Equities on new record levels and Rand joins in
Image: Pixabay
Despite the news from Statistics South Africa (StatsSA) that the South African economy recorded disappointing GDP growth (0.1%) in Q1 2025, and the news that Goodyear will close shop in RSA, resulting in nine hundred permanent job losses, the JSE and the Rand keep on recovering.
On the JSE the ALSI ended Friday on a new weekly close record of 96 366 or 2.1% higher than the previous Friday.
The index broke quickly through the 95 000 level on Monday and through 96 000 on Thursday.
The South African economy recorded worrying economic growth and employment numbers for the first quarter of 2005.
The economy in real terms advanced by only 0.2%, with manufacturing (-0.2%), mining 9-0.2%), construction (-0.1%) contributing towards a worrying picture.
Since 2022 three quarters of contraction were recorded.
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The unemployment rate also shows a disturbing movement as it started to accelerate strongly in the fourth quarter of 2024, reaching 32.9% in Q1 2025.
Prospects for economic growth for 2025 were downscaled to 1.4% for 2025 in the third national revised budget against the 1.9% forecast in the first budget proposals.
Investors on the South Africa equity and bond markets see the country still as an investment haven.
The continuous increase in precious metals prices, like gold, platinum and palladium, the lower inflation rate and expected lower inflation rate targets and the improvement in policy prospects under the national Government of Unity boost risky capital investments keep sentiment positive.
The Rand consolidates on stronger levels.
The exchange rate of the Rand improved last week.
Against the US/$ the currency closed on Friday at R17.79/$.
This is twenty cents stronger than a week ago and ninety-one cents better than the R18.70/$ at the beginning of the year.
Against the Pound, the Rand appreciated by fifteen cents to R24.07/£ on Friday, trading still eighty-four cents weaker than on 2 January this year (R23.23/£).
Against the Euro the Rand improved by fifteen to R20.27/€ but is still 104 cents weaker than R19.23/€ at the beginning of 2025. Gold gained $35 to $3323 per ounce and Platinum shot up by $92 to $1 164 per ounce.
Given the steady oil price of around $66 per barrel, fuel prices since last Friday have improved further as the petrol price is now twenty-six cents per liter recovered and the diesel price is over recovered by forty-seven cents per liter.
The decrease in fuel prices last Wednesday was based on the recovered value up to last Friday.
Global equity markets
On world markets, share prices also recovered last week.
In the US, the Dow Jones industrial index gained 1.3% last week, S&P500 traded 1.5% higher and NASDAQ was up by 2.0%.
On European markets and the UK, the FTSE 100 in London the FTSE100 shot up by 1.4%, the German Dax improved by 1.6%.
I the east the hang Seng in Hong Kong gained 0.9% last week whilst the Nikkei 225 lost -0.19% Prospects for this coming week
This coming week domestic and foreign investors await the release of the US inflation rate for May 2025, which will be released on Wednesday.
The market expects the US annual core inflation rate to have increased marginally to 2.9% from 2.8% in April 2025.
Domestically STATSSA will publish the manufacturing production data for April on Tuesday and the mining production data for April on Thursday.
Chris Harmse is the consulting economist of Sequoia Capital Management and a senior lecturer at Stadio Higher Education.
Chris Harmse is the consulting economist of Sequoia Capital Management and a senior lecturer at Stadio Higher Education.
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