Markets in a Nutshell
World
South Africa
Equities
World
Developed market equities surged and the S&P 500 neared all-time highs after the US Federal Reserve signalled it would cut rates in 2024 more than the market was expecting — but Chinese stocks fell again on sentiment and restrictive gaming proposals
South Africa
The FTSE/JSE All Share Index tracked global bourses higher, achieving almost all its annual gain in the fourth quarter — led higher by financials, while resources lagged and industrials were led lower by a sharp fall in index heavyweights Naspers/Prosus
Bonds
World
Developed market bond yields fell sharply and bond markets surged ~8% to recoup their 2023 losses — after inflation prints surprised to the downside and interest rate expectations adjusted sharply lower
South Africa
The All Bond Index also rallied, recouping two quarters of losses from the bond market — yields fell across the curve, with those on longer dated bonds falling most
Currencies
World
The US dollar strength abated with the unit weaker against the other majors — on expectations of more aggressive US interest rate cuts in 2024
South Africa
The rand was volatile but gained against the US dollar — on expectations of improved interest rate differentials despite its weak fundamentals and deteriorating trade balance
Commodities
World
Interest-rate-sensitive precious metals including gold and platinum rallied and industrial commodities including copper advanced on prospects of a soft economic landing — while crude oil plunged ~20% after US production rose and Angola left the OPEC cartel, despite heightened Middle Eastern tensions
South Africa
Interest-rate-sensitive precious metals including gold and platinum rallied and industrial commodities including copper advanced on prospects of a soft economic landing — while crude oil plunged ~20% after US production rose and Angola left the OPEC cartel, despite heightened Middle Eastern tensions
Economy
World
Cooling headline inflation has improved living standards in developed markets where economic growth has defied restrictive monetary policy — robust US GDP growth continues to outpace European growth and should backstop global demand
South Africa
The South African consumer remains constrained as third quarter economic activity contracted again after two quarters of tepid expansion — SARB now expects somewhat improved economic growth on gradually improving electricity supply
Monetary and fiscal policy
World
The Fed turned dovish in December, holding rates steady and signalling that the inflation outlook has improved more quickly than previously anticipated — while also suggesting that it would cut the US federal funds rate up to three times in 2024
South Africa
SARB’s Monetary Policy Committee again left the repo rate unchanged in its first unanimous decision in a while — its slightly dovish tilt could suggest that (as elsewhere in the world) South Africa is now at peak rates in the current cycle