LOCKDOWN PHASE 4 – DAY 53 07 HOURS 15 MINUTES
By the close of trade on Monday, the South African rand strengthened against the US dollar.
- President Trump said at a roundtable Monday that he’s been taking the antimalarial drug hydroxychloroquine and a zinc supplement for “about a week and a half” as a preventative measure against the coronavirus. This news caused provided investors with a number of reasons to feel optimistic at the start of this new trading week and their positive sentiment is reflected in the strong moves in equities and currencies. First and foremost, Moderna Therapeutics, an American biotech company reported very positive early stage human trial coronavirus vaccine results. All 45 participants who received the vaccine produced COVID-19 antibodies. There’s nothing more valuable than a medical solution but Moderna admitted that if all goes well, it will be early 2021 when a vaccine is ready for the market
- Demand for emerging-market currencies was boosted by further easing of lockdown regulations globally.
- In the US, the NAHB housing market index bounced back slightly in May, as builders saw a quick rebound in interest from buyers.
- The yield on benchmark government bonds fell yesterday. The yield on 2026 bond fell to 7.34%. Further, the yield on 2023 bond declined to 4.66% while that for the longer-dated 2030 issue fell to 9.14%,
In early trade on Tuesday the US dollar is trading 0.1% higher against the South African rand at R18.3667, while the euro is trading marginally lower at R20.0232. The British pound has gained 0.1% against the South African rand to trade at R22.3904.
By the close of trade on Monday, the euro advanced against most of the major currencies.
- The German Bundesbank, in its monthly economic report, warned that economic output will be “significantly” lower in 2Q20, despite an easing of the most crippling restrictions put in place to fight the coronavirus pandemic.
- French President Emmanuel Macron and German Chancellor Angela Merkel unveiled a joint agreement that would offer 500 billion Euros, or roughly $543 billion, in support to EU counties and industries hit hardest by the coronavirus pandemic. The coronavirus recovery fund proposal, though still requiring legislative approval, follows a prolonged battle among European leaders lacking consensus on potential stimulus measures since the EU Summit flop late last month.
- In the UK, a report cited the Bank of England’s Chief Economist, Andy Haldane, as saying that the central bank was looking more urgently at negative interest rates to prop up the economy. The comments are likely to fuel expectations that Britain might one day take borrowing costs sub-zero to prop up the economy.
- Federal Agriculture Minister David Littleproud says Australia is not in a trade war with China, and will not retaliate after the economic superpower confirmed it would set an 80 per cent tariff on Australian barley, effectively crippling exports to the lucrative Chinese market.
- Hong Kong and China stocks opened higher on Tuesday after an overnight rally on Wall Street amid positive development on the trials for a coronavirus vaccine in the US and easing lockdown measures globally. Chinese President Xi Jinping’s pledge to make any coronavirus vaccine universally available once it’s developed also boosted sentiment.
In early trade on Tuesday, the euro slipped 0.1% against the US dollar to trade at $1.0903, while it has weakened 0.1% against the British pound to trade at GBP0.8944.
Below is a link to a very detailed Covid-19 picture giving stats and graphs.