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In the loop 06 January 2025

In the loop

Christelle Grobler

What you should know this morning:

  • The rand is weaker this morning, at R18.77/$, after closing stronger on Friday (R18.72/$*).
  • EM currencies were mixed on Friday; the CLP (-1.3%), BRL (-0.6%) and THB (-0.5%) lost the most; the RUB (+0.9%), COP (+0.7%) and RON (+0.4%) gained the most.
  • Asian equity markets, the Nikkei, Hang Seng and Shanghai Composite are down this morning.
 
  • China’s Caixin services PMI increased to a 7-month high in December, reaching 52.2, from 51.5 in November.
  • The increase was on the back of further improvement in the domestic market, while export demand weakened.
  • The Caixin China composite PMI dipped to 51.4 in December (from 52.3 in November), but remained in expansion for the fourteenth straight month.
  • A deceleration in manufacturing output growth weighed on December’s composite PMI.
 
  • Japan’s Jibun Bank composite PMI registered 50.5 in December, up from 50.1 in November.
  • This final reading for December came in lower than the flash estimate of 50.8.
  • The Jibun Bank services PMI for Japan also recorded a lower reading in the final estimate, reaching 50.9 in December, from 51.4 published previously and 50.5 in November.
  • At these levels, Japan’s PMI figures signal expansions in the services as well as other industries.
  • BOJ Governor Kazuo Ueda reiterated this morning that the bank is likely to hike its policy rate this year if economic conditions continue to improve.
  • He noted that the timing of the rate hike will be contingent on the outlook for the economy, inflation and financial conditions.
  • The momentum in wage increases is a key marker for the BOJ, according to Ueda, and the bank hopes to see a balanced rise in wages and prices.
  • Ueda warned that the uncertainty with respect to US economic policies is high.
 
  • The HCOB Eurozone composite and services final PMIs for December will be released today.
  • Earlier flash readings indicated an expansion in the services sector, with the services PMI at 51.4 in December, up from 49.5 in November.
  • Eurozone Sentix investor confidence index for January is due out today.
  • During December, the index unexpectedly dipped to -17.5, from -12.8 in November.
  • Investor confidence likely deteriorated further in January, with the index expected to reach -17.9.
 
  • Locally, the S&P Global PMI for December is due later this morning.
  • This all-industry PMI has been hovering above the 50-mark since August and increased to 50.9 in November, from 50.6 in October.
 
  • Brent crude is down this morning, and up by 2.0% year-to-date.
  • The gold price is down this morning, and up by 0.4% year-to-date.
 
  • Brent crude oil is currently at $76.14/bbl; ($76.51/bbl*).
  • Gold is at $2635/oz ($2640/oz*).
  • SA CDS 192bps*, Brazil 203bps* and Turkey 260bps*.
  • Yields: US 10yr at 4.60%*, German bund at 2.43%*, SA 10-year generic at 10.23%*, SA’s R2035 at 10.26%*.
 

* Denotes Friday’s close.

Key events and data:

  • 09h15: SA S&P Global PMI (December)
  • 11h00: Eurozone HCOB composite, services PMI (December – final)
  • 11h30: UK S&P Global composite, services PMI (December – final)
  • 11h30: Eurozone Sentix investor confidence (January)
  • 16h45: US S&P Global composite, services PMI (December – final)
  • 17h00: US factory orders (November)
 

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