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IOL News
07-07-2025
- Business
- IOL News
JSE reaches new heights as rand strengthens
The All Share index on the JSE on Friday recorded a week high level for a third consecutive week. Image: Nicola Mawson / Independent Newspapers The All Share index on the JSE on Friday recorded a week high level for a third consecutive week. The index improved over the week by 1.38% to a new record level of 97 128 points. For the first six months of the year the index gained 15.2%, increasing by 18.6% in the last quarter. This despite the geo-political woes from the rampant Trump tariff spree, the Trump-Ramaphosa meeting in the US, the Israel-Iran conflict up to tension in the Government of National Unity. All and all it seems that South Africa is isolated and far away from the Middle East fiasco, with the precious-metals bonanza of gold, platinum and palladium leading the appetite for investments in shares and bonds. The Resources 10 index led the charge, gaining 2.6% last week, 24.5% over the last quarter and a massive 47.7% since the beginning of the year. The Rand exchange rate also continues to recover week by week. In intra-trade last week, the currency improved to R17.50/$, R23.87/£ and R20.72/€. This is a 22 cents improvement against the Dollar, 44c appreciation against the Pound and 21c strengthening against the Euro. Against the US dollar the Rand has improved by R1.09/ $ since the beginning of the year. The strong improvement in the Rand/$ last week and the return of the Brant oil price to levels much lower than $70 (R1 232) per barrel are likely to reverse the sudden strong increase in fuel prices at the beginning of August. Video Player is loading. Play Video Play Unmute Current Time 0:00 / Duration -:- Loaded : 0% Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan Transparency Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. Advertisement Next Stay Close ✕ After the first week of the new month calculating the over-recovering for petrol is around 20c per liter although the price for diesel remains under pressure with an under-recovering of 60c per liter. The US share market recovers strongly but lower interest rates are still in balance. With in two weeks after President Donald Trump send in the US bombers to eliminate Iran's nuclear facilities, equity prices on Wall Street recovered quickly and sharply. During this time, the S&P 500 index gained 5.0% and with the 1.7% increase last week reached a new all-time high. Although US bond yields have been moving lower over the past few weeks, there was a strong increase in new jobs of 147 000 in the non-farm job market in June. With the unemployment rate moving lower to 4.1% from 4.2% in May 2025, and expectations that the US core inflation rate will remain on 2.80%, the Federal Reserve may abstain yet again in lowering its bank rate during its July meeting. On Friday just after the jobs report, the odds of a cut at the Fed's July 28-29 meeting fell to 5% from an earlier 25% possibility. Prospects for this coming week Investors will await the release of the US Federal Open Market Committee meeting's minutes on Wednesday. The minutes will shed light and prospects for lowering the Federal Reserve's bank rate in months to come. Domestically Statistics South Africa will publish the May manufacturing production data. It is expected that the annual manufacturing production decreased by 3.0% after a disappointing annual growth of -6.0% in April. The manufacturing sector suffered during the first quarter of 2025 with a negative growth rate of -2.0%, contributing -0.2 of a percentage point to the very week GDP growth of only 0.1%.
