South African rand weakens on risk-off mood, economic data eyed
JOHANNESBURG, June 17 (Reuters) - The South African rand weakened in early trade on Tuesday, as risk sentiment remained fragile with the Israel-Iran conflict entering its fifth day.
At 0626 GMT the rand traded at 17.83 against the dollar , 0.1% softer than Monday's close.
Heightened uncertainty stemming from the Middle East conflict and U.S. President Donald Trump's call to Iranians to evacuate Tehran led investors to seek safe-haven assets, dulling the appeal of the local currency.
Domestic investors will also look to consumer inflation (ZACPIY=ECI), opens new tab and retail sales (ZARET=ECI), opens new tab figures due on Wednesday, which may influence the South African Reserve Bank's thinking on monetary policy, though its next rate decision is not due till the end of July.
South Africa's benchmark 2035 government bond was also weaker in early deals, with the yield rising 1.5 basis points to 10.155%.
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Times
33 minutes ago
- Times
What war in the Middle East means for your money
The conflict between Israel and Iran is the latest geopolitical shock set to hamper the outlook for the UK economy — and, ultimately, your bank balance. Since the attacks began on June 12, the price of oil has risen to a six-month high. Hopes for interest rate cuts have been dashed, fears of rising inflation have been amplified, and any respite from stock market turmoil appears to have been short-lived. • Read more money advice and tips on investing from our experts This week the prime minister, Sir Keir Starmer, said: 'I'm always concerned about the effect of international issues on people back at home. You saw with Ukraine the direct impact it had on energy bills. Equally, with this conflict, you can see the effect it's having on the economy, particularly on the price of energy.' From petrol prices to pension pots, here's what you need to know: Iran is the third-largest oil producer among the 12 members of the Organisation of the Petroleum Exporting Countries (Opec), and there are worries about how a wider regional war could affect the transport of oil through the Strait of Hormuz, which accounts for about 25 per cent of seaborne crude oil transportation, according to the consultancy Capital Economics. The price of a barrel of Brent crude hit a six-month high of about $78 after Israeli attacks on Iran began, up from about $65 at the start of this month. That is bound to have a knock-on effect on motorists, said David Oxley from Capital Economics: 'A rough rule of thumb is that a $10 rise in the oil price will add about 7p to the price at the pump.' It normally takes about two weeks for oil prices to feed into pump prices, Oxley said. Motorists have, however, had some recent respite from the cost of living crisis as petrol and diesel prices hit their lowest in almost four years. Petrol cost an average of 132p a litre last month, the lowest since July 2021, while diesel was at 138p, the lowest since September 2021, according to the motoring organisation the RAC. While prices are likely to rise, they are not expected to reach the high of March 2022, when Russia's invasion of Ukraine caused the oil price to reach $127 per barrel. The price in sterling peaked in July of that year at more than £100 with pump prices hitting 192p per litre for petrol and 199p per litre for diesel. More than a million homeowners whose fixed deals come to an end this year may have their hopes of further interest rate cuts dashed. The lowest two-year fix was 3.72 per cent last month, but rates are starting to tick up again, according to the property portal Rightmove. The lowest two-year deal is now 3.82 per cent from Lloyds Bank for those with a Club Lloyds account. The lowest five-year fixed rate has gone from 3.78 per cent to 3.88 per cent, also from Lloyds. Lenders had been cutting mortgage rates to compete for business, but changed tack after inflation went from 2.6 per cent for the year to March to 3.5 per cent in April. This makes cuts to the Bank of England base rate less likely — the Bank generally keeps the rate high when inflation is above its target of 2 per cent. The Consumer Prices Index inflation figure for the year to May, released