Daily Market Update: PMK Group

2020-04-08

With global markets and the rest of the world focused on the impact of Covid-19, there seems to be some light at the end of the tunnel. Over in Wuhan, life appears to be slowly heading back to normal with China lifting the 76-day (yes, 76) lockdown. The news bodes well for some of the worst hit nations, where it is now rumoured that both Italy and Spain have seen the peak of transmission rate. The good news has filtered into the rand’s performance, with the currency gaining more than R1.00 against the USD in little over 48 hours. Attention will shift to the Fed’s FOMC minutes this evening and the OPEC meeting tomorrow. Following the last meeting that resulted in a price war between Russia and Saudi Arabia, expectation is for a 10 million barrel per day cut in production.

Latest Rates USD/ZAR 18.23 GBP/ZAR 22.45 EUR/ZAR 19.81 AUD/ZAR 11.20

All rates quoted are the interbank rates at time of publishing and shown for inducative purposes only. It is important to note that foreign exchange rates fluctuate and that rates will vary depending on the amount , product purchased and sold.

Global

Easing, and talk of easing, restrictions

Travel restrictions on the 70 million inhabitants of Wuhan, which accounted for 80% of China’s cases, have been lifted and some small European countries are easing. Kudlow says he hopes to reopen the US economy within four to eight weeks starting with smaller cities although New York would remain shuttered. The Imperial College in London, however, with Professor Neil Ferguson leading the charge, continues to warn on death tolls and the danger of a secondary wave of infections from premature easing.

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

Brent oil still buoyed by cut hopes

The G20 energy ministers are due to meet on Friday to find measures to ease the plight of the oil industry and ahead of that, on Thursday, their Saudi and Russian counterparts will meet to the same end.

he market obviously believes they will agree to some serious cutting so as not to look too foolish in front of their global peers. With oil traders saying the world is running out of tanks, on land and floating, to store the current 25mbpd surplus production, the market might be disappointed if it is not more than 10mbpd.

Meanwhile Sasol, after being caught with minimal hedging earlier this year, has no doubt been remedying that situation.

South Africa Lockdown measures

The President says it is too early to tell whether the lockdown has worked but government should know within the next few days, based on scientific evidence, whether it has or not. So we will know soon whether there will indeed be the widely expected fourth week extension. If not, we may join the select number of small nations, such as Austria, the Czech Republic and Denmark that benefited from early action and are beginning, slowly and carefully, to ease out of restrictions.

Following successful and detailed negotiations at Nedlac the UIF will soon be ready to assist.

The Treasury says it is actively scouring the world for cheap money, including a $1bn loan from the NDB.

Numerous domestic indices are currently much overbought on very short term technical metrics suggesting that despite evidence which hints at marginal traction in US markets as today’s session unfolds a degree of inconsistency and profit-taking is likely to characterize the session. Indicators such as six day rate of change data, stochastic metrics, the RSI indicator and momentum figures are currently marginally stretched with their elevated position materializing against the backdrop of descending medium term trend indicators such as the 200 day moving average. Current strength should be used as an opportunity to close out trading positions in those counters which have enjoyed brisk and decisive upside in recent sessions.

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

“As the global public health crisis and the ensuing economic fallout has rapidly intensified, more and more people have, sensibly, been reviewing their strategies to ensure that they remain on track .

This is usually in terms of investments, savings, tax planning, pensions and retirement planning, wills, education fee considerations , and foreign exchange.

We can be in no doubt that the world has already changed because of the coronavirus pandemic – and it will do so more and maybe at a faster pace. “For instance, we are moving towards an era of negative interest rates – this will negatively affect savings but bolster equity prices.

“And as always in times of increased turbulence, there will be winners and losers in the economy – and we’re already seeing this. This will mean job losses in some sectors and potentially unprecedented job and investment opportunities in others.”

Zoom meeting , calls and reviews are being conducted and we encourage on going engagemet as always .

Stay safe stay home.

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