It is not all trade wars and Brexit news this week, only partly. Of course, sadly, that does not mean that it is all good news. There was a drone attack on a Saudi Arabian oil facility which has been blamed on Iran. After existing tensions with Iran, President Trump threw his weight behind Saudi Arabia threatening military force. This has since died down with everyone hoping to avoid another Middle Eastern war.
Global News
- Over the weekend there was an attack on a Saudi Arabian oil facility. In the aftermath, Saudi Arabia said that Iran’s involvement in the attack was “undeniable”. Iran has denied responsibility for the attacks.
- Oil prices skyrocketed on the news of the attack but have since normalised as Saudi Arabia was able to fully restore oil supplies by tapping into inventories. They expect production to be back on track by the end of September.
- The Fed reduced its benchmark rate by a quarter percentage point to a range of 1.75% to 2%. Fed Chair Jerome Powell said that “moderate” policy moves, such as this, should be sufficient to sustain the US expansion.
- The US has managed to strike a trade deal, it is not the trade deal, but rather a deal with Japan. This is a positive development as it shows that deals can be struck with the US.
- After a meeting with Boris Johnson, European Commission President Jean-Claude Juncker has said that Johnson reiterated that he would leave the EU with or without a deal.
- President Donald Trump has appointed Robert O’Brien as White House national security adviser, replacing John Bolton. O’Brien is a Rotary Scholar from the University of the Free State and is fluent in Afrikaans.
- It has been three days since votes were cast, but there is still no clear winner in the race to become Prime Minister of Israel. Benny Gantz declared victory because his party is projected to win a few more seats than Prime Minister Benjamin Netanyahu. Gantz won’t have enough seats to govern, meaning that he would have to form a coalition with Netanyahu, and that’s probably not going to happen. That brings up another possibility: Israel may have to have a third election to settle the political gridlock.
- Global equity markets have had a fairly flat week so far, but a solid September on the back of August’s retracement. The S&P500 and the MSCI ACWI are up 2.7% and 3.1% in USD month-to-date, respectively.
Local News
- The SARB unanimously kept the repo rate unchanged at 6.50%. The rand adjusted slightly, but this news was largely priced into the market.
- Finance Minister, Tito Mboweni, will present his Medium-Term Budget Policy Statement, a week later than usual, on the 30 October. This is the day before Moody’s is expected to update their status on South Africa. We are not expecting a downgrade to “junk” at this stage, but these two events will make for an interesting couple of days.
- Julius Malema has been found to be connected with more corruption this week: having bribed supporters in Limpopo with a tractor; an alibi for a payment to a Julius Malema-linked Mahuna Investment fell through; and evidence that Malema took kickbacks from a massive City of Johannesburg contract.
- The rand is 2.2% weaker for the week, but still 2.1% stronger than the closing levels of August. The ALSI is similarly 1% weaker for the week, but 2.27% stronger for the month-to-date.
Source: Dynasty, Daily Maverick, Moneyweb, Reuters, RMB, Aljazeera, and Bloomberg Markets, etc
