Nedbank Weekly Economic Monitor

18 Oct..

Nedbank Weekly Economic Monitor: Review of 10 to 14 and preview of 17 to 21 October 2011.

• Global equity markets shrugged off concerns about the Eurozone, betting that authorities would be able to find a lasting solution to the problem.
• The rand gained further ground against the US dollar, on higher precious metal prices and better risk appetite.
• Manufacturing production surprised on the upside in August, rising by 5,6% y-o-y following a 6,2% drop in the previous month, while mining production remained depressed, falling by 3,4% y-o-y following a 5% drop in July.
• In the Eurozone, inflation rose to 3% in September, up from 2,5% in August.
• In the US, the University of Michigan consumer confidence index dropped in October as households’ outlook for the economy deteriorated.
• Industrial production in the UK rose by more than expected increasing by 0,2% in August.

Domestic

The rand gained further ground against the US dollar last week, supported by higher precious metal prices and as some optimism that the European authorities remain committed to solving the region’s debt problems contained risk aversion. The unit closed at R7,82 against the US dollar on Friday, up from R7,97 at the previous week’s close and firmed to R12,37 from R12,41 against the British pound. However, the rand slipped to R10,86 from R10,53 against the euro over the week.

Bond prices advanced along with the rand. Yields on the benchmark R157 2015 and R186 2025 fell to 6,69% and 8,38% from 6,73% and 8,43% respectively. The 3-, 5- and 10-year BESA actuaries dropped to 6,38%, 7,15% and 8,11% from 6,41%, 7,20% and 8,17%.

In the money market, the 3-month JIBAR was steady at 5,5%, while the 6-, 9- and 12- month JIBAR rose to 5,77%, 5,96% and 6,19% respectively from 5,62%, 5,68% and 5,76%.

Local equities improved further in line with stronger global markets. The FTSE-JSE all share index ended at 31 123,6 on Friday, up by 2,9% from the previous week’s close, with all the major indices rising. Industrials gained 3% over the week, closing at 33 057,1 on Friday, financials ended 1,3% higher at 21 299,4, while basic materials rose 3,7% to end at 28 098,8.

Manufacturing production surprised on the upside in August, rising by 5,6% y-o-y following a 6,2% drop in the previous month, against the consensus forecast for total production to decline by 0,9% y-o-y. …

See the full monitor at Weekly Economic Monitor