Rand Weakens to R18/USD

  • Market Overview

The rand weakened to R18 to the US dollar on Thursday afternoon after Eskom announced that stage 4 load shedding would remain in place until the power utility could replenish its diesel stocks. “The vessel that is supposed to offload diesel at Mossel Bay cannot berth due to rough seas. Eskom has to therefore preserve the low diesel levels at Gourikwa, while delivery to Ankerlig will take time to replenish as it is done by road tankers,” the statement said. At 18h00 the currency recovered slightly trading at R17.98 to the US dollar. The local index also closed down by 0.85% after a rally in the resource sector was not enough to offset declines in industrial and financial counters.

Most global markets traded in the red as investors worried about whether weaknesses in the UK market would spill over to other indices. All three US indices were trading down at 18h00 “amid persistent worries about tightening financial conditions and slowing economic growth. The tech sector was among the top losers, led by a slump in Apple (NASDAQ: AAPL ), after the Bank of America (NYSE: BAC ) downgraded the tech stock to neutral,” Trading Economics added. According to Reuters “worries of a global economic downturn from aggressive central bank rate hikes and risks of potential contagion from a turmoil in UK markets turned investors risk averse.” Added to that was data from the US Bureau of Economic Analysis that showed the US economy entered a technical recession when its economy contracted by 0.60% in the second quarter of this year, after falling 1.60% in the first three months.

European markets closed lower after data showed that inflation in Germany rose more than expected. “Germany's consumer price inflation jumped to 10% year-on-year in September 2022, the highest on record and well above market expectations of 9.40%, a preliminary estimate showed. Consumer prices have been rising in the wake of a deepening energy crisis in Europe's largest economy, as well as the continuing supply chain interruptions,” added Trading Economics.

Asian markets were mixed with the Hang Seng and Shanghai indices falling “as caution dominated market sentiment ahead of Chinese PMI and other economic data.” However, Japan’s Nikkei rose by 0.95% after the Bank of England’s announcement about quantitative easing to stabilise its market.

Concerns about demand for fuel in a slower-growing world economy caused the price of Brent crude to rise to $89.65 a barrel at 18h15. The price of gold traded at $1 664.33 at the same time.

PSG Wealth Daily Investment Update, 30 September 2022

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