Markets in a Nutshell - June 2024
World
South Africa
Equities
World
The index of global share markets rallied narrowly, pulled up by a handful of mega-cap US tech stocks as the AI theme continued — European shares traded lower, while emerging markets also gained as Chinese shares recovered from recent lows
South Africa
JSE-listed shares rallied over 8% in an eventful quarter, which included resources shares recovering from recent selloffs — but the standout performers were SA Inc. shares that include banks and construction companies, which surged as the most market-friendly elections outcome eventuated
Bonds
World
Developed market bond yields rose and bond markets fell as it became evident that the US central bank would not be cutting interest rates quickly — given the strength of the US economy and inflation sticky above target levels
South Africa
The All Bond Index gained over 7% as investors reduced the risk premium on South African bonds, as a government that excluded the most radical parties became assured — with longer dated bonds advancing most
Currencies
World
US dollar strength persists against the majors, given the US economy’s sustained resilience, high interest rates and AI dominance — meanwhile the Japanese yen weakened to 38-year lows against the US dollar as the country persists with ultra-low interest rates
South Africa
The rand was volatile intra-quarter, but advanced aggressively on hopes that a more centrist government would move quickly on market-friendly policies — the unit broke through R18/$, but has subsequently retraced some of the gains
Commodities
World
Commodities mostly retraced after a bullish run this year, with copper down meaningfully and gold flat despite continued dollar strength — but crude oil prices rose on summer demand and OPEC supply cuts
South Africa
Commodities mostly retraced after a bullish run this year, with copper down meaningfully and gold flat despite continued dollar strength — but crude oil prices rose on summer demand and OPEC supply cuts
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