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MARKETS IN A NUTSHELL

WORLD

EQUITIES

World equity markets advanced, led by US bourses — but emerging markets were lower on additional US tariffs on Chinese goods and heavy new tariffs on Turkish steel and aluminium

BONDS

Developed market bond yields were higher, with the US 10-year yield surpassing 3.0% — the Fed’s tone has become noticeably more hawkish

CURRENCIES

Dollar strength persisted — but emerging market currencies nosedived after the US tariffs on Turkish goods and Argentina’s IMF bailout

COMMODITIES

Commodity prices were broadly lower on US dollar strength and the negative trade outlook — but the oil price surged on supply concerns given disruptions in Venezuela, new US sanctions on Iran and Russia and OPEC’s refusal to ramp up production

ECONOMY

The global economic expansion continued, driven by robust US economic activity where unemployment has been below 4% for the longest period in 18 years — the cycle is now undoubtedly in its late stages

MONETARY AND FISCAL POLICY

The Fed again raised the federal funds target rate and started with the slow process of winding down its balance sheet — the European Central Bank is about to conclude its own stimulus

SOUTH AFRICA

EQUITIES

The FTSE/JSE Capped All Share Index declined, with mixed performance from the rand hedge counters as stock specific factors offset the weaker rand — but SA Inc. counters were mostly sharply lower

BONDS

SA bonds were lower as yields spiked on the emerging markets sell-off — but the All Bond Index eked out a positive total return

CURRENCIES

The rand weakened sharply against the US dollar on emerging market contagion risk — compounded by trade war escalation

COMMODITIES

Commodity prices were broadly lower on US dollar strength and the negative trade outlook — but the oil price surged on supply concerns given disruptions in Venezuela, new US sanctions on Iran and Russia and OPEC’s refusal to ramp up production

ECONOMY

Data confirmed a technical recession with 2nd Quarter GDP contracting 0.7% (q-on-q) after Q1’s -2.6% — mostly due to very weak consumption, steep agriculture declines and a dearth of fixed investment

MONETARY AND FISCAL POLICY

SARB kept interest rates unchanged despite the sharply higher fuel price and interest rate increases in peer economies Turkey and Russia — although its tone is less accommodative

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