Overview
US: Preliminary US durable goods orders for May fell by 2.2% over the month from a gain of 3.3%, significantly below consensus expectations. Sentiment indices for June were also lower across the board. This continues to point toward a sluggish secondary sector of the economy which will now be impacted further by a stronger dollar and weaker global growth outlook in the wake of the Brexit which remains the key driving force in the medium term. Brexit risks have seen rate hike expectations take off the table. A generally weak backdrop will not only constrain the Fed but may well spur other central banks into further stimulus action depending on the expected range of the fall out and negative spill overs and feedback loops to the global economy.
Currencies
On Friday the markets opened with fear and uncertainty the chief drivers of market activity post the surprising Brexit vote. Liquidity in the foreign exchange markets was practically non-existent, and spreads in the price spectacular to say the least. The indicated opening level around 15.5000 and a flurry of nervous activity saw the rand manage to trade back below 15.0000 to touch 14.8000 during the local session and closing the day just sub 15.0000. This morning the rand is currently trading at 15.2500, EURZAR 16.7990 and GBPZAR is trading at 20.4272.
Markets remain cautious and are likely to remain so for a significant period of time as the realities of the vote and the time lines of the various outcomes remain somewhat sketchy. Possible trading range in the rand today 15.0800 to 15.4800
SA Equities
Markets experienced a sharp sell-off on Friday after the surprise of the U.K. voting in favor of exiting the European Union caused a global risk sell off as investors weighed the implications on the global economy. The local market lost over 5% in the morning session but managed to pull back and close just under 4% lower as gold stocks rocketed on the back of the stronger gold price as the safe haven appeal of the yellow metal surged. The Top 40 lost 3.9% while the broader based All Share fell 3.5%. The sharp losses meant that the local bourse closed lower for the week wiping out the stronger performances seen on Monday and Wednesday. Goldfields and Harmony Gold were among the top performers gaining 14.9% and 13.8% respectively while everything else sold off aggressively, particularly companies with direct exposure to the U.K. Property counters INTU and Capital and Counters illustrated this falling a massive 15% and 18% respectively. After market close media giant Naspers released full year core headline earnings of $1.2bn dollars with profits gaining 21%. Value traded was R39bn and the rand was at R15.08 to the dollar.
Financial Data
Oil=$48.41 Gold=$1,315.75 Platinum=$985.40
R/$=15.08 R/€=16.73 R/£=20.43 $/€=1.11
JSE All Share=51,679.66 DJIA=17,400.75 FTSE 100=6,138.69
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