THE DAILY BRIEF ECONOMICHEADLINES TUESDAY,11SEPTEMBER2018 - CAPRICORN ASSET MANAGEMENT

The Daily Brief

Economic Headlines                                         Tuesday, 11 September 2018

Stocks Mixed; Pound Climbs With Euro on Brexit: Markets Wrap
European stocks were steady while U.S. equity futures edged higher after a mixed session in Asia as
relations seemed to improve between the world’s biggest economies. The dollar weakened as the
pound and euro climbed on the outlook that Britain may achieve an amicable split from the EU.
Contracts on the Dow, S&P 500 and Nasdaq were all higher. A gauge of emerging-market shares
slipped while their currencies were led higher by South Africa’s rand… Market sentiment seems to
be improving, with growing optimism about the outlook on Brexit and U.S.-EU trade relations
allowing some recent weakness to dissipate. Yet the memory of the summer’s volatility in emerging
markets and weakness in commodities still provide plenty of reasons for caution, with investors still
bracing for the next step in the U.S.-China trade dispute after the Trump administration signaled it’s
ready to impose tariffs on even more goods. Elsewhere, WTI oil rose toward $68 a barrel as
speculation increased over whether a giant hurricane approaching the U.S. East Coast would disrupt
supplies and drive prices higher. – Bloomberg

South Africa may miss tax take target, says finance minister
South Africa’s tax take could well be lower than forecast this financial year, with a recession
compounding problems at the tax revenue service, Finance Minister Nhlanhla Nene said on
Monday… The country entered recession in the second quarter for the first time since 2009, data
showed last week, weakening the rand and government bonds. “There is now additional downside
risk to the tax revenue projected at the beginning of the year because of the contraction in the
economy,” Nene told a tax conference, referring to the financial year ending next March… Nene also
cited problems at the South African revenue service (Sars)… In its February budget the Treasury said
it faced a R48.2 billion revenue gap in the 2017/18 fiscal year, partly due to Sars missing its collection
targets. It also increased value added tax (Vat) for the first time since 1993. Tax shortfalls in the past
two years had been partly been due to slower than projected economic growth, while tax evasion
was also a factor, Nene said. – Moneyweb

Government working on reforms to lift economic growth, Nene assures
Introducing economic reforms could add two to three percentage points to real GDP growth over
the next 10 years, said Finance Minister Nhlanhla Nene… The SA economy entered into a technical
recession, as Stats SA last week reported that growth had contracted by 0.7% during the second
quarter, on the back of a contraction of 2.6% in the first quarter… “Should the global environment
remain supportive, the effective implementation of reforms in areas such as agriculture, competition
policy, telecoms, tourism and others could according to National Treasury estimates, add two to
three percentage points to real GDP growth over the coming decade,” he said. Treasury projected

growth for 2018 to be 1.5%, at the National Budget in February. But growth of 5% is needed to
improve the unemployment rate which is at 27%. – Fin24

Oil prices climb ahead of U.S. sanctions on Iran
Oil prices rose on Tuesday as U.S. sanctions squeezed Iranian crude exports, tightening global supply
despite efforts by Washington to get other producers to increase output. Benchmark Brent crude oil
LCOc1 was up 50 cents at $77.87 a barrel by 0750 GMT. U.S. light crude CLc1 was 15 cents higher at
$67.69… Washington has told its allies to reduce imports of Iranian oil and several Asian buyers,
including South Korea, Japan and India appear to be falling in line. But the U.S. government does not
want to push up oil prices, which could depress economic activity or even trigger a slowdown in
global growth… A group of OPEC and non-OPEC producers have been voluntarily withholding
supplies since January 2017 to tighten markets, but with crude prices up by more than 40 percent
since then and markets significantly tighter, there has been pressure on producers to raise output. –
Reuters

Euro rises as Italian debt concerns ease; sterling builds on gains
The euro rose on Tuesday as easing concerns about Italian debt boosted the single currency for a
second day, while broader moves in forex markets were contained as investors fretted about the
next developments in the Sino-U.S. trade dispute… [The euro] was buoyed by a fall in Italian
government borrowing costs this week after Economy Minister Giovanni Tria on Monday predicted
yields would drop as the government lays out its much-anticipated budget for 2019. The euro rose
0.4 percent to $1.1644 while the dollar index was left down 0.3 percent at 94.895, close to its lowest
since late August. – Reuters

China investment in public-private projects reaches 11.8 trillion yuan at end-July
China’s finance ministry said on Tuesday that investment in public-private partnership projects was
valued at 11.8 trillion yuan ($1.72 trillion) by the end of July. It will step up risk control for PPP
projects, the finance ministry also said in a statement on their website. – Reuters

Stats of the Day

Data Releases
             Local Time   Country         Indicator Name               Period

             12:00        United States   NFIB Business Optimism Idx   Aug
             13:00        South Africa    Manuf Production MM          Jul
             13:00        South Africa    Manuf. Prod. Index YY        Jul
             14:55        United States   Redbook MM                   3 Sep,   w/e
             14:55        United States   Redbook YY                   3 Sep,   w/e
             16:00        United States   JOLTS Job Openings           Jul
             16:00        United States   Wholesale Invt(y), R MM      Jul
             16:00        United States   Wholesale Sales MM           Jul
             22:30        United States   API weekly crude stocks      3 Sep,   w/e
             22:30        United States   API weekly gasoline stk      3 Sep,   w/e
             22:30        United States   API weekly dist. stocks      3 Sep,   w/e
             22:30        United States   API weekly heating oil       3 Sep,   w/e
             22:30        United States   API weekly crude imports     3 Sep,   w/e
             22:30        United States   API weekly product imports   3 Sep,   w/e
             22:30        United States   API weekly crude runs        3 Sep,   w/e
             22:30        United States   API Cushing number           3 Sep,   w/e

                                                                          Source: Thomson Reuters

Market Overview

                  Source: Bloomberg

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