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Closing the loop 24 March 2023

Closing the loop

Shireen Darmalingam

Market highlights:

  • The rand is weaker at R18.16/$ (R18.07/$*) today; it ranged between R18.05/$ and R18.29/$.
  • The currency is above its 50-day, 100-day and 200-day moving averages (R17.89/$, R17.55/$ and R17.39/$).
  • EM currencies are mixed today; IDR (+1.3%) and TWD (+0.1%) are the biggest gainers; the HUF (-1.7%), RUB (-1.2%) and KRW (-1.2%) are the biggest losers. 
  • The Eurozone S&P Global composite PMI increased more than expected to 54.1 in March from 52.0 in February.
  • The improvement comes on the back of the strongest growth in ten months in the services PMI, which increased to 55.6 in March from 52.7 in February.
  • The manufacturing PMI remained in contractionary territory slipping further to 47.1 in March from 48.5 in February.
  • The UK composite PMI slipped in March, albeit remained in expansionary territory, to 52.2 from 53.1 in February.
  • The deterioration was driven by decreased activity in the manufacturing sector; the manufacturing PMI fell to 48 in March from 49.3 in February.
  • The services PMI also remained in expansionary territory with the index at 52.8 in March from 53.5 in February.
  • The data suggests that companies are still confident about the outlook for the economy despite higher interest rates and the recent global financial market turmoil.
  • UK retail sales increased more than expected by 1.2% m/m in February following an increase of 0.9% m/m in January.
  • Retail sales returned to their pre-pandemic levels in February as retailers discounted goods and lured consumers back into the shops.
  • The data adds to evidence that UK consumers seem to be dealing with the cost-of-living crisis better than expected.
  • This could support the case for the BOE to hike rates further.
  • Bank of Atlanta Fed President Raphael Bostic commented today that the recent 25 bps increase in the Fed funds rate came following “a lot of debate”.
  • The decision to hike interest rates in the midst of a banking crisis was not made lightly.
  • Bostic, however, noted that there were clear signs that the US banking system was sound and resilient.
  • In addition, the bank also had to stick to its course of taming inflation.
  • Fed Chair Jerome Powell noted following the rate announcement last week that the FOMC had considered pausing rates in the days prior to the meeting.
  • Locally, it was a quiet day as far as data releases were concerned.
  • Eskom: Stage 2 loadshedding continues until 5am tomorrow; Stage 1 loadshedding will be implemented from 5am until 4pm tomorrow.
  • We look to the SARB’s MPC meeting next week; a 25 bps hike in the repo rate is largely expected.
  • The oil price is down by 1.8% today, and down by 13.2% in the year-to-date.
  • The gold price is down by 0.2% today, and up by 9.4% in the year-to-date.
  • Brent crude oil is at $74.58/bbl ($75.91/bbl*).
  • Gold price is at $1994/oz ($1999/oz*). 
  • SA CDS is at 307bps (291bps*), Brazil 257bps (248bps*), Turkey 547bps (536bps*).
  • Yields: US 10yr 3.33% (3.42%*), German bund at 2.11% (2.19%*) and SA 10-year generic at 10.79% (10.74%*), SA’s R186 is at 8.35% (8.34%*).
  • The JSE ALSI is down by 1.0% today (+0.5%*).

* Denotes yesterday’s close. 

Key events and data:

  • On Monday: 03h30: China industrial profits (February)
  • 07h00: Japan leading and coincident indices (January – final)
  • 10h00: Eurozone M3 money supply (February)

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