<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="547" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/07/GettyImages-880072092-820x547.jpg" alt="" class="wp-image-409717" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/07/GettyImages-880072092-820x547.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/GettyImages-880072092-300x200.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/GettyImages-880072092-120x80.jpg 120w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/GettyImages-880072092-768x512.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/GettyImages-880072092-1536x1024.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/GettyImages-880072092-scaled.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Kenyan shilling banknotes and coins sit arranged at a market stall in Mombasa, Kenya, on Thursday, Nov. 23, 2017. The countrys Treasury has already cut this years growth target to 5 percent from 5.9 percent as the protracted election furor damped investment and a drought curbed farm output. Photographer: Luis Tato/Bloomberg via Getty Images</figcaption></figure>



NAIROBI, July 15 (Reuters) &#8211; Kenya&#8217;s currency is likely to come under pressure against the U.S. dollar next week while Nigeria, Tanzania, Uganda and Zambia&#8217;s units hold steady.



<h2 class="wp-block-heading" id="h-kenya">KENYA</h2>



The Kenyan shilling is expected to come under pressure in the coming week as demand for dollars increases in the market.



Commercial banks quoted the shilling at 108.05/108.25, compared with last Thursday&#8217;s close 107.85/108.05.



&#8220;I expect the demand (for dollars) to go up in the next week,&#8221; said a trader at one of the commercial banks.



<h2 class="wp-block-heading" id="h-nigeria">NIGERIA</h2>



Nigeria&#8217;s naira is seen unchanged on the official and parallel markets next week due to a forthcoming bank holiday and thin liquidity, traders said.



The currency was quoted at 411 naira on the spot market on Thursday, to stay within a range of between 407 naira and 412 naira it has traded at since last month.



It remained unchanged on the black market at the more than 3-1/2-year low of 505 naira hit last week on the informal market.



<h2 class="wp-block-heading" id="h-tanzania">TANZANIA</h2>



Tanzania&#8217;s shilling is expected to hold steady as dollar inflows from daily corporate operations and retail companies match demand.



Commercial banks quoted the shilling at 2,314/2,324 against the dollar, unchanged from last Thursday&#8217;s close.



&#8220;We expect the demand and inflows to come from the daily operations of corporates and retail businesses,&#8221; a trader at one commercial bank in Dar es Salaam said.



<h2 class="wp-block-heading" id="h-uganda">UGANDA</h2>



The Ugandan shilling is expected to be stable, with inflows from exporters of commodities like coffee helping absorb appetite from merchandise importers.



Commercial banks quoted the shilling at 3,545/3,555, compared with last Thursday&#8217;s close of 3,550/3,560.



&#8220;We have healthy inflows from commodities like coffee, they will mop up any importer demand coming through,&#8221; said a trader at one commercial bank, who expected it to trade in the 3,540-3,560 range in the next week.



<h2 class="wp-block-heading" id="h-zambia">ZAMBIA</h2>



The kwacha is likely to hold steady against the dollar next week as the market continues to see some moderate hard currency supply and matching demand.



On Thursday, commercial banks quoted the currency of Africa&#8217;s second largest copper producer at 22.6350 per dollar from 22.6200 at the close of business a week ago.



&#8220;Interim trends suggest that the rate is likely to trade between 22.650 to 22.850 in the short to medium term,&#8221; pan-African commercial bank Access Bank said in a note. 



(Reporting by Omar Mohammed, Chijioke Ohuocha, Nuzulack Dausen, Elias Biryabarema and Chris Mfula; Compiled by Chris Mfula)

General Economy As Kenya Faces Bleak 2018 Outlook In Vote Aftermath

Kenyan shilling seen softening, other African currencies stable

JOHANNESBURG, July 15 (Reuters) &#8211; South Africa&#8217;s central bank will keep its repo rate on hold next week as it looks through temporary high inflation and to support the economy, a Reuters poll found, but will kick-start its hiking cycle early next year to catch up with peers.



Adding to the economic devastation already wrought by the COVID-19 pandemic, riots and looting in recent days have left more than 70 people dead, hurt thousands of businesses and damaged major infrastructure in some of the worst civil unrest since the end of white minority rule in 1994.



Meanwhile, the unleashing of pent-up demand sent inflation to a 30-month high of 5.2% in May from 4.4%. However, this is considered transitory and core inflation &#8211; indicative of long-term trends &#8211; was still well within the Reserve Bank&#8217;s comfort level of 3-6 percent at 3.1% year-on-year.



All 30 economists in the July 9-14 Reuters poll were unanimous in saying the central bank would keep rates unchanged on July 22 at 3.50%, but as consumer inflation was expected to average around 4.3% this year and 4.4% next year, future rises were predicted.



Medians in the poll suggested rates would be hiked 25 basis points to 3.75% in either January or March as real rates are already in negative territory. The repo rate was expected at 4.00% by the end of next year and 4.50% by end-2023.



Generally, South Africa&#8217;s current uptrend in inflation, similar to the global backdrop, is transitory rather than a more lasting trend, according to a majority of economists polled.



Indeed, economists across the world agree the recent upward trend is primarily driven by the pandemic-induced low base of last year due to the shock from countries across the world shuttering vast swathes of their economies to try and contain the coronavirus.



&#8220;Consumer services inflation remain contained, and consumer goods inflation likely peaked in May and will shortly steadily moderate over the remaining months of 2021,&#8221; said Thanda Sithole, economist at First National Bank.



Economists have been concerned about imported inflation due to higher oil prices, albeit cushioned by a stronger rand in past months, although a compromise by Saudi Arabia and the United Arab Emirates over OPEC+ policy should unlock a deal to supply more crude to a tight oil market and cool soaring prices.



However, Sithole said the output gap remains wide, indicative of a lack of demand-pull inflationary pressures.



South Africa&#8217;s gross domestic product was expected to rebound and grow 4.3% this year, a 0.2 percentage points increase from last month&#8217;s median. But that comes after a 7.0% slump last year and not enough to address the record high 32.6% unemployment rate.



Growth was expected to slow to 2.2% next year and to 1.9% in 2023.



The full impact of the recent civil unrest is still unclear as Durban&#8217;s port has suffered major disruption, operations have been badly affected at the Richards Bay Port as has a national freight rail line, companies said on Wednesday.



&#8220;If it comes to an end in the next day or so then the impact will be more muted compared with a scenario where it spreads to more areas of the country and last for weeks,&#8221; said Jason Tuvey, senior emerging markets economist at Capital Economics.



&#8220;In Brazil, for example, strikes by truck drivers in May 2018 brought the country to a stand-still and resulted in a sharp (albeit temporary) drop in activity and a rise in inflation, even if supply disruptions did push up inflation, we suspect that the SARB would look through this.&#8221;



(Reporting and polling by Vuyani Ndaba)

South Africa’s New Reserve Bank Governor Lesetja Kganyago

South Africa’s central bank to keep rates unchanged on July 22, hike in early 2022

LONDON, July 14 (Reuters) &#8211; South Africa&#8217;s worst unrest in years threatens to derail one of this year&#8217;s star emerging market performers and highlights the chronic joblessness and poverty papered over by a short-term export boom.



The rand tumbled as much as 3.4% this month and hit a more than three-month low, stocks of property firms and retailers dropped as much as 7% in a single day and sovereign bonds sold off after more than 70 people were killed in unrest and looting that erupted following the jailing of ex-president Jacob Zuma.



