It is rather gloomy in financial markets at this stage.
Yesterday saw massive selling of all assets and a huge surge in demand for the mighty greenback as liquidity concerns and continuing fears over the Covid-19 pandemic grow. The Dollar’s status as the world’s reserve currency has seen a global move back to the Dollar in these volatile and uncertain markets. The Dollar DXY index has soared to 101.32 (see the chart below) with the Pound falling to below 1.1500 and the Euro to below 1.0900 yesterday. The Pound is currently a touch higher at 1.1508, the Euro at 1.0908 and the Yen at 109.05. The Aussie Dollar is trading at 0.5590 this morning after the RBA cut rates again today to 0.25%.
EM currencies were not spared as the Oil price sensitive Russian Rubble and Mexican Peso fell heavily. The Rand broke above 17.0000, reaching 17.4000 before closing at 17.0900. This respite was short-lived as Asian markets tumbled and the Rand has weakened to 17.5200 this morning. We await the SARB’s interest rate decision later today.
Wall Street was once again deep in the red and US futures are trading down again this morning, pointing to further losses. Asian stocks are trading lower today while the JSE fell 6.39% yesterday.
Global Treasury bonds are being liquidated massively as investors move to cash and yields are soaring. The US 10y yield has climbed to 1.256% and the 30y yield to 1.866%. The SA 10y yield has risen to above 11.0%. See the chart below.
Commodity prices continue to fall with Brent Crude Oil falling below the $25.00 per barrel mark. With all the world halting flight massively, something has to give somewhere. With oil already at multi decade lows and demand continue to plummet will we see $15 oil? Or do the producers start to cut back production? US shale producers of which Sasol is one, is under extreme pressure and cannot survive at these prices. See the chart below for oil for the past 5 days.
