Morning report (21.4)

Local equities traded higer yesterday on the back of the slightly stronger European markets and a weaker currency, says Nico Kelder, economist at the Efficient Group.

The rand strengthened agains the euro and pound after local markets closed as the Fed chairman, Alan Greenspan, indicated that the possibility of deflation has diminished.

This paves the way for increases in US interest rates later this year. This helped the dollar to strengthen against the euro by more than 1%.

Yields on the bond market increased ahead of the MPC meeting to day and tomorrow. The stronger dollar pushed commodity prices lower with platinum losing more than 2%.

US markets weakened more than 1% on the news from the Fed, as equities lost some of its glamour. Markets in the Far East are trading flat to lower this morning with the Hang Seng losing more than 1% so far.

We expect that the equity market should trade weaker today as the news from the US is digested.