25%*.

* Denotes yesterday’s close. 

 Key events and data: 

  • 09h00: SA leading indicator (December)
  • 11h00: Eurozone S&P Global manufacturing, services and composite PMI (January)
  • 11h30: UK S&P Global manufacturing, services and composite PMI (January)
  • 16h45: US S&P Global manufacturing, services and composite PMI (January)

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