Closing the loop 20 March 2023

Closing the loop

Shireen Darmalingam

Market highlights:

The rand is weaker at R18.53/$ (R18.44/$*) today; it ranged between R18.26/$ and R18.59/$.
The currency is above its 50-day, 100-day and 200-day moving averages (R17.78/$, R17.55/$ and R17.34/$).
EM currencies are mixed today; BRL (+0.7%), HUF (+0.7%) and CZK (+0.5%) are the biggest gainers; the KRW (-0.6%), ZAR (-0.3%) and ARS (-0.3%) are the biggest losers.

Financial market jitters increased over the weekend on the back of concerns around the health of the broader global banking system.
The Fed and five other major central banks have taken measures to improve global access to liquidity given the current financial market turmoil impacting the banking sector.
These major central banks announced daily (as opposed the weekly) swap operations to increase liquidity and “ease strain in global funding markets.”
The swap lines between the Fed, ECB, BOE, BOJ and Bank of Canada would run until at least the end of April.

The Eurozone trade deficit compressed to EUR11.3bn in January from a revised deficit of EUR13.4bn in December.
The narrower trade deficit comes even as both imports and exports declined in January.
Exports fell by 1.1% m/m in January while imports fell by 1.8% m/m.
The trade deficit, however, widened on a y/y basis, reflecting the higher imported energy cost in January compared to January 2022 (prior to the Russian-Ukraine war).

UK house prices according to Rightmove increased by 0.8% m/m in March from 0% in February.
Rightmove, however, noted that price growth in March was below the 1.0% increase for March over the past 20 years.
This comes as sellers are more cautious than normal about pricing.
In addition, higher mortgage rates and economic headwinds continue to pose challenges for the housing market.

US existing home sales for March are scheduled for release tomorrow and are expected to have increased by 5.0% m/m after having declined by 0.7% m/m in January.
The housing market, however, will continue to be weighed down by affordability concerns and weaker expectations for the labour market going forward.

Locally, it was a quiet day as far as data releases are concerned.
Eskom: Loadshedding has been suspended; Stage 2 loadshedding will resume tomorrow at 4pm.
The suspension comes on the back of low demand.

The oil price fell to its lowest level in 15 months intraday today largely on the back of concerns around the global banking sector and that a possible increase in the Fed Funds rate could spark a recession.
The oil price is down by 1.4% today, and down by 16.2% in the year-to-date.
The gold price is down by 1.0% today, and up by 8.1% in the year-to-date.

Brent crude oil is at $71.98/bbl ($72.97/bbl*).
Gold price is at $1970/oz ($1989/oz*).
SA CDS is at 317bps (291bps*), Brazil 286bps (248bps*), Turkey 557bps (541bps*).
Yields: US 10yr 3.37% (3.42%*), German bund at 2.06% (2.10%*) and SA 10-year generic at 10.73% (10.83%*), SA’s R186 is at 8.33% (8.40%*).
The JSE ALSI is up by 2.3% today (-0.5%*).

* Denotes Friday’s close.

Key events and data:

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