Market Summary 16/09/2019
Local & Regional:
South African rand weaker as risk appetite ebbs
South Africa’s rand weakened in early trade on Monday as an attack on Saudi Arabia’s oil facilities dented risk appetite, while investors braced for monetary policy decisions from major central bank meetings due this week.
The rand, along with other emerging market assets, last week benefited from increased risk appetite after Washington and Beijing officials made concessions on retaliatory tariffs, while the European Central Bank (ECB) cut interest rates and promised more stimulus.
South Africa likely to miss 1.5% growth target -finance minister
South Africa’s rand steadied in early trade on Monday, struggling for momentum as the appetite for South Africa’s economic growth is unlikely to reach the treasury’s target of 1.5% in 2019 because conditions have changed and the country is facing increasing headwinds, Finance Minister Tito Mboweni said on Friday.
$11 Billion Green-Energy Initiative Takes Shape in South Africa
A plan to establish the world’s largest green-energy financing initiative is being threshed out in South Africa, which needs to reduce its environmental footprint and find innovative ways to fund debt-stricken state power utility Eskom Holdings SOC Ltd.
The plan being formulated by Meridian Economics, a Cape Town-based think tank, is under consideration by the government. It envisions the establishment of an $11 billion facility backed by development finance institutions and private funders. The new entity would lend money to Eskom at slightly below commercial rates on condition it accelerates the closure of polluting coal plants to make way for renewable energy.
Sasol and gold miners lead JSE higher amid Middle East tension
The JSE was in positive territory on Monday morning while global markets slipped after attacks on Saudi Arabia oil facilities at the weekend dampened risk sentiment.
An attack on state-owned oil producer Saudi Aramco’s facilities wiped out more than half of the country’s oil output, about 5% of global oil supply. Yemen’s Houthi rebels claimed responsibility for the attacks, while the US has blamed Iran.
Oil Prices Jump Most on Record After Saudi Arabia Strike
Oil posted its biggest ever intraday jump, briefly surging above $71 a barrel after a strike on a Saudi Arabian oil facility removed about 5% of global supplies and raised the specter of more destabilization in the region.
In an extraordinary start to trading on Monday, London’s Brent futures leaped almost $12 in the seconds after the open, the most in dollar terms since their launch in 1988. Prices have since pulled back about half of that initial gain of almost 20%, but are still heading for the biggest advance in almost three years.
Global markets hit by oil supply shock
Oil prices climbed to four-month highs on Monday and world stocks slid after weekend attacks on crude facilities in Saudi Arabia shut about 5% of the world’s supply and fueled worries over the impact of an oil shock on economic growth.
Brent crude futures rose nearly 20% at one point in their biggest intra-day gain since the Gulf War in 1991, and US futures jumped almost 16%, both hitting their highest level since May. But prices came off their peaks after US President Donald Trump authorised the use of the country’s emergency stockpile to ensure stable supply.
JSE lifts after break in US-China trade tension
China’s State Council said on Friday that it would exclude several US agricultural products from additional tariffs China’s State Council said on Friday that it would exclude several US agricultural products from additional tariffs including soybeans and pork, Reuters reported. US President Donald Trump said on Thursday that he would prefer a comprehensive deal with China but would not rule out an interim deal.
Egypt’s economy to grow by 8% annually by 2022-PM
Egypt expects its economy to grow by an annual rate of 8% by 2022 as the government improves the investment climate, Prime Minister Mostafa Madbouly said on Sunday.
“The Egyptian government expects growth to gradually pick up to 8 percent by 2022,” he told a meeting of Arab central bank governors.
In July, Madbouly said gross domestic product (GDP) grew 5.6% in the 2018/19 fiscal year.
Barring the oil industry, Egypt’s economy has struggled to attract foreign investors since the 2011 uprising that ended Hosni Mubarak’s 30-year rule.
Factors to watch
* GLOBAL MARKETS-Oil surges, stock futures slip after attack on Saudi facility
* Oil surges as Saudi attack focuses market on supply risks
* PRECIOUS-Gold gains as attacks on Saudi oil plants lift safe-haven bets
* MIDEAST STOCKS-Saudi leads Gulf lower after attacks on oil plants
* Trump says U.S. ‘locked and loaded’ for potential response to Saudi oil attack
* EXPLAINER-Attack on Saudi leaves world without spare oil capacity
* Trump authorizes release of U.S. oil reserves if needed because of Saudi attack
* Evidence from Saudi oil attack points to Iran, not Yemen -U.S. official
Articles of interest:
The implications of passive investing for securities markets:
The passive investment boom and its consequences