The Citizen
04-07-2025
- Business
- The Citizen
Weekly economic wrap: politics dominate, lower inflation expectations
Between fears of how the economy will react to the DA-ANC tensions and the US' new bill and tariffs, inflation expectations decreased. Politics dominated the economic news this week, with local and global politics taking centre stage, while a South African survey on inflation expectations had good news for consumers from all the groups surveyed. Lisette IJssel de Schepper, chief economist at the Bureau for Economic Research (BER) points out that while tensions persisted in South Africa between the DA and ANC, international headlines were dominated by the passage of the 'Big Beautiful Bill' in the US and the fast-approaching US tariff deadline. Bianca Botes, director at Citadel Global, says gold gained, while oil slipped as fiscal and trade risks weigh on commodities. 'Gold advanced to around $3,330/ounce, maintaining a solid position due to lingering uncertainty, even in an improved-sentiment environment. 'The US Tax-and-Spending bill's anticipated $3.3 trillion-plus impact on the deficit, along with the risk of new tariffs, bolstered gold's appeal.' ALSO READ: Policy Uncertainty Index drops slightly while global and local uncertainty remain Oil markets and the rand trending lower She says oil markets, on the other hand, are trending lower, with Brent Crude falling to approximately $68.50/barrel. 'Market sentiment was shaped by speculation that the expanded Organization of the Petroleum Exporting Countries (OPEC+) may increase output at its upcoming meeting, adding to downward pressure. 'Nonetheless, medium-term forecasts remain positive, with some analysts expecting higher average prices in 2025 due to persistent supply constraints outside OPEC and steady demand growth. However, geopolitical factors remain in play, particularly US sanctions on Iran, which added a layer of uncertainty to the global supply picture.' The rand kept surprising economists, strengthening to around R17.50/$, its strongest level since late 2024, supported by a declining dollar, elevated gold prices and improving local political sentiment. 'While the rally has been encouraging, the rand's outlook remains sensitive to both domestic developments and broader commodity market dynamics.' Busisiwe Nkonki and Isaac Matshego, economists at the Nedbank Group Economic Unit, say the rand was buoyed by higher global risk appetite this week, firming to its strongest level since the second week of November, trading at R17.60 on Friday afternoon. ALSO READ: Inflation expectations almost at four-year low Inflation expectations looking good De Schepper says according to the BER's inflation expectations survey, expectations declined across the board in the second quarter, with the inflation expectations of all three social groups, (businesspeople, trade union representatives and analysts) decreasing, with the downward adjustment extending across the forecast horizon. On average, the respondents expect that headline consumer inflation will be 3.9% during 2025, then rise gradually to 4.3% in 2026 and 4.5% in 2027. The inflation expectations of households for the next 12 months decreased to 5.4%, from 5.7% before. This is the lowest rate since the fourth quarter of 2021. 'The moderation in expectations not only firms up the likelihood of a 25 basis points rate cut in July but should also support the South African Reserve Bank's (Sarb) desire to shift to a lower inflation target. Mamello Matikinca-Ngwenya, Siphamandla Mkhwanazi, Thanda Sithole and Koketso Mano, economists at FNB, say the household experience of inflation is determined by spending patterns. 'While lower-income households will be more affected by food, higher-income households will be more sensitive to transport and insurance costs. That said, higher household expectations reflect the nuances beyond headline inflation readings. 'This is a dynamic that will also affect how quickly the Sarb is able to efficiently and sustainably achieve a lower inflation objective. High administered inflation may need to be compensated for by further non-admin core disinflation, which suggests less monetary policy easing. That said, the efficacy gains from a credible central bank and effective communication cannot be overlooked.' ALSO READ: Absa PMI increases but in contractionary territory for eighth consecutive month PMIs a mixed bag again The Absa Purchasing Managers' Index (PMI) increased by 5.4 points in June to reach 48.5, the second-highest reading this year and the largest monthly increase since September 2024, although it remains below the neutral 50 points. The S&P Global PMI, on the other hand, decreased by 0.7 points to 50.1 in June. While it remains in expansionary terrain, the underlying data showed output and new business declines, De Schepper points out. Furthermore, she says, the forward-looking confidence index slipped to its lowest level in four years. 'The divergence between this index and the Absa PMI could reflect survey timing: the Absa survey was conducted after the end of the 12-day war between Isreal and Iran and amid a lull in global tariff news, while the S&P survey was fielded during the final two weeks of the month and likely captured more of the lingering uncertainty.' Matikinca-Ngwenya, Mkhwanazi, Sithole and Mano say the good news in the Absa PMI is that new sales orders surged by 7.8 points, driven mainly by domestic demand. 'Despite stronger demand, production declined slightly, and supplier delivery times lengthened, likely due to increased activity rather than supply issues.' ALSO READ: New vehicle sales finish first half of 2025 on a noteworthy high New car sales keep increasing Naamsa reported that new vehicle sales increased by 18.7%, slightly down from 22% in May, with sales increasing for a fourth consecutive quarter. Exports also bounced back with 7.9% growth from a 14.6% contraction in May. Nkonki and Matshego say new vehicle sales surprised on the upside in June, much higher than their forecast of 14.3%. They noted that imported models outperformed those produced by local OEM's, reflecting heightened price sensitivity among consumers given still-tight household budgets. 'The broader recovery in vehicle sales is supported by subdued inflation, better credit conditions and the 100-bps drop in interest rates. However, the outlook is tempered by soft business confidence and lingering uncertainty around trade policy. Still, the industry should benefit from a more supportive macroeconomic backdrop heading into the second half of the year.'
