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Closing the loop 23 September 2022

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is weaker at R17.86/$ (R17.61/$*) today; it ranged between R17.55/$ and R17.89/$.
  • The currency is above its 50-day, 100-day and 200-day moving averages (R16.99/$, R16.53/$ and R15.90/$).
  • EM currencies are mixed today; the RUB (+4.1%) and KRW (+0.1%) are the biggest gainers; the BRL (-2.1%), CLP (-2.0%) and ZAR (-1.5%) are the biggest losers.
  • The UK manufacturing PMI increased in September, albeit remaining below the 50-benchmark line, to 48.5 from 47.3 in August.
  • The services PMI fell to 49.2 in September from above 50 in August and was the main driver of the fall in the composite index in September.
  • The composite index slipped further in September to 48.4 from 49.6 in August.
  • The slippage in the composite index, however, is likely to be underestimating the decline in economic activity during the month.
  • The UK has had an extra bank holiday in September to mark Queen Elizabeth II’s funeral, which saw most of the economy shut down.
  • The Eurozone composite PMI slipped to 48.2 in September, signalling contraction, from 48.9 in August.   
  • Both the manufacturing and services PMIs fell in September and are below the 50-benchmark line.
  • The US composite PMI increased to 49.3 in September from 44.6 in August.
  • Both manufacturers and service providers signalled improvements to their industries in September.
  • The manufacturing PMI remained in expansionary territory in September.
  • UK Chancellor Kwasi Kwarteng unveiled his mini budget today.
  • Kwarteng abolished the top tax rate in England; workers earning more than GBP150k will pay the same amount of tax as someone who earns GBP50k from April 2023.
  • The 45% additional rate will be replaced by the 40% higher rate threshold.
  • In his growth plan, Kwarteng highlighted the reversal of the hike in National Insurance, scrapped the planned increase in corporate tax and did away with the cap on bankers’ bonuses.
  • The growth plan comes as the UK faces a cost-of-living crisis, soaring inflation and rising interest rates.
  • He noted that the 2-year energy bailout programme will cost the economy GBP60bn over the first 6 months from October 2022.
  • Locally, it was a quiet day as far as economic data releases were concerned.
  • Eskom continues with Stage 5 loadshedding until 5am tomorrow when loadshedding will be downgraded to Stage 4.
  • Stage 3 loadshedding will kick in at 5am on Sunday.
  • The oil price is down by 5.1% today, and up by 10.4% in the year-to-date.   
  • The gold price is down by 1.7% today, and down by 10.0% in the year-to-date.
  • Brent crude oil is at $85.87/bbl ($90.46/bbl*).
  • Gold price is at $1646/oz ($1674/oz*). 
  • SA CDS is at 312bps (295bps*), Brazil 275bps (268bps*), Turkey 774bps (750bps*).
  • Yields: US 10yr at 3.72% (3.71%*), German bund at 2.024% (1.96%*) and SA 10-year generic at 11.23% (11.02%*), SA’s R186 is at 9.30% (9.13%*).
  • The JSE ALSI is down by 2.9% today (-1.4%*).

* Denotes yesterday’s close. 

Key events and data:

  • On Monday: 02h30: Japan Jibun Bank manufacturing, services and composite PMI (September)
  • 11h00: OECD publishes interim Economic Outlook

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