The price moves are a stark reversal for a market that had until recently outpaced emerging market peers such as Brazil, Mexico and Russia. The rally was underpinned by exports rebounding at the fastest pace globally thanks to surging metal prices.



That export boom has turned a long-standing balance of payments deficit into surplus.



However, behind all that lurked the same social pressures which are being felt more acutely since the pandemic.



An unemployment rate over 32% is the highest in the Group of 20 major economies, while poverty and wider inequality are widespread 27 years from the end of apartheid.



These grievances have now boiled over into protests linked to Zuma&#8217;s imprisonment for defying a constitutional court order to give evidence at an inquiry investigating high-level corruption during his nine years in office until 2018.



&#8220;This is an economy that has been bouncing back faster than many expected from six months ago, but for the average person unemployment remains one of the highest in the world and recovery has been concentrated on exports, so doesn&#8217;t necessarily lift all boats,&#8221; said UBS&#8217;s head of emerging market strategy Manik Narain.



Africa&#8217;s most industrialised economy was on track to grow more than 4% in 2021 after recovering from a recession that started even before it recorded its first COVID-19 infection last March. That bounce-back will almost certainly take a hit.



&#8220;There is never a good moment for riots, but now the timing is particularly unfortunate,&#8221; said Viktor Szabo, portfolio manager at fund manager abrdn. &#8220;It will dampen economic activity through temporary business and infrastructure closures, just as the economy was recovering from the COVID shock.&#8221;



For markets, the rand has been the lightning rod. Having been the best-performing emerging market currency during the pandemic by late April, it has lost some 8% since hitting a more than two-year peak in early June.



This week, it ceded all its year-to-date gains.



&#8220;There is a risk of further short-term losses if the government does not manage to control the violence,&#8221; said Commerzbank EM analyst Elisabeth Andreae.



Wall Street bank Citi has already trimmed its exposure to both the currency and local government bonds.



On the ground, one of the immediate consequences was a number of immunisation centres shutting temporarily, further slowing the pace of vaccinations, which at 2% of a population of 60 million is among the lowest even among emerging markets.



The setback for South Africa comes just as the global backdrop is becoming more challenging.



South Africa is the top global producer of platinum and chrome. But platinum prices have fallen 15% from February&#8217;s more than six-year highs and commodity prices could soften if Chinese demand slows and more countries, including the United States, withdraw pandemic-era stimulus.



&#8220;One of the reasons the rand has been strong has been South Africa having one of the single strongest export markets in the world because of metals like platinum and rhodium,&#8221; said UBS&#8217; Narain. &#8220;That&#8217;s at already very mature levels and we think that South Africa has passed peak exports.&#8221;



There is a chance that Zuma&#8217;s arrest will prove to be a positive if it deals a decisive blow against South Africa&#8217;s chronic corruption problem.



It may also strengthen President Cyril Ramaphosa&#8217;s grip on power within the ruling African National Congress. That will be put to the test in local government elections in October. &#8220;These legal outcomes now hand President Ramaphosa a clear path to accelerate state reform,&#8221; TS Lombard&#8217;s Larry Brainard told clients. &#8220;But the wheels of justice will still take time to play out.&#8221;



(Additional reporting by Marc Jones; Editing by Emelia Sithole-Matarise)

101416618-rand

Violence gives South African markets a reality check

July 14 (Reuters) &#8211; Emerging market stocks and currencies fell on Wednesday after a surge in U.S. inflation raised fears the Federal Reserve might tighten policy sooner than expected, while Turkey&#8217;s lira dipped ahead of an interest rate decision.



U.S. consumer prices surged at their fastest pace in 13 years in June, sending the dollar and Treasury yields higher as markets bet that the Fed would raise rates by the end of 2022.



MSCI&#8217;s index of emerging market currencies fell 0.2% while stocks retreated 0.3%. A rise in U.S. lending rates usually makes risk-driven assets appear less attractive and drives capital out of emerging markets.



In Europe, the Middle East and Africa, Turkey&#8217;s lira fell 0.2% to 8.6373 ahead of an interest rate decision, with the central bank expected to maintain rates at 19% amid spiking inflation in the country.



The lira is the worst performing emerging market currency this year, down nearly 16% on government interference in policy making. Analysts are doubtful about the lira&#8217;s prospects, despite a sharp rebound in growth from the COVID-19 pandemic.



&#8220;We are quite cautious about Turkey&#8217;s macroeconomic imbalances and uncertain policy outlook with respect to the central bank, but this does not mean that we do not expect a punchy activity rebound in the near term,&#8221; Tatha Ghose, FX and EM analyst at Commerzbank wrote in a note.



However, Ghose said growth would take a severe downturn in 2022 as Turkey&#8217;s &#8220;unconventional monetary policy experiment unravels&#8221;.



Credit Suisse had said in a note last week that tighter policy was needed to rein in runaway inflation.



Turkish stocks rose 1% on reports that the country expanded regulations for asset management firms, allowing for more flexibility in debt transfers.



South Africa&#8217;s rand dropped 0.2% to a new three-month low of 14.7648 to the dollar, with violence in the country showing little sign of stopping.



The rand tumbled 3.9% over the past two sessions, turning negative for the year, as violence over the jailing of former president Jacob Zuma killed more than 70 people, wrecked several businesses and even shut down the country&#8217;s largest refinery.



The Czech crown fell 0.2% versus the euro, faring slightly better than its peers in Central Europe as rising inflation and comments from central bank officials suggested more monetary policy tightening was on the way.



Specialist emerging market asset manager Ashmore Group said its quarterly assets under management rose by $4.5 billion, reflecting some improvement in sentiment towards emerging markets during the second quarter.



For GRAPHIC on emerging market FX performance in 2021, see <a href="http://tmsnrt.rs/2egbfVh">http://tmsnrt.rs/2egbfVh</a> 



For GRAPHIC on MSCI emerging index performance in 2021, see <a href="https://tmsnrt.rs/2OusNdX">https://tmsnrt.rs/2OusNdX</a>



(Reporting by Ambar Warrick; Editing by David Clarke)

asian stock market

FX hit by U.S. inflation, Turkish lira drops before rate decision

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="502" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/07/32FTKYZ5B5IQTPL5TS7LBR6FHA-820x502.jpg" alt="" class="wp-image-409449" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/07/32FTKYZ5B5IQTPL5TS7LBR6FHA-820x502.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/32FTKYZ5B5IQTPL5TS7LBR6FHA-300x184.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/32FTKYZ5B5IQTPL5TS7LBR6FHA-131x80.jpg 131w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/32FTKYZ5B5IQTPL5TS7LBR6FHA-768x470.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/32FTKYZ5B5IQTPL5TS7LBR6FHA.jpg 960w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>People queue to buy food at a supermarket with most stores staying closed as protests continue following imprisonment of former South Africa President Jacob Zuma in Hillcrest, South Africa, July 13, 2021. REUTERS/Rogan Ward</figcaption></figure>



JOHANNESBURG, July 13 (Reuters) &#8211; South Africa&#8217;s rand dropped to a three-month low on Tuesday and local and hard currency bonds suffered as violent protests over economic hardship and inequality rippled across the country.



Crowds clashed with police and ransacked or set ablaze shopping malls, with dozens of people reported killed as grievances unleashed by the jailing of ex-president Jacob Zuma boiled over into the worst violence in years.