this week, was 3.4 per cent. Uncertainty around President Trump's trade tariffs and conflict in the Middle East has also dampened hopes of further base rate cuts. The Bank held rates at 4.25 per cent this week, which, although a lot higher than the sub 2 per cent rates many mortgage holders will have fixed at three or five years ago, is down from the peak of 5.25 per cent in August last year. Fixed mortgage rates are based on swap rates (the rates at which banks lend to each other, which are in turn based on forecasts of where Bank rate is expected to be in the future), which have edged up over the past week or so, suggesting that mortgage rates could follow. Homeowners who want certainty can lock in a new deal up to six months before theirs ends yet still swap if a cheaper deal comes along. Rising oil prices could also cause other expenses to creep up, particularly if the Iran conflict continues or escalates. Lotanna Emediegwu, an economics lecturer at Manchester Metropolitan University, said that prolonged conflict could drive up energy bills. The price cap that limits how much suppliers can charge customers on standard variable tariffs will work out at an average bill of £1,720 a year for gas and electricity from July 1 (down 7 per cent from today's cap). At the moment analysts expect the cap to go up 2 to 3 per cent in October, but this could change dramatically. He said: 'Until recently, fuel prices had been rising less than other things, so actually mitigating some inflationary pressures. The recent conflict is expected to reverse this trend. 'The financial repercussions extend beyond immediate energy costs into transportation and logistics. Transport expenses are particularly vulnerable to fluctuations in fuel prices. This affects everything from airline fares to shipping costs for products, ultimately hitting consumer prices.' Before June 12, when Israel launched strikes on Iran, inflation had been expected to rise to 3.5 per cent by the autumn — now it could go further. A sustained $10 per barrel rise in the oil price typically pushes up annual inflation by 0.1 to 0.2 percentage points, according to The Economist, meaning that it could be closer to 3.7 per cent by September. Emediegwu said a prolonged blockade of the Strait of Hormuz shipping route could add a further 0.5 to 1 percentage points, which could take it close to 5 per cent. So far the stock market has been fairly resilient to the conflict in the Middle East. The UK's FTSE 100 is down about 0.77 per cent since the turmoil started, while the US's S&P 500 is down about 1.06 per cent. If a sustained conflict leads to an increase in the price of oil, stock valuations may fall — this is because higher oil prices lead to higher inflation, which means interest rates are likely to stay higher for longer, which makes it more expensive for companies to borrow money to grow and often curbs investors' risk appetite. Losers are likely to include airline and travel stocks, as well as so-called growth stocks, which include technology and healthcare companies. Many investors will have exposure to the US 'Magnificent Seven' tech stocks of Microsoft, Apple, Alphabet, Tesla, Amazon, Meta and Nvidia. These companies are often valued on their future earnings potential, which means their stock price can be volatile if company results or wider economic conditions point towards a slowdown of earnings. The good news is that Iran and Israel are a very limited part of the global stock market, so direct exposure for most UK investors will be immaterial. However, Michael Field from the research firm Morningstar said that the risk is that wider markets get jittery about the potential for the conflict to escalate further. Investors should avoid making any kneejerk changes to their portfolio. Ultimately, while geopolitical tensions may create short-term turmoil, historically markets have been resilient in the long term. Jacob Falkencrone from the investment bank Saxo said: 'As an investor, your greatest tool is a disciplined approach — staying informed, remaining calm and focusing on your long-term investment goals rather than reacting impulsively to temporary shocks.'
Daily Mail
2 hours ago
- Daily Mail
Going for gold - should the 'new dollar' be your next investment?
