South African Rand
Rising to a two month high, the South
African rand was boosted by lots of positive news on the session. The SACOB business confidence report,
which overshadowed both net and gross reserves surveys, jumped higher and
reversed the declining trend that was taking place between the months of May and
September. Increasing to a 99.5
reading, the report was boosted as a narrowed trade deficit, heightened consumer
spending and lower consumer inflation figures comparative to broader
expectations boosted provider sentiment.
The report additionally reflects resiliency in the face of rising
interest rates. Simply, rate hikes
up to this point are somewhat negligible as manufacturers still remain openly
positive to broader market gains, allowing further rate hike speculation to
arrive at the forefront. The notion
additionally boosted foreign speculation as traders continue to see nothing but
expansion in regional based assets, with many turning to the benchmark stock
market. In afternoon trading,
South
Africa’s main equity index jumped to surpass
the 24,000 level for the first time on record. Rising 71.62 points to 24,022.61 at the
close in Johannesburg, the FTSE/JSE Africa All Share
index was buoyed once again by higher precious metal contracts. Although paring back slightly in the
overnight and New
York, commodity futures still remain supported with
platinum contracts hovering just below $1,200 an ounce and gold contracts
slightly below the $628 a troy ounce level. Both metals have been bid higher
throughout the year, and this should translate into higher profit earnings for
the country’s main exporter/producers.
As a result, Anglo American, the world’s second biggest mining company,
led stocks higher, reaching a record close at 348.41 rand, gaining 2.41
rand. Unfortunately, positive
bidding may be absent heading into the overnight with no economic data to spark
things off. The next release,
expected by the market, will be manufacturing production in two days
time.
Mexican
Peso
A day after three explosions rocked
Mexico City,
there was little reason to buy the Mexican peso. As a result, the day’s range remained
similar to the previous session, rising slightly above the 10.80 figure. The day’s move was in line with the
intermediate rangebound condition that is being purported as the currency pair
is finding considerable upside and downside barriers between 10.85 and 10.80
respectively. A technical
suggestion of indecision, the recent price action may be telling of the markets
concern over the longer term prospects of the Mexican economy. In a word, trade relations. As prospects for growth in the world’s
largest economy, the US, grow dimmer, fear is rising that
the bad vibes may translate into declining times for the Mexican economy. According to recent data, the
US is expanding at the slowest pace
since 2003. This is likely to weigh
on the economy and its trade partners especially Mexico as the US purchases
close to 85 percent of the country’s exports. The concerned selling pressure is likely
to be exacerbated when combined with the recent turmoil that has beset Mexico City and the city state of Oaxaca. As a result, intense focus is likely to
be placed on the President-elect when he takes office in three weeks, helping to
establish the longer term directional bias. Separately, profit taking took the Bolsa
index slightly lower on the session. The benchmark equity index dropped 118
points to 23,615.14, however remained higher on the year by 30 percent. Economic data was relatively negligent as
the market shrugged off a lower than expected 8.3 percent gross fixed investment
figure.
Nordics – Swedish,
Norway and Denmark
Back to the old ranges, all three
Nordic currencies strengthened against the US dollar, even on mixed data. In the economy of Norway,
industrial production figures took center stage as overall productivity fell
compared to previous month’s figures. For the month of September, the
seasonally adjusted figured dipped by 1.1 percent. Subsequently, the non-seasonally
adjusted annualized figure declined further, taking the previous 2.7 percent
lower to a 4.7 percent drop on the year. The results aren’t that much of a
surprise compared to yesterday’s purchasing managers index which printed a lower
61.8 for the month of October.
Although lower on both measures, the pullback can be somewhat expected as
the economy overall has done a positive job for the year. The negative results are additionally
not likely to purport a stall in already expected tightening by the Norges Bank,
supporting the Krone in the Asian session.
Separately, the Swedish balance budget report showed a wider deficit as
Denmark industrial production and
orders were mixed on the month. For
September, reports improved by 0.7 percent in production compared to a decline
of 2.4 percent in August.
Subsequently, however, orders dropped by 1 percent.
Hong
Kong
Dollar
Fundamentals ran contrary on the day
against the Hong Kong dollar as the day’s take
was widely positive for the underlying Asian currency. Boosting the currency in the overnight
was news that the benchmark stock index closed higher for a fifth record
close. Once again supported by
speculation in developer companies and sentiment of higher property values,
Hong Kong’s Hang Seng index closed at 18,939.31
at the close. The highest on
record, the benchmark index has been bolstered by rising demand for Asian based
assets connected with China and a slower growing global
market. The benchmark index is now
higher by 20 percent on the year.
Subsequently, once again, Hong Kong’s
top ranked property developer, Sun Hung Kai, led shares by climbing HK$2.95 to
HK$91.30. Separately, and taking
top billing for the day, was the economy’s report on foreign currency
reserves. Rising above the previous
report of $130.3 billion, the $131.2 billion figure for the month of October
coincides with increasing attention on the $1 trillion mark reached by mainland
China. Still ranked as seventh largest holder
of foreign reserves overall behind the mainland power, Hong
Kong may be setting itself up for competition, even though most, if
not all of the funds, are used to maintain the two-way pegged
system.
Singapore Dollar
Singapore markets were in line with Hong Kong on session. The Straits Index, much like the Hang
Seng, hit another record high as real estate companies in the region boosted the
market’s benchmark index. Leading
shares higher, United Overseas Bank Ltd. stock supported overall interest in
lenders as expectations continue to rise on an increase in property sales
boosting mortgage lending activity.
Shares of Singapore’s second largest lender
added 10 cents to S$18.10. As a
result, the Straits index advanced another 20.09 to close at 2,749.22 after
setting an intraday high of 2,764.91 and lent some intraday strength to the
Asian tiger currency. In addition,
foreign currency reserves were built higher over the course of the month, rising
to $131.91 billion compared to last month’s $129.42 billion. Positive for the health of the economy,
the report lent to further overall bullishness witnessed over the past month.