The protests rattled financial markets in the continent&#8217;s most industrialised economy, with the rand dropping as much as 1.8% to 14.67 against the dollar, its lowest level since mid-April. The currency has lost nearly 3% since Friday close and wiped out almost all gains enjoyed since the start of 2021, with currency&#8217;s volatility gauges hitting multi-week highs.



<div class="wp-block-group"><div class="wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow">
<h3 class="wp-block-heading" id="block-64be6bc4-a613-4aca-bc36-fc965a436949">Watch: Foreign investors react to unrest in SA</h3>


</div></div>



Yields on 10-year local government bonds broke above 9% for the first time since late June. Longer-dated sovereign dollar-denominated bonds lost nearly 1 cent in the dollar while the cost of insuring exposure to the country&#8217;s debt climbed to near-two month highs.



Wall Street bank Citi said it had cut its exposure to both bonds and FX on the back of the spreading violence.



&#8220;Following a couple of days of heightened social unrest in South Africa, it is time to take a step back and reflect on the causes and consequences of the current noise,&#8221; said Citi&#8217;s Luis Costa, predicting the events might have further to run and could have &#8220;important consequences&#8221; for the government under President Cyril Ramaphosa, without elaborating.



Initially sparked by last week&#8217;s arrest of Zuma, the protests have widened into looting and an outpouring of general anger as the economy struggles to emerge from the damage wrought by Africa&#8217;s worst COVID-19 epidemic and as unemployment rates have soared to a record high of 32.6%.



Equity markets also suffered with the all share index down 0.3%, sharply underperforming the MSCI global emerging market index which jumped 1%.



<div class="wp-block-group"><div class="wp-block-group__inner-container is-layout-flow wp-block-group-is-layout-flow">
<h3 class="wp-block-heading" id="h-peter-armitage-on-where-to-find-value-in-sa-markets">Peter Armitage on where to find value in SA markets</h3>


</div></div>



Nervous investors dumped property and retail stocks directly damaged by the looters, with the property index dropping 2.55% and Vukile Property Fund tumbling more than 7%.



SA Corporate said on Tuesday four out of 11 retail shopping centres that had been looted had suffered extensive damage.



Massmart, majority-owned by U.S. Walmart Inc , led the decliners, falling 7.53% as looters continued to ransack its Game and Makro stores, as well as warehouses.



&#8220;Economically sensitive sectors are taking a hit and with property companies, investors are trying to work out which ones are the most affected,&#8221; Sanlam Private Wealth&#8217;s Portfolio Manager Greg Katzenellenbogen said.



&#8220;We have a double whammy of the pandemic as well as now the unrest in the country.&#8221;



(Reporting by Olivia Kumwenda-Mtambo and Nqobile Dludla, additional reporting by Marc Jones and Tom Arnold in London; Writing by Karin Strohecker; Editing by Alison Williams)

South African Economy As Inflation Rate Rises For First Time In 2017

South African rand sinks to 3-month low, bonds drop on violent protests

July 12 (Reuters) &#8211; South Africa&#8217;s rand tumbled on Monday as violence broke out after the jailing of former President Jacob Zuma, while most emerging market stocks and currencies appeared to have stabilized after losses last week.



The rand sank more than 1% to a low of 14.3658 to the dollar, leading losses across emerging market currencies. Violence over Zuma&#8217;s 15-month prison term spread to Johannesburg over the weekend, resulting in property damage and road closures.



Zuma, who was given the sentence for defying a court order to cooperate with an inquiry into corruption during his tenure, is set to challenge it during a hearing on Monday.



South African stocks fell 0.6%. The rand is still the top-performing emerging market currency this year, trading more than 2% higher.



South Africa extended tight COVID-19 restrictions by another 14 days as it grapples with a damaging third wave of COVID-19 infections, particularly of the more contagious Delta variant. The move could upset an otherwise steady economic recovery in the country.



Broader emerging market currencies traded steady after logging losses last week. MSCI&#8217;s index of currencies rose 0.1%, recovering from a 0.4% loss last week.



But concerns over the rapid spread of the Delta variant are likely to cap any gains this week, with upcoming U.S. inflation data also expected to curb sentiment.



<div class="wp-block-image"><figure class="aligncenter size-large is-resized"><a href="https://product.datastream.com/dscharting/gateway.aspx?guid=440cfb66-98ea-41dc-b0d6-78810bec240f&amp;action=REFRESH"><img loading="lazy" decoding="async" src="https://product.datastream.com/dscharting/gateway.aspx?guid=440cfb66-98ea-41dc-b0d6-78810bec240f&amp;action=REFRESH" alt="native" width="492" height="574"/></a><figcaption>Emerging market stocks recovered slightly from steep losses last week, with MSCI&#8217;s index of stocks rising about 0.5%.</figcaption></figure></div>



Investors also digesting the implications of a reserve requirement rate (RRR) cut in China from last week, which analysts say could imply a slowing economic recovery.



&#8220;EM FX came under great pressure last week as broad risk off sentiment hit global markets… The Chinese RRR cut helped risk sentiment recover on Friday, but this is likely to remain short-lived if the delta variant continues to spread,&#8221; analysts at Brown Brothers Harriman wrote in a note.



Commodity-linked currencies extended their losses as the spread of the Delta variant threatened to weigh on demand.



Russia&#8217;s rouble lost 0.6% as oil prices dipped, while softer gold and base metal prices weighed on the rand. The rouble had lagged its peers in Europe, the Middle East and Africa last week, falling 1.7%.



Emerging market stocks recovered slightly from steep losses last week, with MSCI&#8217;s index of stocks rising about 0.5%.

World map with charts and graphs as symbols of global finance

Civil unrest, virus woes see South African rand drop over 1%

July 9 (Reuters) &#8211; Most emerging market currencies took respite from a falling dollar on Friday but were set for weekly losses as concerns over the fast-spreading COVID-19 Delta variant and a tech crackdown in China dented appetite for risk-driven assets.



MSCI&#8217;s index of emerging market currencies traded flat after tumbling 0.8% since Monday&#8217;s close. The index is also set to lose 0.5% this week.



The index of emerging market stocks was also unchanged, but was set to fall 2.9% this week as growing virus infections in Asia and a rout in Chinese technology stocks weighed.



Baidu, Alibaba and Tencent, the three largest Chinese tech companies, were set to lose between 5% to 10% this week on fears of more regulatory scrutiny, after the Chinese government&#8217;s shock crackdown on ridesharing app Didi Global.



The dollar held just below three-month highs, having benefited from safe-haven demand this week as increasing fears of a slowdown in growth spurred a rush for safety. Yield spreads between emerging market and developed world debt also widened.



Rising inflation and mixed economic readings in major emerging market economies have somewhat dampened optimism over a post-COVID recovery this year, despite a strong start to 2021.



&#8220;Growth dynamics are turning against EM for the second half of the year as illustrated by both consensus economic forecasts, diverging PMIs, greater fiscal consolidation and potentially the Delta variant which has scope to disrupt EM economies more than highly vaccinated developed market peers,&#8221; Deutsche Bank wrote in a recent note.



Russia&#8217;s rouble, which rose about 0.1%, was set to be the worst performing currency in the Europe, Middle East, and Africa (EMEA) region this week, after wild swings in the oil market.



Oil prices had marked volatile sessions before settling lower through the week, after OPEC talks over increasing production later this year collapsed.



The rouble has some of the highest exposure to oil among emerging market currencies, along with Brazil&#8217;s real and the Mexican and Colombian pesos.



