Live Markets: Rand faces a volatile week

Andre Botha, Principal Reseller at TreasuryONE, said the rand was in an unstable week.

At 11:04, the rand was trading at R $ 14.55 for the greenback.

"The current market narrative, aside from the tales of the trade war, is the fact that the market is beseeching the Fed to lower rates in the medium term in order to avoid the most recent fears of global growth. …

"In addition, Trump now has Mexico and India in the forefront. [This] has only reinforced the pessimistic outlook for global growth and the debate over the recession is only a matter of time. We have already seen a shelter such as gold climb above the $ 1,300 level as a result of the latest concerns about global growth.

"The rand had a little respite on Friday, the US dollar being under pressure and [the currency] could continue to be under pressure if calls for a reduction in the US interest rate became stronger. However, we are planning a volatile week for the rand with important data releases during the week.

"We will have the South African GDP figure tomorrow, which could confirm a contraction of the South African economy in the first quarter." We also have the South African current account balance on Thursday and the payroll figure non-agricultural in the United States Friday.

"All things considered, it could be a week of dirt or champagne for the rand with reciprocal risks [and] the rand could be below the level of R14.5000 near the level of R15.0000 by the end of the week. "

Asian stocks continue their slide and oil collapses amid the anguish of the trade war

Adam Haigh, Bloomberg

Asian stocks were generally lower as a result of trade war-related tensions caused by US tariffs that threaten Mexico's and China's retaliation against US measures.

US and European equity futures fell and most companies in the MSCI Asia Pacific index were down. Declines in Japan left benchmarks closer to erasing their gains for 2019, while shares in Shanghai and Hong Kong posted smaller declines. South Korean and Indian stocks have increased.

The 10-year Treasury yields hit a 21-month low, with JPMorgan Chase & Co. announcing further declines ahead. Oil prolonged the rout since May, when West Texas Intermediate fell 16%, due to worries about global demand.

"Trading is an extreme risk that is increasing day by day," Jun Bei Liu, portfolio manager at Tribeca Investment Partners, told Bloomberg TV. "At the moment, investors are more interested in preserving capital before moving on to buying."

The month of May was a brutal month for just about every asset class, with the exception of bonds, as fund managers sought the relative safety of treasury bills. And June began with China implementing retaliatory tariff hikes on Saturday.

Chinese authorities are also considering taking action against "unreliable" foreign companies, with a list of pending offenders. Meanwhile, tariff measures taken by President Donald Trump against Mexico have triggered a wave of forecast revisions among economists and strategists.

Traders hope the Fed will reduce its target rate by half a percentage point by the end of the year, a prospect now matching the forecasts of JPMorgan and Natwest Markets. Morgan Stanley expects a recession in the next nine months if Trump applies 25% tariffs on the rest of Chinese imports and China retaliates.