“Government Confirms No Increase in VAT Rate”

Good morning

The VAT hike is no longer which is a welcomed headline in an environment where the cost of living is already a major challenge.  Now if something can just be done about this incessant rain!!!

These are the mid rates at 7:50 today:

Market News

• The Rand is also looking rather soggy as we head towards the next long weekend with an earlier flourish during the week now far behind us.  We managed to hit R18.50 to the Dollar on Wednesday, but any hopes of further gains were quickly snuffed out as the subsequent slide has taken us to R18.86 this morning.   
• After what seems like an age of negative headlines we’ve finally had a number of positives this week which has allowed trampled on equities to stage decent recovery, but unfortunately also taking pressure off the Dollar.  To be fair, the week started with a shocker on Monday with speculation of Trump trying to oust FED Chair Jerome Powell weighing heavily on stocks and the Dollar alike.  The tone has improved significantly since then with the S&P500 up by 6.4% in the past 4 sessions, a relief for investors, but the Dollar is on the cusp of snapping a 4 week losing streak which is bad for the Rand. 
• Looking at the good news in more detail there are three items to focus on, those being the FED, tariffs and earnings.  Trump vs Powell headlines dominated the early part of the week but thankfully this turned out to be a storm in a teacup with Trump saying he has no intention of firing Powell.  Monday’s heavy selling in the equity market was reversed on Tuesday and at the time the swing to risk-on sentiment was a tailwind for the Rand.
• Things improved on Wednesday when Trump said that the elevated tariffs between the US and China would be substantially lowered through negotiations, comments that have been spoken about with interest across multiple news channels as a possible sign that the US has blinked first in this ongoing trade war.  Trump also said that negotiations between the US and China are already underway, something that Chinese officials say is “false news” so take your pick when choosing what to believe, but the market trades on sentiment and with just the potential of a thawing in relations that has been enough for stocks to keep climbing (as well as the Dollar). 
• In the absence of any new trade related headlines from the White House this week the market has been able to focus back on the Q1 2025 earnings and while some reports have been patchy others have been surprisingly strong.  Alphabet (Google) for example reported better than expected earnings last night with revenue growth coming in at 12% year-on-year when 10% was expected, and with the share price up by 5% in pre-market after already climbing by 8% this week that shows how risk-on is trying to make a comeback. 
• No local market data today but with our consumer inflation dropping to 2.7% on Wednesday could that strengthen the case for a SARB interest rate cut in late May? 
• Possible USD mid rate trading ranges in the Rand today are R18.70 and R19.00.

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