Turkey&#8217;s lira fared much better than its emerging market peers this week, and was set to end largely flat. Still, the currency is the worst performing emerging market unit this year, with a near-17% loss.



In central Europe, Hungary&#8217;s forint and the Czech crown bounced back from their respective two-month lows to the euro, while the Polish zloty was flat after the central bank held interest rates on Thursday, as expected.



For GRAPHIC on emerging market FX performance in 2021, see <a href="http://tmsnrt.rs/2egbfVh">http://tmsnrt.rs/2egbfVh </a>



For GRAPHIC on MSCI emerging index performance in 2021, see <a href="https://tmsnrt.rs/2OusNdX">https://tmsnrt.rs/2OusNdX</a>



(Reporting by Ambar Warrick; Editing by Emelia Sithole-Matarise)

Macro view of a screen of trading terminal with abstract financial graph and digits. Trading and forex concept. 3D Rendering

Currencies stabilise, rouble lags EMEA peers this week

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="540" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/07/13383716683_f88451543d_k-820x540.jpg" alt="" class="wp-image-408816" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/07/13383716683_f88451543d_k-820x540.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/13383716683_f88451543d_k-300x198.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/13383716683_f88451543d_k-121x80.jpg 121w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/13383716683_f88451543d_k-768x506.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/13383716683_f88451543d_k-1536x1012.jpg 1536w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/13383716683_f88451543d_k.jpg 2048w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>COVID-19 vaccine Photo: via Flickr</figcaption></figure>



LONDON, July 7 (Reuters) &#8211; Inflation has emerged as one of the top concerns for central bank reserve managers, alongside a failure to end the COVID-19 crisis and soaring debt levels, showed the results of a UBS survey released on Wednesday.



Fears about inflation and uncontrolled rises in long-term yields, a risk not flagged by participants at all in last year&#8217;s Annual Reserve Manager Survey, were raised by 57% of respondents this year as a main risk to the global economy.



Failure to end the pandemic was cited as a worry by 79% of respondents, with 71% flagging government debt levels. Reflecting angst about the gravity of COVID-19, half of participants in the survey believe the virus will be over only after 2022.



Reserve managers from close to 30 global central banks responded to the survey, conducted during April and June. &#8220;Inflation is back at the top of concerns for central bankers,&#8221; Massimiliano Castelli, UBS&#8217;s head of strategy and advice, global sovereign markets, told Reuters.



&#8220;The majority is saying they expect a rise, but not sort of moving to very high levels of inflation. So it seems there is a sort of view among the central banking community that the current rising inflation that we are experiencing is transitory.&#8221;



In terms of risks specifically related to the investment of FX reserves, the top concern, cited by 86% of respondents, remained lower and negative yields within fixed income.



More than two-thirds of participants expect the U.S. Federal Reserve to raise interest rates in 2023, while 30% expect the Fed to do so in 2022.



In contrast, participants expect a later hiking cycle for the European Central Bank, with 33% expecting the first interest rate increase in 2023, 41% in 2024 and only 26% later than 2024.



Asked how far leading central banks might go to support markets and the economy if needed, 58% of respondents think the Fed could turn to yield curve control.



The trend towards more diversification of reserves across asset classes continued, the survey showed. Equities is an eligible asset class for over 40% of central banks and emerging market debt for 54% of respondents, while there was a shift towards more assets protecting against inflation.



Nearly 40% of respondents expect wholesale central bank digital currencies to be launched within the next three years.



(Reporting by Tom Arnold in London Editing by Matthew Lewis)

vaccine

Inflation, COVID-19 and debt top central bank worries -UBS survey

July 7 (Reuters) &#8211; Most emerging market currencies fell on Wednesday, while stocks were set for their worst losing streak in 10 months as investors feared more hawkish signals from the minutes of the U.S. Federal Reserve&#8217;s recent meeting.



MSCI&#8217;s index of emerging market currencies fell as much as 0.3% to a two-month low, while the stocks index sank 0.4% and was set for a seventh straight day of losses.



Still, a rebound in base metal prices and a stabilizing crude market helped commodity-linked currencies recover from recent losses, with South Africa&#8217;s rand and Russia&#8217;s rouble rising 0.2% and 0.5%, respectively.



The dollar had surged late on Wednesday as investors anticipated more hawkish signals from the Fed minutes, after the bank during its June meeting brought forward plans to begin tightening monetary policy.



Rising global cases of the highly infectious delta variant of the coronavirus have also spurred a risk-off mood in recent sessions, weighing on emerging markets.



&#8220;Principally the minutes are unlikely to differ hugely from the information provided at the meeting on 16th June … even following careful scrutiny there will not be much reason for any moves in the dollar,&#8221; Antje Praefcke, FX and EM analyst at Commerzbank wrote in a note.



&#8220;In the short term, therefore, market uncertainty about the delta variant and its possible consequences on the economies is likely to set the tone.&#8221;



While rising delta cases in Asia had first sparked concerns over the variant, increased infections in Latin America and parts of Europe have also brewed more uncertainty.



Russia&#8217;s rouble was set for its best day in two weeks, after tumbling to a two-month low on Wednesday as a breakdown in OPEC talks prompted wild swings in the crude market. But oil prices appeared to have stabilised on Wednesday.



Russian stocks rose 0.2%. Investors were awaiting Russian inflation data later in the day.



Turkey&#8217;s lira rose 0.2%, but kept to a tight range amid uncertainty over the central bank&#8217;s stance on a spike in inflation.



South Africa&#8217;s rand shrugged off data showing a dip in net foreign reserves in June. Growing optimism over the South African economy has made the rand the best performing emerging market currency this year.



In Asia, Chinese stocks bucked the trend and ended higher after the country ramped up supervision of Chinese firms listed overseas, and vowed to protect local investors.



The move had caused large losses in U.S.-listed Chinese firms on Tuesday.



For GRAPHIC on emerging market FX performance in 2021, see <a href="http://tmsnrt.rs/2egbfVh">http://tmsnrt.rs/2egbfVh</a> 



For GRAPHIC on MSCI emerging index performance in 2021, see <a href="https://tmsnrt.rs/2OusNdX">https://tmsnrt.rs/2OusNdX</a>



(Reporting by Ambar Warrick; Editing by Catherine Evans)

Stocks and currencies fall as Fed minutes and virus woes feed caution

Oil jumped to its highest level in six years after talks between OPEC and its oil-producing allies were&nbsp;<a href="https://www.cnbc.com/2021/07/05/opec-meeting-saudi-arabia-uae-in-focus-over-oil-output-policy.html">postponed indefinitely</a>, with the group failing to reach an agreement on production policy for August and beyond.



On Tuesday, U.S. oil benchmark&nbsp;<a href="https://www.cnbc.com/quotes/@CL.1">West Texas Intermediate crude futures</a>&nbsp;traded as high as $76.98, a price not seen since November 2014. But by 9 a.m. on Wall Street those gains were erased, and the contract for August delivery stood 3 cents lower at $75.13 per barrel.&nbsp;<a href="https://www.cnbc.com/quotes/@LCO.1">Brent crude</a>&nbsp;hit its highest level since late 2018 before also reversing gains, and last traded 1.2% lower at $76.23 per barrel.



