Daily Market Commentary: PMK Group

      Daily Market Commentary: PMK Group

       Latest Rates USD/ZAR 18.01 GBP/ZAR 22.64 EUR/ZAR 19.65 AUD/ZAR 11.54



      A strong dollar has important investment implications for inflation, commodity prices, earnings, and foreign exporters.

      Downward pressure on commodity prices. The world generally buys commodities in U.S. dollars, so a strong dollar makes these

      commodities more expensive. There is no better example recently of the dollar’s impact on commodities than oil. Trump gets some Oil kudos and claims total power over lockdown decision.

      Even as many state governors are planning to band together to implement regional strategies, Trump claims, contrary to the Constitution, that the president has total power of the process. The long interview also included claims that he had acted early, and had been criticized for doing so. It remains to be seen whether voters will be convinced by what sounded like bluster. If not we had better pay more attention to what the world look like under a Biden presidency. While Trump deserves some credit for persuading the cartelists to exercise some sanity in the face of the c.25m bpd drop in oil consumption it remains to be seen whether the 9.7mbpd cut agreed will keep the price above the$30/bbl mark for much longer. Industry experts reckon that all available tank storage will be fully take up by mid-May.

      1. The US and China, among others, have adding to strategic reserves.
      2. Ours was looted years ago plus we don’t have the cash now! China exports fell 3.9% year on year March This constituted a modest rebound for the trade sector after steep falls in January and February and further data this week will give a better idea of the extent of economic recovery.

      References: PMK investment committee, Exchange 4 free , Momentum Investment Consultants, Momentum securities, RMB Global Markets

      EU to Issue guidelines for Economic normalization

      France is extending lockdown to 11 May as it and Spain plan re-entry, for example, allowing construction to resume. Despite signs of improvement resumption of normality is months away.

      South Africa Compliance where it counts?

      As the President said last week the SA numbers are encouraging but media reports tend to indicate the lockdown isn’t happening in the townships for all the obvious reasons. Here’s one from a very angry and shaken up journalist: SANDF and police’s violent Easter gift to Masiphumelele

      Needless to say, if this report is indicative of what is happening in many, let alone all, the townships, the infection rate will really take off at some stage.

      BCG Vaccinations to the rescue?

      If township non-compliance is general we had better hope reports that countries with mandatory at birth BCG (Bacille Camette-Guerin) vaccinations have lower covid-19 infection rates, are true. In which case, since we are one of those that do, we may be reprieved through plain damn luck. (Citizen 5 April)

      Covid-19 Ministerial Committee Says This week Critical

      Committee Chair Professor Abdool Karim says SA has done much better than the UK thanks to the lockdown on 26 March and we cannot afford to come out of it precipitously. In a long Zoom meeting last night he and Dr Zwele Mkhize outlined a multi-pronged and pro- active strategy to fight the virus. The lockdown had bought us time to cope with the exponential rise in infections possible when the lockdown is lifted. It might, however, have to be extended.

      Mines To Open Today

      This is good news for the economy although it will be at least a couple of months before the industry is firing on all cylinders and, meanwhile, the infections it experiences it will provide a crucial indicator for unwinding the lockdown in the rest of the economy.

      References: PMK investment committee, Exchange 4 free , Momentum Investment Consultants, Momentum securities, RMB Global Markets

      Public Sector Unions Moot Court Action

      The unions threaten to take the Government to court if it does not adhere to the original wage agreement this week.

      What can we expect today ?

      Improved traction in the US futures market, a relatively upbeat reaction to the Chinese trade data and no evidence of a reversal in very short term metrics such as momentum indicators and RSI data indicates that further upside is likely to emerge for the JSE at the commencement of today’s session. We remain tethered to the view that short term metrics are currently exceptionally stretched placing the market in a much overbought position.

      Chasing performance at current levels should undoubtedly be avoided as the short term trading structure exhibits a high probability of reversal from current levels despite the potential for a further pop to the upside in today’s session.

      References: PMK investment committee, Exchange 4 free , Momentum Investment Consultants, Momentum securities, RMB Global Markets