Markets In A Nutshell
World
South Africa
Equities
World
Developed market equities achieved all-time highs on expectations that vaccine rollouts would accelerate global growth—buoyed by further US stimulus and accommodative monetary policy
South Africa
The JSE outperformed emerging market peers—led higher by resources stocks on a sustained commodities rally and industrial counters on hopes for robust 2021 growth
Bonds
World
Longer dated developed market bond yields were sharply higher—on rising inflation expectations given the rapid US economic recovery and massive increases in money supply
South Africa
The All Bond Index fell as longer dated SA rates tracked global yields higher—the yield curve was steeper as SARB held the repo rate unchanged
Currencies
World
The US dollar outpaced the majors on rising Treasury yields and expectations for faster growth—rising European coronavirus case counts weighed on the euro
South Africa
The rand was stable against the US dollar, bucking general emerging market currency weakness—on surprisingly robust recovery and improved terms of trade
Commodities
World
Industrial commodities oil, copper, platinum and iron ore rallied on prospects of rising demand—precious metals gold and silver fell on the opportunity cost of rising yields and as central banks downplayed inflation risks
Economy
World
The 2020 economic recession was milder than first expected, with GDP contracting 3.6%—the IMF now forecasts global growth of 6.6% for 2021, moderating to 4.4% next year
South Africa
Fourth quarter GDP growth rebounded, but the SA economy contracted by a staggering 7.0% in real terms last year—reflective of the harsh lockdowns and inconsistent government policy
Monetary and fiscal policy
World
New US President Biden hammered through a massive $1.9 trillion pandemic relief bill and announced a $2.0 trillion infrastructure plan—global monetary policy remains very accommodative
South Africa
The SA Reserve Bank again kept the repo rate on hold at multi-decade lows, given benign inflation—while SA escaped harsh tax increases after windfall mining tax revenues exceeded expectations