Discussions began <a href="https://www.cnbc.com/2021/07/02/opec-meeting-oil-output-policy-decision-in-focus-as-prices-rise.html">last week</a> between OPEC and its allies, known as OPEC+, as the energy alliance sought to establish output policy for the remainder of the year. The group on Friday voted on a proposal that would have returned 400,000 barrels per day to the market each month from August through December, resulting in an additional 2 million barrels per day by the end of the year. Members also proposed extending the output cuts through the end of 2022.



<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/07/106485738-15867767812020-04-09T124529Z_1895158720_RC201G9KUNLZ_RTRMADP_0_GLOBAL-OIL.jpeg" alt="" class="wp-image-408749" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/07/106485738-15867767812020-04-09T124529Z_1895158720_RC201G9KUNLZ_RTRMADP_0_GLOBAL-OIL.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/106485738-15867767812020-04-09T124529Z_1895158720_RC201G9KUNLZ_RTRMADP_0_GLOBAL-OIL-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/106485738-15867767812020-04-09T124529Z_1895158720_RC201G9KUNLZ_RTRMADP_0_GLOBAL-OIL-140x80.jpeg 140w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>A person passes the logo of the Organization of the Petroleoum Exporting Countries (OPEC) in front of OPEC’s headquarters in Vienna, Austria April 9, 2020. Leonhard Foeger | Reuters</figcaption></figure>



The United Arab Emirates rejected these proposals, however, and talks stretched from Thursday to Friday as the group tried to reach a consensus. Initially, discussions were set to resume on Monday but were ultimately called off.



“The date of the next meeting will be decided in due course,” OPEC Secretary General Mohammad Barkindo said in a statement.



OPEC+ took historic measures in April 2020 and removed nearly 10 million barrels per day of production in an effort to support prices as demand for petroleum-products plummeted. Since then, the group has been slowly returning barrels to the market, while meeting on a near monthly basis to discuss output policy.



“For us, it wasn’t a good deal,” UAE Minister of Energy and Infrastructure Suhail Al Mazrouei&nbsp;<a href="https://www.cnbc.com/2021/07/04/uae-unconditionally-supports-opec-supply-increase-minister-says.html">told CNBC on Sunday</a>. He added that the country would support a short-term increase in supply, but wants better terms if the policy is to be extended through 2022.



Oil’s blistering rally this year — WTI has gained 57% during 2021 — meant that ahead of last week’s meeting many Wall Street analysts expected the group to boost production in an effort to curb the spike in prices.



“With no increase in production, the forthcoming growth in demand should see global energy markets tighten up at an even faster pace than anticipated,” analysts at TD Securities wrote in a note to clients.



“This impasse will lead to a temporary and significantly larger-than-anticipated deficit, which should fuel even higher prices for the time being. The summer breakout in oil prices is set to gather steam at a fast clip,” the firm added.



— CNBC’s&nbsp;<a href="https://www.cnbc.com/sam-meredith/">Sam Meredith</a>&nbsp;contributed reporting.

106485738-15867767812020-04-09T124529Z_1895158720_RC201G9KUNLZ_RTRMADP_0_GLOBAL-OIL

Oil touches six-year high after OPEC fails to get deal, then turns negative

July 6 (Reuters) &#8211; Currencies in Europe, the Middle East, and Africa rose on Tuesday as the dollar continued its decline due to mixed labour data, with South Africa&#8217;s rand leading the gains on a rise in the prices of major commodities exported by the country.



Russia&#8217;s rouble rose 0.1% to 73.2460 to the dollar, while Turkey&#8217;s lira added 0.2%. Central European currencies moved about 0.2% higher to the dollar, and were flat to the euro.



The rand rose as much as 0.7% to 14.1594 to the dollar, supported by rising gold, base metal, and iron ore prices.



The currency is now the best performing emerging market unit this year with a more-than 3% gain, overtaking Brazil&#8217;s real .



Improving economic trends have also helped sentiment over Africa&#8217;s largest economy, although analysts have cautioned that certain facets, including tax revenue and infrastructure spending, remain at risk from the coronavirus.



&#8220;Inflation risks remain subdued due to an exceptional performance of the rand and well-anchored expectations of households … which is in sharp contrast to other emerging and developed economies,&#8221; analysts at Credit Suisse wrote in a note.



&#8220;We expect the rand to stabilise at a slightly weaker level, consistent with a gradually narrowing current account surplus in H2 and a stronger dollar.&#8221;



The rouble rose 0.1% as oil prices reached their highest level since 2018. But gains in the currency were muted as the finance ministry flagged more foreign currency buying in July.



Turkey&#8217;s lira remained in focus after a bigger-than-expected spike in June inflation furthered the case for tighter monetary policy in the country. But hawkish signals from the central bank could put it at odds with the government.



Broader emerging market currencies rose on Tuesday, with the dollar on the back foot after weak payrolls data last week furthered speculation that the Federal Reserve would likely hold low interest rates for longer.



But concerns over rising cases of the more infectious Delta coronavirus variant bought down Asian currencies, keeping MSCI&#8217;s index of emerging market currencies flat for the day.



Stocks followed a similar trend, although most bourses in EMEA marked small gains. Russian stocks rose 0.5%.



In central Europe, Poland&#8217;s zloty fell slightly to the euro, after marking strong gains on Monday following somewhat hawkish comments from the central bank governor, Adam Glapinski. 



For GRAPHIC on emerging market FX performance in 2021, see http://tmsnrt.rs/2egbfVh 



For GRAPHIC on MSCI emerging index performance in 2021, see https://tmsnrt.rs/2OusNdX



(Reporting by Ambar Warrick; Editing by Alison Williams)

South African rand leads EMEA FX higher on commodity gains

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="549" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/05/2770193028_68edc662a9_b-820x549.jpg" alt="" class="wp-image-403037" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/05/2770193028_68edc662a9_b-820x549.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/05/2770193028_68edc662a9_b-300x201.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/05/2770193028_68edc662a9_b-768x514.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/05/2770193028_68edc662a9_b.jpg 1023w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Photo: via Flickr</figcaption></figure>



Oil prices could “very easily” hit $100 a barrel in the aftermath of the failed OPEC+ talks, former U.S. Energy Secretary Dan Brouillette told CNBC on Tuesday.



“You could very easily see oil hitting $100 a barrel — potentially even higher,” he told CNBC’s Hadley Gamble.&nbsp;



On the flip side, it’s “equally possible” that prices could collapse too.



“If there isn’t any agreement on production, and countries tend to go off and do their own thing, or do their own production, you could have a collapse of oil prices,” said Brouillette, who was U.S. energy secretary from 2019 to 2021.



OPEC and its allies, referred to collectively as OPEC+, twice failed to reach a deal on oil output last week. On Monday, another attempt to resume talks broke down,&nbsp;<a href="https://www.cnbc.com/2021/07/05/opec-meeting-saudi-arabia-uae-in-focus-over-oil-output-policy.html">and discussions were put off indefinitely.</a>



The energy alliance, which includes Russia, had sought to increase supply by 400,000 barrels per day from August to December 2021 and proposed extending the duration of cuts until the end of 2022. Last year, to cope with lower demand due to the pandemic, OPEC+ agreed to curb output by almost 10 million barrels per day from May 2020 to the end of April 2022. 



The United Arab Emirates had indicated that,&nbsp;<a href="https://www.cnbc.com/2021/07/04/uae-unconditionally-supports-opec-supply-increase-minister-says.html">while it was supportive of the proposal to increase supply, it objected to the terms of the extension</a>.



