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Markets in a nutshell

WORLD

EQUITIES

Equity markets rallied strongly on massive global stimulus and easing of lockdowns — emerging markets matched developed markets in the magnitude of the recovery

BONDS

Most developed market government bond yields fell marginally despite new stimulus — while high-yield corporate and sovereign bonds largely recovered from the March sell-off

CURRENCIES

The US dollar was weaker — the ballooning US Federal Reserve balance sheet and surge in money supply is negative for the US dollar vs other hard currencies

COMMODITIES

Industrial metals bounced, gold rallied and WTI oil doubled — on the improved macro outlook and US dollar weakness

ECONOMY

COVID-19 lockdowns plunged the global economy into the deepest recession since the 1929 Great Depression — unemployment spiked and household savings rates soared on curtailed discretionary spending

MONETARY AND FISCAL POLICY

Nations across the globe unleashed unprecedented monetary and fiscal stimulus to support failing economic activity — the resultant debt bloat should impair potential global output for many years

SOUTH AFRICA

EQUITIES

The JSE rallied with global markets, led by surging resource stocks — financial counters were laggards, weighed down by the banking sector on prospects for lower interest margins and higher impairments

BONDS

SA government bond yields fell on improving global risk appetite and sharp repo rate cuts — the very steep yield curve reflects market anxiety for higher inflation and risk of default in the long term

CURRENCIES

The rand retraced some of its first quarter losses — improved terms of trade contributed to SA’s first quarterly current account surplus since 2002

COMMODITIES

Industrial metals bounced, gold rallied and WTI oil doubled — on the improved macro outlook and US dollar weakness

ECONOMY

The beleaguered SA economy contracted for the third successive quarter to end March — even before the brunt of COVID-19 lockdowns which are estimated to cause another 25% contraction (annualised) in the second quarter

MONETARY AND FISCAL POLICY

Government unveiled a massive fiscal relief package exceeding R500 billion to support the pandemic ravaged economy — while low inflation prompted SARB to heavily cut interest rates

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