Markets in a Nutshell - September 2024
World
South Africa
Equities
World
Global equities overcame intra-quarter tech wobbles and US indices hit all-time highs on hopes that the US Federal Reserve would execute a soft economic landing after its first rate cut this cycle — while Chinese stocks surged on overdue Chinese stimulus to outperform US markets in 2024
South Africa
The FTSE/JSE Capped All Share Index gained almost 10% as the global risk-on environment took hold — led by industrial and financial shares as the first 100 days of the GNU concluded with reasonable success, although resources fell
Bonds
World
Developed market bond yields traded sharply lower and bond markets advanced to recoup year-to-date losses — on improving inflation data, lower policy rates and some caution about slowing growth
South Africa
SA bonds advanced by double digits as SARB cautiously started its rate-cutting cycle and inflation metrics improved — the All Bond Index has jumped 26% in the last year
Currencies
World
The dollar was weaker against the euro and pound after the Fed cut interest rates by an aggressive 0.5% — while the yen rallied strongly from multidecade lows on policy adjustments, triggering panic over the yen carry trade and igniting a mini tech selloff
South Africa
The rand has been amongst the best performing emerging market currencies this year, advancing 5% against the US dollar last quarter — on improved political stability and better terms of trade
Commodities
World
Commodities advanced latterly on hopes that Chinese stimulus would buoy demand, while gold again set record highs as the global rate-cutting cycle became assured amid conflict in the Middle East — but oil nevertheless fell sharply on expectations of waning global demand and OPEC ‘leader’ Saudi Arabia planning to boost production
South Africa
Commodities advanced latterly on hopes that Chinese stimulus would buoy demand, while gold again set record highs as the global rate-cutting cycle became assured amid conflict in the Middle East — but oil nevertheless fell sharply on expectations of waning global demand and OPEC ‘leader’ Saudi Arabia planning to boost production
Economy
World
US economic growth slowed demonstrably, but the economy is still expanding at enviable levels compared to other developed markets, although European growth prospects are finally starting to improve — Chinese growth remains stable at around 5%, but the economy still faces headwinds from a protracted property crisis and adverse investor sentiment
South Africa
South Africa’s GDP has not grown in 10 years, but business confidence is improving after 100 days of no loadshedding and hopes of political renewal since the creation of a Government of National Unity — government finances are improving, but SA’s debt levels remain extremely elevated
Monetary and fiscal policy
World
The US central bank again kept rate cuts on hold, with the ‘dot plot’ forecasts of future moves turning more hawkish, leaving the US as an outlier — the European Central Bank moved to cut interest rates ahead of the US for the first time ever, with interest rate cuts also being executed in other developed economies
South Africa
The South African Reserve Bank also left rates unchanged, citing upside risks to inflation from administered prices (fuel and electricity) and inflation expectations — despite core inflation moderating towards the middle of SARB’s 3 – 6% target range