<a href="https://www.cnbc.com/2021/07/05/oil-prices-jump-to-multiyear-highs-after-opec-talks-yield-no-production-deal-.html">Prices soared to three-year highs</a>&nbsp;following the collapse of those talks on Monday.&nbsp;On Tuesday during Asia trading, they surged even higher.&nbsp;<a href="https://www.cnbc.com/quotes/@CL.1">U.S. crude</a>&nbsp;pushed past $76 per barrel and international benchmark&nbsp;<a href="https://www.cnbc.com/quotes/@LCO.1">Brent&nbsp;</a>was higher than $77 per barrel.



Oil prices topping $100 would destroy demand, warned oil expert Dan Yergin, who said that it would not be in the interest of countries.



“I think countries recognize that $100 barrel oil would not be in (their) interest,” Yergin, the vice chairman of IHS Markit, told CNBC’s Street Signs Asia on Tuesday. “You would see governments pour more incentives into electric cars, and see the impact on demand.”



<h2 class="wp-block-heading" id="h-striking-that-uae-and-saudi-are-on-divergent-paths">‘Striking’ that UAE and Saudi are on divergent paths</h2>



OPEC+ is led by Saudi Arabia, a close ally of the UAE. But the breakdown of those talks, and UAE’s objection to the terms, reflect a rare public disagreement between the allies.



The discord between Saudi Arabia and the UAE has been “striking,” Brouillette and Yergin both said.



“I find it striking that the UAE has stepped away from Saudi Arabia, a longtime ally within OPEC and OPEC+,” Brouillette said.&nbsp;



Yergin, too, said the contention between both countries was striking, given that both countries until recently had “pretty much marched in lockstep.”



“I think that one side or the other is gonna have to give in &#8230; there’s going to have to be &#8230; a lot of, as they say, horse trading, to get to a deal and keep it together,” he told CNBC on Tuesday.



While they are on divergent paths in this matter, both actually have similar goals and require revenue from oil production for new investments, Brouillette pointed out.

2770193028_68edc662a9_b

Oil prices could ‘very easily’ top $100 a barrel, says former U.S. energy secretary

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="820" height="461" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/07/loo-820x461.jpg" alt="" class="wp-image-408638" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/07/loo-820x461.jpg 820w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/loo-300x169.jpg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/loo-140x80.jpg 140w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/loo-768x432.jpg 768w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/loo.jpg 1200w" sizes="auto, (max-width: 820px) 100vw, 820px" /><figcaption>Saudi Arabia’s Minister of Energy Prince Abdulaziz bin Salman Al-Saud speaks via video link during a virtual emergency meeting of OPEC and non-OPEC countries, following the outbreak of the coronavirus disease (COVID-19), in Riyadh, Saudi Arabia April 9, 2020. Saudi Press Agency | Reuters</figcaption></figure>



Oil producer group OPEC will resume talks on Monday with non-OPEC partners, seeking to broker a deal on crude output after the group&nbsp;<a href="https://www.cnbc.com/2021/07/02/opec-meeting-oil-output-policy-decision-in-focus-as-prices-rise.html">unexpectedly failed to reach an agreement last week</a>.



The energy alliance, often referred to as OPEC+, on Friday voted on a proposal to increase oil production by roughly 2 million barrels per day between August and the end of the year in 400,000 barrels per day monthly installments. It also proposed to extend the remaining output cuts to the end of 2022.



The United Arab Emirates&nbsp;<a href="https://www.cnbc.com/2021/07/04/uae-unconditionally-supports-opec-supply-increase-minister-says.html">rejected these plans</a>, however, blocking an agreement for the second consecutive day to leave oil markets in limbo over the weekend.



“For us, it wasn’t a good deal,” UAE Minister of Energy and Infrastructure Suhail Al Mazrouei&nbsp;<a href="https://www.cnbc.com/2021/07/04/uae-unconditionally-supports-opec-supply-increase-minister-says.html">told</a>&nbsp;CNBC’s Hadley Gamble on Sunday. He added that while the UAE was willing to support a short-term increase in oil supply, it wants better terms through 2022.



Speaking to the Saudi-owned Al Arabiya television channel on Sunday, Saudi Arabia’s Energy Minister Abdulaziz bin Salman called for “<a href="https://www.cnbc.com/2021/07/05/oil-markets-opec-and-allies.html">compromise and rationality</a>” in order to reach a deal on Monday, Reuters reported.WATCH NOWVIDEO01:38UAE supports increasing oil production unconditionally: Minister



OPEC+, which is dominated by Middle East crude producers, agreed to implement massive crude production cuts in 2020 in an effort to support oil prices when the coronavirus pandemic coincided with a historic fuel demand shock.



Led by Saudi Arabia, a close ally of the UAE, OPEC+ has since initiated monthly meetings in a bid to navigate production policy.



It has resulted in a rare public stand-off between the UAE and its long-time regional ally Saudi Arabia, OPEC’s de facto leader. The dispute comes as energy market participants anxiously await policy direction that is&nbsp;<a href="https://www.cnbc.com/2021/07/05/oil-explainer-energy-prices-rise-after-opec-fails-to-reach-deal.html?utm_term=Autofeed&amp;amp;utm_medium=Social&amp;amp;utm_content=Main&amp;amp;utm_source=Twitter#Echobox=1625462303">likely to shape crude markets into next year</a>.



OPEC+ will reconvene once again via videoconference from 2 p.m. London time Monday.



“UAE remains steadfast in its refusal to give ground, insisting that using the October 2018 production benchmark is fundamentally unfair. Hence, the prospect of a no-deal outcome — as well as a UAE OPEC exit — has risen materially even if it has not yet fully entered into firm base-case territory,” Helima Croft, head of global commodity strategy at RBC Capital Markets, said in a research note.



“Of course, in practice, the monthly meeting structure means that decisions can be reversed quickly and that no condition is permanent. On the flip side, if the talks end in utter discord, there is a risk of a return to an every-man-for-himself production scenario that could cause a reversal of this year’s oil price rally.”



Croft said Monday’s meeting was unlikely to end in disarray for a third day, but conceded this prospect could not be dismissed. “Certainly, it is not a black swan scenario,” she added.



<h2 class="wp-block-heading" id="h-beginning-of-the-end-for-the-broader-deal">Beginning of the end for the broader deal?</h2>



Ahead of the talks, international benchmark&nbsp;<a href="https://www.cnbc.com/quotes/@LCO.1">Brent</a>&nbsp;crude futures traded at $76.44 a barrel, up around 0.3% for the session, while&nbsp;<a href="https://www.cnbc.com/quotes/@CL.1">U.S. West Texas Intermediate</a>&nbsp;futures stood at $75.35, roughly 0.25% higher.



Oil prices rallied more than 45% in the first half of the year, supported by the rollout of Covid-19 vaccines, a gradual easing of lockdown measures and massive production cuts from OPEC+.



Analysts had expected the energy alliance to raise supply by around 500,000 barrels per day from next month.



As such, energy strategists at ING said on Monday that an OPEC+ proposed increase of around 400,000 barrels per day would likely be supportive for prices.



“Failing to come to a deal may provide some brief upside to the market, with reports that output would remain unchanged if OPEC+ does not come to an agreement,” they added.



“However, realistically it could also signal the beginning of the end for the broader deal, and so the risk that members start to increase output.”

prince

OPEC+ to resume crisis talks as Saudi Arabia and the UAE remain at loggerheads over oil output

July 5 (Reuters) &#8211; Turkey&#8217;s lira, and most currencies in Europe, the Middle East and Africa fell on disappointing economic readings, while broader emerging market currencies gained on Monday as mixed U.S. labour data weighed on the dollar.



