Markets In A Nutshell - January 2022
World
South Africa
Equities
World
Equities brushed aside the Omicron threat to rally into the year end—but markets have already begun to discount the changing real economy drivers and policy backdrops
South Africa
The FTSE/JSE Capped All Share Index followed global equities higher, led once again by resources counters—capping a very strong calendar-year performance
Bonds
World
Developed market bond yields were remarkably little changed—given the spectre of structurally higher inflation and almost universal monetary policy tightening
South Africa
SA bonds were positive, especially the longer dated maturities—despite negative global emerging market sentiment, and rising SA inflation and interest rates
Currencies
World
The US dollar strengthened on the Omicron risk-off sentiment and expectations for rising US interest rates—but any policy U-turn by the Fed is likely to see the dollar weaken
South Africa
The rand weakened against the US dollar—on a combination of dollar strength and negative emerging market sentiment, despite monetary tightening by SARB
Commodities
World
The stronger dollar, strained global supply chains and higher energy prices buoyed commodity prices—these are all likely to stay well bid near-term, given heightened socio-political sensitivities
Economy
World
Pandemic-related global economic growth uncertainties have started to fade—markets are now increasingly turning to the fundamentals of the real economy
South Africa
The economy continued to recover from the deep 2020 recession on sensible, data-driven policy response to Omicron—but early red-listing of SA by primary tourist markets hampered tourism
Monetary and fiscal policy
World
Global central banks are rapidly moving towards policy normalisation—with the US Fed planning to end its asset purchases program by March and hike interest rates three times in 2022
South Africa
The spike in mining royalties and tax receipts has helped the country’s fiscal revenues—while SARB joined a host of other central banks in increasing the repo rate