Top Gun, Jurassic World bump Ster-Kinekor performance in June | Fin24
The rand weakened past 17 per dollar on Monday as the South African currency’s resilience is tested by fears of a US recession even as local fundamentals remain supportive.
"Even more concerned by recession fears could be the crowded positions in popular non-oil commodity names like South Africa," Bank of America Corp. strategists led by David Hauner wrote in a note to clients."They won’t escape tightening financial conditions, recession fears and de-risking, even if the long-term fundamental picture is likely to remain supportive."
Lower oil prices help curb inflation, they’re also a drain on dollar liquidity globally, boosting the greenback and weighing on emerging-market currencies as financial conditions tighten and funding costs rise, according to Nedbank. "In our view, the rand is likely to recover in the second half of 2022 on the accelerated tightening by the SARB and the expected recovery in China."
An upbeat US June payrolls report already has the market wagering heavily on a rise of 75 basis points from the Federal Reserve, sending bond yields and the dollar higher. If the economy does manage to dodge recession, Kostin sees EPS growth of 8% in 2022 and 6% in 2023, with the S&P 500 index rising to 4,300. In a moderate recession, EPS could fall by 11%.
Japan's conservative coalition government was projected to have increased its majority in upper house elections on Sunday, two days after the assassination of former prime minister Shinzo Abe. Likewise, Treasury yields climbed around 10 basis points on the jobs report and the 10-year stood at 3.09% on Monday, up from a recent low of 2.746%.
"Indeed, we think the EUR/USD rate will break through parity before long, and may well trade some way through that level." The US economy added 372,000 new positions in June, nearly 100,000 more than economists forecast, and the unemployment rate held steady at 3.6 percent, the Labor Department reported.
But the report"did nothing to deter the market from thinking the Fed is going to remain an aggressive rate-hike path."The broad-based S&P 500 shed 0.5 percent to 3,884.23, while the tech-rich Nasdaq Composite Index dropped 0.5 percent to 11,559.45. A strong reading on the US employment data could provide the Fed with evidence to stick to its hawkish line.
The dollar was helped by two top Federal Reserve officials who said the economy could withstand sharper rate hikes and maintain growth. There has been growing talk that the fast pace of monetary tightening by the bank will tip the world's top economy into recession. But Christopher Waller, a member of the board of governors, said worries were overblown and that a strong jobs market would provide a buffer, adding that rates needed to go up sharply and quickly.
Masahiro Yamaguchi, of SMBC Trust Bank, said:"It could be negative for markets if the government's policy, including its stance on monetary easing, is affected as it was evident that he was pulling the strings behind the scenes in many ways. "If it becomes possible for Kishida to carry out policies he wanted to, such as financial tax and regulations on share buy-back, that would be negative for markets.
However, surging inflation, rising interest rates and a fresh flare-up of Covid infections in Shanghai continued to keep investor sentiment grounded. St Louis Fed president James Bullard also said there was"a good chance of a soft landing".And Brian Belski, at BMO Capital Markets, agreed that fears of a recession had gone too far."Institutional investors are not positioned for any kind of upside move. That's why you are seeing these sharp moves on a day like . We remain positive and think people are way too negative."
"And that could provide a reason for the Fed to at least pause their hiking cycle, because a crumbling jobs market is great for deflation. So I'd expect market fireworks if and when begins to disappoint." Sterling extended Thursday's rally that came after Boris Johnson resigned as leader of the ruling Conservatives, paving the way for a new prime minister and bringing an end to weeks of political uncertainty in the United Kingdom.
London's blue-chip FTSE 100 stock index rose 1.1 percent, with gains accelerating after Johnson announced his resignation."Sterling is revelling in what is probably its last 'Boris bounce', moving up against the dollar and the euro as the political crisis of the past few days subsides," said Chris Beauchamp, chief market analyst at online trading platform IG.
Oil prices jumped more than five percent after having briefly fallen under $100 per barrel this week. Two of these bids have been rejected. But on Wednesday, the parties made a new offer of 504 pence per share . Investors are weighing the risks of a US recession with the Federal Reserve hiking rates aggressively. Minutes of June's Fed meeting released on Wednesday - when policy makers tightened by 75 basis points, the most since 1994 - revealed their concern that worsening inflation would erase faith in the Fed's ability to control it.
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