The fast-mounting tensions in the Middle East are fuelling the ascent of gold. The price hit $3,389 an ounce this week – 30 per cent higher than at the start of the year, and 185 per cent above its level of a decade ago. The metal is being called 'the new dollar' since it is supplanting the US currency as the place to seek shelter in tough times. This new status suggests that maybe you should make some room for gold in your portfolio, particularly if you are apprehensive about the outlook for inflation. Meanwhile, even if you have already joined the gold rush of 2025, it is worth taking a look at the other precious metals whose values are being propelled by the view that gold is the safe haven of our era. The price of silver is up by 29 per cent since January, while platinum has soared by 39 per cent to $1,312. Silver is used in batteries and solar panels. The demand from platinum is coming from the jewellery industry, particularly in China. This metal is also needed for the catalytic converters on hybrid and petrol cars. Precious metals are having a moment. But will it turn into a long-term trend? Here's what you need to know. WHAT'S NEXT FOR THE GOLD PRICE? In the short-term, any worsening of the hostilities between Israel and Iran may spur further gold price rises. Goldman Sachs expects the price to increase to $3,700 by Christmas, and to $4,000 by the summer of 2026. Citigroup is almost a lone pessimist, forecasting a retreat to about $2,600 by Christmas next year. By contrast, the arch-optimists see bullion hitting $5,000 by the end of the decade. Earlier in the year, the fears that Donald Trump would impose tariffs on the import of gold to the US gave the price a fillip. This did not materialise. But a gold spending spree at central banks is now fuelling the metal's ascent. These institutions, whose key responsibility is to ensure the financial stability of their nation's, are buying 80 metric tonnes of gold a month which is worth about $8.5billion. US dollars still make up about 46 per cent of these banks' reserves, but gold accounts for about 20 per cent, having overtaken the euro, as data released this month reveals. Secrecy covers which central banks are buying. But it is clear that some nations, such as China, are playing catch up. China's holdings may be at the highest ever, but just 10 per cent of its reserves are in gold, by contrast with France, German, Italy and the US where the share is closer to 70 per cent. In the UK, the percentage is under 20 per cent, following the sale by then Chancellor Gordon Brown in 1999 of about half of the stockpile stashed in the Bank of England. At the time, the price was about $298. Through its gold purchases, China is seeking to bolster the credibility of its currency, the yuan. But, like other nations, it is engaged in 'de-dollarisation' that is lessening dependence on the US currency. In some emerging market nations, this shift is being driven by anti-American sentiment. But it is also a policy prompted by pragmatism, with fears that there could be more 'weaponisation' of the dollar. US sanctions imposed on Russia following the invasion of Ukraine and its exclusion from the Swift international payment system rendered that country's dollar reserves worthless. Central banks view moving more into gold as way to swerve such a fate. They are also alarmed by the size of US debts. But this anxiety has yet to reach a pitch that would precipitate a frenzied investment in gold. James Luke of asset manager Schroders says: 'The fiscal frog continues to boil slowly, for now.' This is a reference to the adage that people tend to wake up too late to the progressively increasing risks of a situation in the same way that a hapless frog seems not to be conscious that the temperature of water is becoming ever hotter. Even if there is no sudden upward surge, central banks seem set to keep going for gold, limiting the amount available for trading and so putting a floor under price falls. Lina Thomas of investment bank Goldman Sachs says: 'The long-run bull story for gold is that central banks are buying large amounts of it. We expect that to continue for at least another three years.' SHOULD YOU GO FOR GOLD? Despite the predictions that the gold price will remain strong, some investors will never get into the metal because it does not provide an income – and because they regard it as fundamentally uninteresting. As the legendary US investor Warren Buffett has said, gold 'doesn't do anything but sit there and look at you'. Even if you are unconcerned by the lack of a yield and also of excitement, it would still be unwise to commit more than 5pc of your portfolio to the metal. You also need to ponder your strategy. If you are drawn to the look of gold, with its beguiling lustre, you may be interested in acquiring a bar, a coin or an ingot. A one kilogramme gold bar will set you back about £82,000 at Sharps Pixley, the bullion dealer in St James's Street, London, although smaller, much less expensive versions are available. The Royal Mint has also options for most budgets. Its website is a mine of information on every aspect of gold. But do not overlook the practical issues such as storage – in a secure vault. Holding physical gold through low-cost exchange traded commodity (ETC) fund is simpler, if more prosaic. These funds track the price of the metal by owning bullion, which is safely stashed in vaults. The investor platform best-buy options include iShares Physical Gold, which opts for responsibly-sourced gold. This column highlighted this fund in February, when the metal's price was about $2,900, and it became my choice for a first foray into gold. For me, gold jewellery is an adornment, rather than an investment. Funds that hold gold mining shares are a more complex proposition. The profits of these companies gain an extra boost from upward moves in the gold price since their overheads are fixed. But they face other challenges, like the cost of borrowing and possible political intervention. For example, the authorities in Mali have taken control of Barrick Gold's mine in that country following a dispute. The mine accounts for 14 per cent of the output of Barrick, a Canadian group. If you are prepared for such eventualities, the gold mining company funds that appear on the platforms' best buy lists include BlackRock World Mining and Ninety One Global Gold. Ninety One Global Gold has stakes in the big mining names like Newmont, Northern Star, Alamos Gold and AngloGold Ashanti. The $64.81billion Colorado-based Newmont is the world's largest name in its field. As always, it is wise to check whether you already have exposure to gold through funds and trusts that aim for capital protection. Personal Assets, Ruffer and Troy Trojan all have a slug of gold. If you are ready for an adventure in the world of metals, Ben Yearsley of Fairview Investing suggests Amati Strategic Metals which invests in gold, silver platinum, but also copper, manganese and rare earth metals. The fund's top holding is Fresnillo, the Mexican gold and silver mining group whose shares have jumped by 117 per cent since January. This rise may not continue. But it is a sign that this is a sector which you cannot afford to ignore.
