Market Update | 30 April 2020
James Mckeown, director of Domisa Treasury shares weekly market updates, along with his current view on the South African market.
Levels at the time of writing: USD 18.13; EUR 19.69; GBP 22.62
- US markets up on positive drug test results: On a day where Q1 GDP indicated the US economy contracted 4.8%, the most since the Great Depression, US markets were up almost 3% following news that Gilead announced that the NIAID remdesivir study in hospitalized patients hit its primary endpoint which was time to recovery
- ZAR & Emerging Markets stronger: The rand has strengthened this week on increased global risk appetite with investors seeking higher yield. Outflows from SA bond market as a result of removal from indexes following Moody’s downgrade have happened and market feels more constructive. S&P cut SA rating overnight from BB to BB-, further into sub-investment grade territory. Market did not react. A break of 18.00 vs the USD brings 17.50 clearly into view. SA trade balance this afternoon expected to be surplus of R9bn
- ZAR remains deeply oversold: along with SA assets in general ZAR remains deeply undervalued. Developed markets have shown incredible strength, albeit supported by unprecedented central bank intervention. Whilst Q1 earnings have been somewhat as expected the real damage will be visible in Q2. ZAR & SA assets will continue to strengthen as long as the “risk on” environment persists
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