By Andre Botha, Senior Dealer, TreasuryONE
Risk aversion and a flight to safety dominate markets after US Retail sales declined by a record 8.7% and manufacturing production fell to its lowest level in 74 years. The dire economic global growth outlook resulting from COVID-19 saw a move to bonds and the Dollar while equity markets and risk-sensitive currencies were sold off.
US and European stocks closed in the red yesterday and Asian stocks are down this morning. US futures are marginally down this morning as well. The JSE erased all of Tuesday’s gains to close 3.15% lower yesterday.
The Dollar is firmer today with the Euro falling to 1.0877 and the Pound to 1.2475. All eyes will be on today’s Initial jobless claims number which is forecast at 5.1 million new claims. The Rand weakened throughout the day yesterday and traded above the 18.8000 level at one stage.
This morning the Rand is 18.7100, just above last nights closing level. The IMF has expressed confidence that South Africa’s resilience will see it overcome the impact of the Coronavirus, citing its deep and liquid capital markets as well as low level of foreign borrowings relative to other EM countries.
The Oil price has steadied after yesterday’s sell off with Brent currently quoted at $27.90. Gold and Platinum are flat this morning at $1 716.20 and $787.75 respectively while Palladium is up at $2 217.10.
