The Week Ahead

9 - 13 December

International news

Markets have been receiving mixed signals around the progress of a trade deal between the US and China. Negative sentiment has stemmed from comments by the US President that he would be fine with a trade deal only being realised after the 2020 US election. The president has gone onto say that if there is no progress in trade talks, new tariffs would be imposed on China on December the 15th. On the contrary, the Chinese finance ministry has said that it would start the process of waiving its retaliatory tariffs on imports of US pork and soy products, which appears an act o goodwill boosting the prospect of a phase 1 deal being signed sooner rather than later.

Local news

Third quarter Gross Domestic Product (GDP) data showed an unexpected contraction of 0.6% quarter on quarter and 0.1% year on year. This brings the unadjusted real GDP figure for the first nine months of 2019 to +0.3% when compared to the first nine months of 2018.

The mining and quarry industry contracted by 6.1% with a decrease in platinum group metals (PGMs), coal and iron ore noted.

The manufacturing industry decreased by 3,9% with lower economic activity noted in basic iron and steel, non-ferrous metal products, metal products and machinery; and petroleum, chemical products, rubber and plastic products.

The transport storage and communication industry decreased by 5,4%.

The trade, catering and accommodation industry as well as the finance, real estate and business services provided positive contributions to the GDP figure, gaining 2.6% and 1.6% respectively.

Economic Calendar

Date Time Currency Event Previous

10-Dec

11:30am

GBP

GDP m/m

-0.10%

10-Dec

1:00pm

ZAR

Manufacturing Production Index

-2.40%

11-Dec

10:00am

ZAR

CPI y/y

3.70%

11-Dec

3:30pm

USD

CPI m/m

0.40%

11-Dec

3:30pm

USD

Core CPI m/m

0.20%

11-Dec

9:00pm

USD

FOMC Economic Projections

11-Dec

9:00pm

USD

FOMC Statement

11-Dec

9:00pm

USD

Federal Funds Rate

<1.75%

11-Dec

9:30pm

USD

FOMC Press Conference

12-Dec

1:00pm

ZAR

Retail Sales y/y

0.20%

12-Dec

All Day

GBP

Parliamentary Elections

12-Dec

2:45pm

EUR

Main Refinancing Rate

0.00%

12-Dec

2:45pm

EUR

Monetary Policy Statement

12-Dec

3:30pm

EUR

ECB Press Conference

13-Dec

3:30pm

USD

Core Retail Sales m/m

0.20%

13-Dec

USD

Retail Sales m/m

0.30%

Commodities

Oil prices have rallied this week finding a catalyst for gains from the supply side rather than the demand side. The Organisation of Petroleum Exporting Counties (OPEC) along with Russia have agreed to support oil prices by furthering production curbs by another 500 000 barrels per day. This adds to the already lowered output of 1.2m barrels per day which currently extends until March 2020. The total production curbs amount to roughly 1.7% of global supply.

The Rand

The rand has had mixed fortunes this week, gaining against the US dollar while softening against the Euro and British pound.

Gains against the greenback have more been a case of dollar weakeness rather than rand strength. The dollar has seen worse than expected data and trade uncertainty starting to increase the perception that US monetary easing may not be over just yet. The greenback has moved in and out of positive territory against the domestic currency, although been a clear underperformer relative to its developed market currency peers (such as the Euro and British Pound).

Companies

Sanlam Limited: released a 10M19 operational update, guiding that new business volume increased 6.0% and the net value of new covered business written by 13.0% from the prior year’s comparative period.

Vukile Property Fund Limited: 1H19 results, showed diluted EPS to have declined by 14.5% from the prior year’s comparative interim period.

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