MSCI&#8217;s index of emerging market (EM) currencies rose about 0.3% and was set to snap a five-day losing streak, with the dollar stalling on signs of weakness in the labour market, which is a key factor for the Federal Reserve to consider tightening policy.



Data showing rising U.S. unemployment cut short a dollar rally last week and helped emerging market assets, which had been under pressure from some hawkish signals from the Fed.



But currencies in Europe, the Middle East and Africa (EMEA) traded lower on Monday, with Russia&#8217;s rouble falling 0.4% to 73.3575 to the dollar, as weakness in oil prices weighed.



Russia&#8217;s service sector expanded in June for a sixth straight month, but the pace of growth appeared to be slowing.



Turkey&#8217;s lira gave up early gains and fell as much as 0.4% versus the dollar to 8.7105, after inflation rose much more than expected to 17.53% in June, its highest in two years.



That puts pressure on the Central bank of Turkey (CBT) to hike interest rates and support the lira, but also sets up an inevitable clash with President Tayyip Erdogan&#8217;s unconventional view that high interest rates cause inflation.



&#8220;The likelihood of CBT cutting rates voluntarily will disappear, but that will bring the central bank closer to a showdown with the President… CBT has, so far, stuck to a rather hawkish rhetoric in defiance of pressure from the president, which has supported the lira,&#8221; said Tatha Ghose FX and EM analyst at Commerzbank.



Lira depreciation had accelerated after Erdogan sacked a hawkish central bank governor in March, the most recent firing in a string of governors over the past two years.



South Africa&#8217;s rand eased 0.1% after data showed South African private sector activity expanded at a slower rate in June, due to disruptions caused by new COVID-19 measures.



In central Europe, Hungary&#8217;s forint and the Czech crown rose slightly against the euro. Both currencies have been supported by hawkish central banks this year.



Emerging market stocks traded flat, with MSCI&#8217;s index inching 0.04% lower.



Most EMEA stocks traded along similar lines, as a holiday in the United States made for a dearth of immediate cues.



For GRAPHIC on emerging market FX performance in 2021, see <a href="http://tmsnrt.rs/2egbfVh F">http://tmsnrt.rs/2egbfVh F</a>



or GRAPHIC on MSCI emerging index performance in 2021, see <a href="https://tmsnrt.rs/2OusNdX">https://tmsnrt.rs/2OusNdX</a>



(Reporting by Ambar Warrick; Editing by Kirsten Donovan)

Turkey Lira, photo via Flickr

EMEA currencies dip, Turkey’s lira slips on inflation spike

LONDON, July 2 (Reuters) &#8211; Stocks held near record highs on Friday as investors waited to see if U.S. payroll figures will alter their bets on when central banks row back on pandemic stimulus and whether inflation is here to stay.



The STOXX index of 600 leading European companies was up 0.5% at 458 points, just over two points below last month&#8217;s lifetime high.



Chipmakers were a bright spot, with ASML Holding up 1% after Micron Technology Inc said it plans to start using ASML EUV machines in production in 2024. ASM International rose 1.35% as it forecast higher order intake in the second quarter.



MSCI&#8217;s All Country World index was little changed, just below its all-time high hit earlier this week.



&#8220;The market is generally nervous with equity prices like the S&amp;P500 being up at all-time highs, and there&#8217;s a general sense of there is a pullback coming, but when is it going to be and what&#8217;s the catalyst,&#8221; said Giles Coghlan, chief currency analyst at HYCM.



On Wall Street, the S&amp;P 500 reached its sixth consecutive all-time closing high on Thursday, as a new quarter began with upbeat economic data. Jobless claims continued their downward trajectory, touching their lowest level since the pandemic shutdown.



&#8220;One catalyst for a pullback could be is a very strong run of jobs data, increasing expectations of earlier rate hikes out of the United States. That could be enough to start seeing a pullback in equity markets,&#8221; Coghlan said.



Wall Street was set for a steady start as S&amp;P futures hit new highs though sentiment will hinge on the payrolls data due before the open.



Economists polled by Reuters forecast that the U.S. economy created 700,000 jobs last month, up from 559,000 in May. That would be more than the 540,000 monthly average over the past three months.



Nevertheless, employment would be about 6.9 million jobs below its peak in February 2020.



While the prospects of a strong economic recovery underpin equity markets, investors remained nervous that a sharp recovery from the pandemic could push up inflation to an uncomfortable level for the U.S. Federal Reserve.



Former U.S. Treasury secretary Lawrence Summers said massive U.S. fiscal spending will set off inflationary pressures of a kind not seen in a generation, but others argue that until wage pressures return in force, talk about a return to 1970s-style inflation is just that.



&#8220;The situation remains uncertain and no one would have their forecast with high degree of confidence now. Markets will be very sensitive to any upticks in inflation,&#8221; said Tomo Kinoshita, global market strategist at Invesco.



<h2 class="wp-block-heading" id="h-heads-bashed">&#8220;HEADS BASHED&#8221;</h2>



Japan&#8217;s Nikkei gained 0.3% and most other markets held firm but MSCI&#8217;s broadest index of Asia-Pacific shares outside Japan fell 1% due to declines in Chinese and Hong Kong shares.



Shanghai Composite fell 1.9%, on course to mark its biggest fall since March, as investors grew cautious that China&#8217;s monetary policy could be tightened.



Some investors also noted possible unease among overseas investors over President Xi Jinping&#8217;s warning to foreign powers in a speech to mark his party&#8217;s centenary, as Sino-U.S. tensions simmer over many issues.



Xi said any foreign forces attempting to bully China would &#8220;get their heads bashed&#8221;.



&#8220;Foreign investors are probably turning cautious after hawkish rhetoric from China&#8217;s President Xi Jinping,&#8221; said Masahiko Loo, portfolio manager at AllianceBernstein in Tokyo.



In bond markets, the 10-year U.S. yield stood at 1.452% , largely staying below 1.5% in the past couple of weeks, in part thanks to subsiding inflation expectations.



In the currency market, the dollar was perched at a 15-month high against the yen and at multi-month peaks against other majors on Friday, as traders wagered strong U.S. labour data could lift it even further.



The dollar rose to as high as 111.57 yen, hitting its highest level since March last year. The euro slipped to $1.18324 .



Oil prices stood near their highest levels since 2018 on indications that OPEC+ producers could increase output more slowly than expected in coming months.



OPEC+ delayed its ministerial meeting until Friday to hold more talks on oil output policy, OPEC+ sources said on Thursday, after the United Arab Emirates blocked a plan for an immediate easing of cuts and their extension to the end of 2022.



U.S. crude futures traded at $75.12 per barrel, almost flat on the day after going as high as $76.22 on Thursday, its strongest since October 2018.



