Financial markets stay optimistic following South Africa's Cabinet appointment
President Cyril Ramaphosa's announcement of the new Cabinet for South Africa's Government of National Unity last Sunday brought stability to the country's financial markets.
Share and capital markets have continued their recovery following the previous week's uncertainties.
Optimism has grown about the South African economy potentially expanding by more than 2% in 2024, driven by six positive factors. These include the absence of load shedding since April, anticipated declines in interest and inflation rates, a stronger rand due to capital inflows, improved export performance due to better infrastructure and higher global commodity prices (particularly gold and platinum), and expectations of a government budget recording a primary surplus.
On the Johannesburg Stock Exchange (JSE), equities saw gains as the All Share Index (ALSI) reached record highs multiple times during the week. It closed on Thursday at a new peak of 81,155 points, finishing the week up 1.4%.
Year-to-date, the ALSI has increased by 6.72%. The All Share Industrial Index ended the week flat but has risen 6% year-to-date. The FIN15 Index also ended the week flat after significant selling in banking and financial stocks on Friday.
Resources once again performed strongly, with the Resource 10 Index rising by 4.9%. Precious metals, particularly gold and platinum, showed recovery after recent stagnation. The gold price increased by $63 (R1,145) to close at $2,389 per ounce, while platinum rose by $40 to $1,033.50.
Equity prices were slightly negatively affected in late trading on Friday following the release of the US non-farm payrolls data for June, which showed more job creation than expected. Despite the unemployment rate rising from 3.7% to 3.8%, average hourly earnings grew by 0.2%.
These stronger-than-expected employment figures suggest that the Federal Reserve may refrain from lowering interest rates in its upcoming meeting. Consequently, equity prices ended Friday in the green, reflecting a strong US economy. The S&P 500 gained 1.43% for the week, ending strongly after the job data release.
In the foreign exchange market, the rand strengthened following the resolution of Cabinet uncertainty. The rand appreciated by 20 cents since last Monday, closing at R18.17 to the dollar on Friday. Against the pound sterling, it remained flat at R23.29/?.
This coming week, domestic markets will look forward to the release of South Africa's foreign exchange reserves by the Reserve Bank on Monday. On Thursday, Statistics South Africa will publish the latest data on annual mining and manufacturing production growth for May 2024.
Global market movements will be influenced by US Federal Reserve Chair Jerome Powell's testimony to the Senate on Tuesday and Wednesday. Additionally, the US will release June inflation data on Thursday, with a focus on the annual core inflation rate, which is expected to remain at 3.4%, above the Fed's 2.0% target. This is likely to reinforce the sentiment that the Fed will not lower interest rates.
Share and capital markets have continued their recovery following the previous week's uncertainties.
Optimism has grown about the South African economy potentially expanding by more than 2% in 2024, driven by six positive factors. These include the absence of load shedding since April, anticipated declines in interest and inflation rates, a stronger rand due to capital inflows, improved export performance due to better infrastructure and higher global commodity prices (particularly gold and platinum), and expectations of a government budget recording a primary surplus.
On the Johannesburg Stock Exchange (JSE), equities saw gains as the All Share Index (ALSI) reached record highs multiple times during the week. It closed on Thursday at a new peak of 81,155 points, finishing the week up 1.4%.
Year-to-date, the ALSI has increased by 6.72%. The All Share Industrial Index ended the week flat but has risen 6% year-to-date. The FIN15 Index also ended the week flat after significant selling in banking and financial stocks on Friday.
Resources once again performed strongly, with the Resource 10 Index rising by 4.9%. Precious metals, particularly gold and platinum, showed recovery after recent stagnation. The gold price increased by $63 (R1,145) to close at $2,389 per ounce, while platinum rose by $40 to $1,033.50.
Equity prices were slightly negatively affected in late trading on Friday following the release of the US non-farm payrolls data for June, which showed more job creation than expected. Despite the unemployment rate rising from 3.7% to 3.8%, average hourly earnings grew by 0.2%.
These stronger-than-expected employment figures suggest that the Federal Reserve may refrain from lowering interest rates in its upcoming meeting. Consequently, equity prices ended Friday in the green, reflecting a strong US economy. The S&P 500 gained 1.43% for the week, ending strongly after the job data release.
In the foreign exchange market, the rand strengthened following the resolution of Cabinet uncertainty. The rand appreciated by 20 cents since last Monday, closing at R18.17 to the dollar on Friday. Against the pound sterling, it remained flat at R23.29/?.
This coming week, domestic markets will look forward to the release of South Africa's foreign exchange reserves by the Reserve Bank on Monday. On Thursday, Statistics South Africa will publish the latest data on annual mining and manufacturing production growth for May 2024.
Global market movements will be influenced by US Federal Reserve Chair Jerome Powell's testimony to the Senate on Tuesday and Wednesday. Additionally, the US will release June inflation data on Thursday, with a focus on the annual core inflation rate, which is expected to remain at 3.4%, above the Fed's 2.0% target. This is likely to reinforce the sentiment that the Fed will not lower interest rates.
