1 June 2020

Morning All.

As we begin our first week of level 3 lock down, the world is in crisis as protests turned ugly in major cities around the U.S over the killing of George Floyd and unarmed black in Minneapolis last week. The social unrest over police brutality comes in the midst of the ongoing coronavirus pandemic, which has killed more than 100,000 Americans and led to the worst unemployment since the Great Depression. The unemployment rate hit 14.7% in April, a post-WWII record, and is likely to rise above 20%.  

However, we are set to see the JSE open in the green after Fridays 2% selloff, not helped by the MSCI re-weighting, a whopping R 49 bln traded on the day as FFA, LBH, TKG, RDF and TFG were all removed from the index. IG mkts Futures are up 712 points this morning.

At home, basic Education Minister Angie Motshekga is scheduled to hold a briefing at 11am on plans to reopen schools as the country eases the coronavirus lockdown to level 3 from level 4. More business sectors are set to reopen.

  • S. Africa Opens 4 Airports for Business Travel as Lockdown Eases
  • S. Africa’s Mboweni May Seek Review of Auditing Regulator Choice
  • Rand’s Speedy Recovery Rally Caught Some Traders By Surprise.  
  • Downgrade Fears Muddle Relief Plan: Africa Debt Watch.
  • Some in S. Africa’s ANC Favor More Assertive State: Sunday Times
  • Lib Holdings Sees 1H HEPS to Be More Than 20% Lower y/y
  • Foschini, Telkom, Investec Fall as They Exit MSCI Indexes


  • 11am: (SA) May Absa Manufacturing PMI, est. 46.5, prior 46.1
  • (SA) May Naamsa Vehicle Sales YoY, est. -86.3%, prior -98.4%

US stocks rallied off earlier lows with the Dow ending the session 0.07% lower, the S&P and Nasdaq closed in the green, up 0.48 and 1.29 percent respectively. The S&P 500 and Dow each gained at least 3% last week while the Nasdaq Composite advanced 1.8% to close out May. Last week’s gains led the major averages to their first back-to-back monthly advances since late 2019. The Dow and S&P 500 gained 4.3% and 4.5%, respectively, for the month while the Nasdaq Composite advanced 6.8%. That advance also put the S&P 500 up 38% from its intraday low set on March 23.

European markets fell Friday as escalating tensions between the U.S. and China pushed back on the week’s positive sentiment amid the reopening of economies across the continent. The pan-European Stoxx 600 closed down by 1.6%, but the index was still up over 3% since the start of May, on pace to register its second straight positive month following April’s more than 6% gain. Rolls-Royce shares continued to tumble on Friday, dropping nearly 14% after S&P downgraded the airplane engine manufacturer’s credit rating to “junk.”

Markets in Asia are a sea of Green led by Hong Kong as the Hang Seng bounces 3.22% after Donald Trump stopped short of specifying tough sanctions over China’s new national law for Hong Kong. Tencent up 4.04%. South Korea’s Kospi rose 1.34%. Reuters reported that the country’s exports in May fell 23.7% year-on-year. That was worse than expectations in a Reuters poll of a median drop of 22.1% year-on-year. Meanwhile, shares in Australia edged higher, with the S&P/ASX 200 up 0.64%. Overall, the MSCI Asia ex-Japan index jumped 2.13%.

Oil prices fell nearly 1% as traders hedged bets with the Organization of the Petroleum Exporting Countries (OPEC) considering meeting as soon as this week to discuss whether to extend record production cuts beyond end-June. Brent $ 37.63, WTI $ 35.31.

Precious metals are a little firmer with Gold up 0.67% at $ 1742, Platinum $ 846 and Palladium + 1.25% at $ 1964.

Have a great week