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Morning Market Scoop 24 January 2019


Morning Market Scoop 24 January 2019

In our morning market scoop:

  • Statistics South Africa CPI Release

source: tradingeconomics.com

“Doing it by the Numbers”

What’s the scoop? Consumers Price Index (CPI)

Yesterday saw the South African delegates (Team SA) turning on the charm at the World Economic Forum (WEF) in the luxurious Ski resort in Davos as our CPI numbers were released.

  • The Consumers Price Index (CPI) measures the rate of price change of goods and services purchased by households. The inflation number (M/M) for December 2018 came in lower by 0.7% than the November 2018 CPI number.

The big picture – The lower inflation number from December might be an indication that consumer spending is slowing down. The Retail sector has recently seen the after effects Petrol increases and of a consumer that is under pressure. Some good news as “Annual fuel inflation eased to 8,7% in December 2018 from 23,1% in November 2018, on the back of falling petrol prices” – STATS SA

  • The inflation number is currently watched carefully as a substantial increase in inflation might just trigger the South African Reserve Bank’s monetary policy committee to increase interest rates.

Some factors to keep an eye on:

  • The Rand (ZAR): with the World Economic Forum (WEF) under way the local currency has strengthened and still trading below R14.00 to the greenback.
  • DAVOS has been mentioned in every morning note so far this week and its importance for a successful outcome can’t be stressed enough. Any announcements from the meeting can change market direction in an instant as seen on Tuesday evening with the Dow losing over 400 points.
  • Team SA, the delegates lead by President Ramaphosa has their work cut out for them as was the case with the live Bloomberg interview yesterday between Jonathan Ferro and the President. The independence of the SARB was brought into questioned with the current Government’s plan moving forward. Eskom the troubled power utility was also mentioned as a concern for international investors.

What does all this mean for me?

  • With a looming global economy slowing down we might see more hardships in the short term if we do not attract foreign investment.