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Daily Dose

Daily Dose

Good Morning,

On the wires…

  • World Bank warns global economy risks falling into stagflation, slashes growth forecast
  • UK ignores Putin’s threats and will send ‘cutting edge’ guided rocket systems to Ukraine
  • Facing ‘severe’ energy crisis, Pakistan cuts its work week short
  • SA breeder to release 100 rhinos back into the wild every year
  • Kane’s 50th England goal rescues draw with Germany
  • Chaos in Major League Rugby as second team disqualified from playoffs

Quote of the day…

“Challenges are what make life interesting, and overcoming them is what makes life meaningful” – Joshua J. Marine

The indicators…

Currency crackdown…

The rand traded near its 7-week best yesterday (reached on Monday) as better than expected first quarter GDP numbers provided support. After trading around the 15.50/$ level at the start of our session, the currency hit a days low 15.33/$ before ending the day slightly higher at 15.38/$. The data yesterday showed that the economy has now recovered back to pre-Covid levels, growing by 1.9% on a quarter-on-quarter basis and 3% year-on-year, with the manufacturing sector taking the lead. This has prompted some economists to revise their full-year forecasts higher after only expecting 1.2% quarter-on-quarter growth and a 1.7% year-on-year expansion.

Elsewhere the mood is a bit mixed after a rally in the US lifted Asian stocks this morning, while gains have been capped as the dollar strengthened on worries that aggressive central bank hiking will dampen global growth and increase the risk of stagflation. This comes after the Reserve Bank of Australia unexpectedly raised rates by 0.85% (the biggest increase in 22-years) – expectations were only for a 0.6% hike. In India, its central bank hiked rates by 50 basis-points – its second consecutive month of hikes. Meanwhile the ECB will meet tomorrow, with markets expecting it to at least lay the groundwork for rapid rate hikes, if not start them with a small hike. We are also expecting a 50 basis-point hike from the Fed next week, which should be followed by further hikes from the SARB. Before that investors will be looking to Friday’s US CPI release for more clues on the Fed’s hiking path.

The World Bank pointed to a grim economic outlook as it dropped its global growth forecast to 2.9% this year from the 4.1% forecast in January. It blamed the revision on high commodity prices, supply disruptions, and aggressive central bank interest rate policies. Meanwhile, US Treasury Secretary Janet Yellen said that she expected inflation to remain high and that the Biden administration would probably increase the 4.7% inflation forecast for this year in its budget proposal. Staying on topic, oil prices are higher this morning, with the US expected to report low oil stocks, while estimates for solid demand in the upcoming driving season also provided support

On the radar…

  • All – Russia/Ukraine Crisis
  • SA – Business Confidence
  • EU – GDP
  • EU – Employment Overall
  • UK – Construction PMI

Did you know?

The Eiffel Tower can become around 15 cm taller during the summer, due to thermal expansion.

Have a great day,

Nyiko

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