Auto Blog
2 hours ago
- Auto Blog
Hopes Of Lower Tariffs Against European Cars Are Fading Fast
Hopes Of A Deal Are Fading Fast One of the biggest promises of President Donald J. Trump's electoral race was to impose tariffs on foreign imports, and shortly after he was inaugurated for the second time, 'tariffs' quickly became one of the buzzwords of his presidency. When it comes to cars, just about anything produced outside of American borders is going to get a lot more expensive, and due to vastly complex international supply chains, even domestically produced products could be impacted. But there was a glimmer of hope that the president would change – or at least soften – his stance against America's allies in Europe. European Union leaders had publicly expressed this expectation, citing a history of cooperation. However, as the July 9 deadline for tariffs to be further increased approaches, hope is fading, reports Reuters. The U.S. Is Already Reaping Tariff Income The publication spoke to an anonymous official who reportedly noted that hopes of relief are fading faster now that tariffs have come into effect: '10% is a sticky issue. We are pressing them, but now they are getting revenues.' A second source reportedly said the EU still would not accept the baseline rate but acknowledged that it would be difficult to change or abolish the measure. The European Union has also publicly declared that it would not accept double-digit tariffs as the United Kingdom has, but U.S. Commerce Secretary Howard Lutnick has ruled out the idea of any tariffs being lowered under the 10 percent baseline. What makes this worse is that the tariffs don't only apply to finished products; steel and aluminum from Europe face a 50 percent tariff, and that doesn't even include the standalone 25 percent tariff on foreign cars. The good news is that Europe, with a trade surplus of $236 billion with the U.S., needs to continue doing business with the largest economy in the world, so your local BMW dealer isn't closing up shop anytime soon. An EU official is quoted by Reuters as saying that the 10% baseline rate would 'not massively erode competitive positions, especially if others receive the same treatment.' And although hope of a compromise is fading, it hasn't been extinguished just yet. Officially, The Fat Lady Has Yet To Sing As noted by CarScoops, European Commission President Ursula von der Leyen has confirmed that negotiations are still underway, despite President Trump's assertion earlier this week that the EU hadn't been fair thus far. 'We're talking, but I don't feel that they're offering a fair deal yet,' said President Trump. 'They're either going to make a good deal or they'll just pay whatever we say they have to pay.' Von der Leyen said, 'It's complex, but we are advancing – that is good – and I push hard to pick up more speed. So we are mixed in the negotiations, and we will see what the end brings.' The United States government is adamant that its long-standing partners are benefitting more from the status quo than America is, and that mindset means that any price increases as a result of tariffs on EU imports will likely not be small. That said, automakers are working to find ways of absorbing as much of the financial strain as possible, and one way of doing that is by pushing sales of existing inventory with incentives and employee pricing offers. Autoblog Newsletter Autoblog brings you car news; expert reviews and exciting pictures and video. Research and compare vehicles, too. Sign up or sign in with Google Facebook Microsoft Apple By signing up I agree to the Terms of Use and acknowledge that I have read the Privacy Policy . You may unsubscribe from email communication at anytime. About the Author Sebastian Cenizo View Profile
