11 Sep 2018

Market Brief: the Santa rally hits Southern Africa and Wall Street

Kevin Musisi

Dealing team

Just 6 days until Christmas and Santa’s pre-Christmas soiree in Southern Africa seems to continue. Not long ago, Zimbabwean President Robert ‘Bob’ Mugabe lost power after nearly 4 decades in charge.

Today's data release
  Key levels
09:00 EU German IFO   Support Resistance
10:00 EU construction output GBP/USD 1.3027 1.3549
13:30 US housing starts GBP/EUR 1.1065
1.1560
Market overview

Good morning everyone, just 6 days until Christmas and Santa’s pre-Christmas soiree in Southern Africa seems to continue. Not long ago, Zimbabwean President Robert ‘Bob’ Mugabe lost power after nearly 4 decades in charge. Yesterday in South Africa, after a gruelling duel, Cyril Ramaphosa won the ANC election, with next year’s state election looming.

Let’s not get ahead of ourselves, Ramaphosa beat Dlamini-Zuma, the President’s ex-wife, by a slender margin - just 52 percent to 48 percent (same margin as Brexit, I might add) and is not president yet. He will need to tread very carefully, as the ANC is deeply divided and the task ahead of him is a mammoth one, especially with Zuma’s allies positioned all around him. 

Needless to say, the Rand had an excellent day and is now trading around the GBPZAR 17.00 handle with USDZAR reaching a nine month high yesterday.

In other news, the Santa Rally has also hit Wall Street as US stocks reached historic highs as America moves closer towards Trump tax reforms, which could see corporate rates slashed from 35% to 21%. Yesterday, the Dow closed up 0.6%, the S&P up 0.5% and the tech heavy Nasdaq up 0.8% yesterday, with global stocks largely following suit.

Turning our attention to matters Brexit, Michel Barnier, the European Union Chief Negotiator has started to play hard ball again. In an interview with the Guardian newspaper he ruled out a special carve-out for the UK financial services industry and specifically warned Britain that it will need to abide by the rules drawn up by the EU during a transition period after leaving the bloc.

The day ahead

In terms of the day ahead, it’s beginning to feel a lot like Christmas. The calendar is light with attention mostly focussed on the German IFO data out this morning and US housing starts this afternoon.

Thought of the day

No judgement, but are you feeling a little hungover today? Strong on a Monday night, I agree, but its Christmas! If the answer is yes, as you walk into work in pain and regret, then you're really not alone. This weekend, the last one before the UK disperses for Christmas, is a notoriously boozy one, as revellers get into the festive spirit. Now, the morning after all that festive spirit, you're probably planning how to tackle your hangover - perhaps you're even reaching for paracetamol right now? A new hangover cure has been revealed and it just a small tweak to what most people probably do already. Drinking grapefruit juice is the best way to speed up your recovery – after taking an Ibuprofen. The Grapefruit chaser limits the activity of the enzyme that breaks down drugs, giving the Ibuprofen more of a chance to get to work and do its healing thing. There you go…thank me later! With 4 working days left until the Christmas break, you will be forgiven for thinking the market is hungover and that there is no movement! However, as Cyril Ramaphosa won the ANC Presidency in South Africa, we saw a 7% gain for the Rand from Friday’s opening to yesterday’s close. If you have ZAR exposure and would you like to discuss ways of hedging this risk please contact your Investec Dealer on 0800 055 6339.

Discover how our Treasury team can help your business

Live FX graph

Live FX graph

Live FX rates

Live FX rates

  • View important information

    This Market Commentary is provided for information purposes only and should not be construed as an offer, or a solicitation of an offer, to buy or sell any related financial instruments. This commentary has not been prepared in accordance with legal requirements designed to promote independent investment research. The information contained in this commentary has been compiled from sources believed to be reliable but no representation or warranty, implied or not, is provided in relation to its accuracy, suitability or completeness. Any opinions, forecasts or estimates constitute a judgement as at the date of this report and do not necessarily reflect the view of Investec Bank plc ("Investec"), its subsidiaries or affiliates. This commentary does not have regard to the specific investment objectives, financial circumstances or particular needs of any recipient and it should not be regarded as a substitute for the exercise of investors' own judgement. Investors should seek their own financial, tax, legal and regulatory advice regarding the appropriateness or otherwise of investing in any investment strategies and should understand that past performance is not a guide to future performance and the value of any investments may fall as well as rise.This commentary is confidential and may not be disclosed or distributed to any third party without the prior written consent of Investec. Investec Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority and a member of the London Stock Exchange. Registered office 2 Gresham Street, London, EC2V 7QP. Investec Bank plc 2014.