(Additional reporting by Hideyuki Sano, editing by Simon Cameron-Moore and Giles Elgood)

Stock market report. 3d illustration

Stocks dig in near record highs ahead of U.S. payrolls

<figure class="wp-block-image size-large"><img loading="lazy" decoding="async" width="740" height="416" src="https://cms.cnbcafrica.com/wp-content/uploads/2021/07/jane.jpeg" alt="" class="wp-image-408492" srcset="https://cms.cnbcafrica.com/wp-content/uploads/2021/07/jane.jpeg 740w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/jane-300x169.jpeg 300w, https://cms.cnbcafrica.com/wp-content/uploads/2021/07/jane-140x80.jpeg 140w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption>U.S. Treasury Secretary Janet Yellen speaks during a news conference, after attending the G7 finance ministers meeting, at Winfield House in London, Britain June 5, 2021. Justin Tallis | Reuters</figcaption></figure>



Treasury Secretary Janet Yellen announced Thursday that a group of 130 nations has agreed to a global minimum tax on corporations, part of a broader agreement to overhaul international tax rules.



If widely enacted, the GMT would effectively end the practice of global corporations seeking out low-tax jurisdictions like Ireland and the British Virgin Islands to move their headquarters to, even though their customers, operations and executives are located elsewhere.



“For decades, the United States has participated in a self-defeating international tax competition, lowering our corporate tax rates only to watch other nations lower theirs in response. The result was a global race to the bottom: Who could lower their corporate rate further and faster? No nation has won this race,” said Yellen in a statement on the accord.&nbsp;&nbsp;



“Today’s agreement by 130 countries representing more than 90 percent of global GDP is a clear sign: the race to the bottom is one step closer to coming to an end,” Yellen said.



The deal also&nbsp;<a href="https://www.wsj.com/articles/u-s-wins-international-backing-for-global-minimum-tax-11625153698?mod=e2tw" target="_blank" rel="noreferrer noopener">reportedly</a>&nbsp;includes a framework to eliminate digital services taxes, which targeted the biggest American tech companies.



In their place, officials agreed to a new tax plan that would be linked to the places where multinationals are actually doing business, rather than where they are headquartered.WATCH NOWVIDEO10:29Is it time for big business to pay up?



Much of the groundwork for adopting a GMT has already been laid by the Organization for Economic Cooperation and Development, which&nbsp;<a href="https://www.zdnet.com/article/oecd-work-on-multinational-tax-avoidance-pushed-to-mid-2021/" target="_blank" rel="noreferrer noopener">released a blueprint last fall</a>&nbsp;outlining a two-pillar approach to international taxation.



The&nbsp;<a href="https://oecdecoscope.blog/2020/10/20/tax-challenges-from-digitalisation-a-global-two-pillar-solution-could-increase-tax-revenues-and-support-economic-activity/" target="_blank" rel="noreferrer noopener">OECD Inclusive Framework on Base Erosion and Profit Shifting,</a>&nbsp;known as BEPS, is the product of negotiations with 137 member countries and jurisdictions.



Yellen’s announcement did not include the actual rate at which the GMT would be set, but the Biden administration has pushed for at least 15%.



G-20 finance ministers and central bank governors are scheduled to meet in Venice, Italy, later this month, and the international tax plan is expected to be high on the agenda.&nbsp;



The GMT agreement represents a key part of what President&nbsp;<a href="https://www.cnbc.com/joe-biden/">Joe Biden</a>&nbsp;has called “a foreign policy for the middle class.”



The strategy, devised in part by Biden’s national security adviser Jake Sullivan, emphasizes how foreign policy and domestic policy can be integrated into a new middle ground between the traditional conservative and liberal approaches to global affairs.



“Foreign policy for the middle class” aims to ensure that globalization, trade, human rights and military might are all harnessed for the benefit of working Americans, not solely for billionaires and multinational corporations, but not for abstract ideological reasons either.

jane

130 nations agree to support U.S. proposal for global minimum tax on corporations

July 1 (Reuters) &#8211; Emerging market stocks and currencies made a grim start to the second half of the year on Thursday, pressured by subdued factory activity data from several countries, but gains outside Asia helped cap losses for the broader indexes.



A weak June manufacturing PMI reading from Russia followed <a href="https://www.reuters.com/world/asia-pacific/asia-factories-see-momentum-weaken-rising-costs-new-covid-curbs-2021-07-01">surveys that showed</a> it grew at a slower pace in China and Japan due to rising raw material prices, while activity shrank in Vietnam, Malaysia and India, where governments imposed tougher restrictions to contain fresh coronavirus outbreaks.



&#8220;Concerns about the Delta variant (of the coronavirus) and fears of related news might cause uncertainty and risk aversion on the markets to rise,&#8221; said Antje Praefcke, an analyst at Commerzbank.



Russia&#8217;s COVID-19 deaths hit a new high on Thursday, while the Pan American Health Organization warned that cases in Latin America and the Caribbean COVID-19 are rising and vaccination is lagging badly. Most Latam stocks and currencies ended lower on Wednesday.



Currencies across emerging Asia were flat to lower, with the Philippine peso hitting August lows, while South Africa&#8217;s rand lost 0.4%.



The rouble, however, gained 0.5% against the dollar, tracking higher oil prices ahead of an OPEC meeting. <a href="https://www.reuters.com/article/russia-economy-gdp-idUSR4N2NZ00K">Data showed</a> Russia&#8217;s economic growth rose 10.9% year-on-year in May, continuing its recovery after a 3% decline in 2020.



The greenback held steady ahead of a much anticipated U.S. jobs data that is being watched to see if it would prompt the Federal Reserve to start tightening policy sooner than forecast.



Turkey&#8217;s lira climbed 0.3%, on a combination of factory activity returning to growth and the central bank&#8217;s revision to reserve requirement rations, which could shore up depleting forex reserves as well as lira holdings.



A hike in utility prices in Turkey is seen fanning inflation, which is already in double digits and well above target, and comes as the central bank faces pressure to lower interest rates in the next two months from President Tayyip Erdogan.



While several EM stock benchmarks in Asia fell, taking MSCI&#8217;s index of EM stocks down 0.2%, those across emerging Europe, Middle East and Africa rallied tracking a strong start for Western European indexes.



Russia&#8217;s MOEX was within a whisker of record highs, while Turkish stocks rose almost 1% to break a four-day losing streak and were on course for their best session in over three weeks.



For GRAPHIC on emerging market FX performance in 2021, see <a href="http://tmsnrt.rs/2egbfVh">http://tmsnrt.rs/2egbfVh </a>



For GRAPHIC on MSCI emerging index performance in 2021, see <a href="https://tmsnrt.rs/2OusNdX">https://tmsnrt.rs/2OusNdX</a>



(Reporting by Susan Mathew in Bengaluru; Editing by Rashmi Aich)

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Economy

Kenyan shilling seen softening, other African currencies stable

South Africa’s central bank to keep rates unchanged on July 22, hike in early 2022

Violence gives South African markets a reality check

FX hit by U.S. inflation, Turkish lira drops before rate decision

South African rand sinks to 3-month low, bonds drop on violent protests

Civil unrest, virus woes see South African rand drop over 1%

Currencies stabilise, rouble lags EMEA peers this week

Inflation, COVID-19 and debt top central bank worries -UBS survey

Stocks and currencies fall as Fed minutes and virus woes feed caution

Oil touches six-year high after OPEC fails to get deal, then turns negative

South African rand leads EMEA FX higher on commodity gains

Oil prices could ‘very easily’ top $100 a barrel, says former U.S. energy secretary

OPEC+ to resume crisis talks as Saudi Arabia and the UAE remain at loggerheads over oil output

EMEA currencies dip, Turkey’s lira slips on inflation spike

Stocks dig in near record highs ahead of U.S. payrolls

130 nations agree to support U.S. proposal for global minimum tax on corporations

Most currencies subdued on weak factory data; EMEA gains cap losses

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