In the loop
Shireen Darmalingam
What you should know this morning:
- The rand is stronger this morning, at R18.69/$, after closing weaker yesterday (R18.70/$*).
- EM currencies were mixed yesterday; the THB (+0.5%), RUB (+0.5%) and MYR (+0.1%) were the biggest gainers; the COP (-1.8%), TRY (-1.3%) and ZAR (-1.0%) were the biggest losers.
- Asian equity markets are mixed this morning; the Nikkei and Shanghai Composite are down, while the Hang Seng is up.
- China’s Caixin services PMI increased to 54.0 in May (the highest in 10 months), from 52.5 in April.
- Total new orders increased at the quickest pace in a year on the back of recovering demand.
- The increase signals some resilience in the sector and may alleviate concerns over the economy’s outlook after weak official services PMI data.
- The Caixin composite PMI also increased in May, to 54.1, from 52.8 in April.
- Australia’s Q1:24 GDP came in at 0.1% q/q in Q1:24, from an upwardly revised increase of 0.3% q/q in Q4:23.
- On a y/y basis, GDP slowed to its lowest rate since 1992, excluding the pandemic year, at 1.1% in Q1:24, from 1.6% in Q4:23.
- Elevated interest rates and cost of living pressures weighed heavily on households and broader economic activity.
- The slowdown will likely increase pressure on the Reserve Bank of Australia (RBA) to begin cutting interest rates, after having held rates steady at 4.35% at its past four meetings.
- RBA Governor Michele Bullock noted today that the central bank remains data-driven and “isn’t ruling anything in or out”.
- The US ISM services index for May is due out today; the index likely increased to 51.0 in May, from 49.4 in April.
- A rebound is expected as regional Fed surveys have been pointing to a modest improvement.
- The US private sector ADP employment report, a precursor to the non-farm payrolls report on Friday, is also on the cards today.
- Private payrolls are likely to have increased by 175k in May, following a 192k increase in April.
- The Bank of Canada is likely to hold its overnight target rate steady today, at 5.0%.
- This even as inflation surprised to the downside in the first three months of the year.
- The National Bank of Poland will also meet today to decide on rates and is largely expected to keep rates on hold.
- The central bank last cut rates in October 2023.
- Locally, the industry-wide PMI for May is due out today; the index is currently above the 50pt benchmark, at 50.3.
- The BER will release the Q2:24 business confidence data; the index improved to 30 in Q1:24.
- Eskom: loadshedding remains suspended until further notice.
- Brent crude is up this morning, and up by 0.6% year-to-date.
- The gold price is down this morning, and up by 13.5% year-to-date.
- Brent crude oil is currently at $77.50/bbl; ($77.52/bbl*).
- Gold is at $2340/oz ($2323/oz*).
- SA CDS 237bps*, Brazil 144bps* and Turkey 266bps*.
- Yields: US 10yr at 4.32%*, German bund at 2.53%*, SA 10-year generic at 11.94%*, SA’s R2030 at 10.56%*.
* Denotes yesterday’s close.
Key events and data:
- 09h15: SA S&P Global industry-wide PMI (May)
- 10h00: SA BER business confidence index (Q2:24)
- 10h00: Eurozone HCOB services and composite PMI (May – final)
- 10h30: UK S&P Global services and composite PMI (May – final)
- 11h00: Eurozone PPI (April)
- 13h00: US MBA mortgage applications (31 May)
- 14h15: US ADP employment report (May)
- 15h45: US S&P Global services and composite PMI (May – final)
- 16h00: US ISM services index (May)
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