Market Commentary: PMK Group

      Market Commentary: PMK Group

      Latest Rates

      USD/ZAR 18.04 GBP/ZAR 22.26 EUR/ZAR 19.81 AUD/ZAR 10.96

      The rand enjoyed a mini-rally late on Tuesday after SA recorded its largest trade surplus in over a year. This is no April fool’s joke, with the February trade surplus of R14.15b surprising markets when compared to January’s trade deficit of R2.72b. Relief for the local unit was short lived however as markets remember that we’re heading into day 6 of our national lockdown, with the rand already weakening by 1.2% today and currently sitting over 18/USD.

      On the data calendar today: local March manufacturing and new vehicle sales figures are out at 11h00 and 14h00 respectively.

      Longest month in history ends with US overtaking China: just not in the way it would like!

      A lacklustre tonality in US futures markets, inconsistent performances in the Asian Pacific region and specific very short term technical considerations against the backdrop of a touch of firmness in the Rand will encourage selling pressure on the JSE at the commencement of today’s session. The generalised technical area at around 38,200 points on the JSE-TOPI remains a realistic initial port of call for the index. In our appraisal very short term trading positions which have recorded particularly brisk upside should now be closed primarily as a risk control and profit capturing exercise.

      WW2’s 6 June D Day was said to be the longest day but March 2020 will no doubt be remembered for the global explosion in the coronavirus. President Trump, needless to say without any “excuse me for getting it wrong last month” is now listening to, and repeating his expert Dr Fauci’s warning that US deaths could reach 240000.

      Policy Response

      A Bloomberg headline has it that the White house and Congressional Democrats are preparing a fourth round of stimulus (presumably the Republicans will not thwart their leader on this).

      Then, in another headline which we have been waiting for years to see, Trump has called for a $2TN infrastructure bill. Want money? Print dollars! At least there will be commensurate production of something really needed.

      01 April 2020

      Merkel to save Europe

      Europe’s response so far boosts the Italian Prime Minister’s narrative that it could split along national lines. Many are now looking to Angela Merkel as the leader to forge a unified response to lead Europe out of the quagmire. She is apparently increasingly active while under quarantine.


      Covid-19 cases less than expected but too early to draw conclusions

      Dr Zwele Mkhize says death toll is now 5 and cases 1395; government had expected

      3000 to 4000 at this stage. Only 46 new cases yesterday and the total now 1353. We have, however, had our first township death and the 10000 testers haven’t really got going yet in those areas.

      Eskom: force majeure on renewable contracts; scales down “philosophy” maintenance

      Following the 9500MW drop in power offtake, which underscores the dramatic plunge in SA’s economic activity, Eskom can’t sell what it is producing so it looks as though renewables producers will take some pain.

      Whilst acknowledging the source of this comment from a leafy suburban armchair and the need for safety first, one would hope that Eskom’s decision to scale back on maintenance could be reviewed with, perhaps, special precautions and modi operandi for the front line maintenance crews. It would seem to be a valuable opportunity.

      Mary Oppenheimer and daughters donate R1bn to Solidarity Fund

      Hopefully this is not the end of this magnanimous trend. We look forward to news of successful delivery by the Fund.

      Sanitized fingers crossed that April will be a more positive month for the rand and

      (more importantly) the health and safety of all of us!