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IOL News
a day ago
- Business
- IOL News
Equities on new record levels and Rand joins in
Investors on the South Africa equity and bond markets see the country still as an investment haven. 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. 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 ✕ Ad loading 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. Image: Supplied
IOL News
26-05-2025
- Business
- IOL News
Shares and the rand stay strong in a week of drama
As the over-recovering in the price of petrol currently stands at 19 cents per liter and forty-one cents for diesel, with prospects for lower global oil prices and a stronger Rand over the next six months. Image: Pixabay The ALSI once again on a record high Despite all the attention on the RSA (Ramaphosa) and Trump(US) standoff to gain political points at the news conference last Wednesday, as well as the 'don't want to cut the national government salary account' third national budget, financial markets in South Africa seem to react on the real issue of the US/SA negotiations, South Africa's promising inflation data and foreign investment interest, that pushed the Rand/$ exchange rate to a new record level for 2025 and the ALSI to a new all-time record. The ALSI closed Friday higher for the fourth consecutive week at an all-time high of 93 529. This is a weekly rise of 1.0% and now has gained 10.8% since the beginning of the year and 18.0% over the last year. Once again, this movement is in sharp contrast to equity prices in the US and Europe. The above bullish movement in equities underpins more favourable economic prospects for South Africa during 2025. Gold and Platinum continuous upward movements, the inflation rate increasing only marginally from 2.7% in March 2025 to 2.8% in April (seven consecutive month lower than the midpoint of 4.5%) and the decision by treasury to increase the fuel levy by 16 and 15 cents per liter, without putting a burden on the motorist over the short run all contributed to the positive sentiment on markets. As the over-recovering in the price of petrol currently stands at 19 cents per liter and forty-one cents for diesel, with prospects for lower global oil prices and a stronger Rand over the next six months. Issues that matter after the trade negotiations between the US and SA It seems that genuine issues that were talked to in the white house between President Trump and President Ramaphosa were favourable for South Africa. It is expected that the AGOA agreement will continue, President Trump will attend the G20 summit, at talks in boost bilateral trade and investment, will continue. Trade, Industry & Competition Minister Parks Tau said in an interview in Washington 'We are ready to negotiate on the offer submitted and while we are negotiating, we are proposing that the US maintains the reciprocal duty at no more than 10%,'. Analysts are now starting to remodel the possible effects of more positive prospects for South-Africa /US trade and investments on South Africa's economic growth rate and the Rand/$ exchange rate. This just after the Minister of Finance have downgraded the country's economic growth rate from 1.9% to 1.4% on the back of President Trump's tariff announcements on 'Liberty Day' at the beginning of April. The minister of communications and digital technologies Solly Malatsi announced in a policy directive the proposed relaxing of Black economic empowerment (BEE) policies in the ICT sector. This will give the green light for the billionaire Elon Musk's Starlink to commence business in SA. This may pay the part for other foreign businesses towards direct foreign investments in other sectors in South Africa. The Rand/$ on its lowest level for 2025 On the foreign exchange market, the Rand improved against the US$ over the week by twenty-two cents to its strongest level this year of 17.88/$. Against the British £ the Rand depreciated by sixteen cents to R24.12/ £ and against the Euro by thirteen cents to R20.24/€. The stronger Rand/$ rate, lower fuel prices over the last two months and the strong surge in the prices for gold, platinum and palladium are likely to keep the inflation rate below 3.0% till the next meeting of the MPC in June. A cut of twenty-five basis points in the repo rate by the MPC became more a certainty, with the odds of another twenty-five basis points cut within the next six months, also a growing possibility. Especially if further trade talks with the US lead to a stronger Rand and precious metal prices continue to rise. US and European equities lower on tariff threats On some global equity markets prices dropped sharply after US president Donald Trump again fueled the trade war by warning to levy high tariffs on the EU and smartphone giant Apple. In Europe equity prices traded down 1.7%, the S&P 500 in the US lost 0.67% after the announcement trading 1.9% down over the week. 1.1% cent in early trading. President Trump wants to introduce a fifty per cent tax in June on all imports to the US from the EU, including on pharmaceuticals and luxury items. He also intends to impose a twenty-five per cent tariff on Apple and Samsung on iPhones sold in the US but produced elsewhere. Prospects for this coming week This coming week domestic and foreign investors await the release of South Africa's producer price inflation rate for April to be released by STASSA on Wednesday. It is expected that the annual increase in the PPI will be 0.7%. This is higher than the annual producer inflation rate of 0.5% recorded for March 2025. The country's balance of trade numbers for April will be published on Thursday and the budget balance on Friday. Globally, the US will release the Federal Reserve Open Market Commission (FOMC) minutes of their meeting in April. The reasons for keeping its bank rate unchanged will be revealed. Its second estimate of GDP economic growth rate will be announced on Thursday. The personal income and spending figures for April in the US will be announced on Friday. Canada will release its GDP growth rate for Q1 2025 on Friday. 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. Image: Supplied
IOL News
19-05-2025
- Business
- IOL News
Financial markets: The JSE ALSI is a silent warrior, with fuel prices heading for another cut
This coming week investors domestic and foreign await the release of South Africa's inflation rate for April to be released by STASSA on Wednesday. Image: File. Despite all the attention on the US trade debate and the South African lack of budget consensus, the worrying unemployment data (32.9%) for Q1, the ALSI on the JSE continue its impressive performance. The index closed on Friday on 92 619, only twenty points away from its record level of 92 638, which was recorded last Tuesday. Not only did ALSI end the week with 0.9% in the green but it is now 9.7% up for the year to date. Foreign buying interests in SA shares, the strong recovery in Naspers and Prosus saw the Rand exchange rate moving close to the R18.00/$ level. Financial shares were the best performer on the JSE last week as the FIN15 index gained 2.7%. JSE ALSI compared with other global indices. (15 May 2025) 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 ✕ JSE ALSI compared with other global indices. (15 May 2025) Image: Supplied. On the foreign exchange market, the Rand improved against the US$ over the week by thirty cents to close on Friday at R18.04/$. This is the strongest level for the year-to-date. Against the British £ the Rand improved by twenty-five cents to R23.96/ £ and against the Euro appreciated the last five days by twenty-two cents to R20.12/€. Given the stable but lower Brent oil price around $65 per barrel, the price for fuel is expected to come down by between twenty-two cents (petrol) and fifty-seven cents (diesel) at the beginning of June 2025. In the week after the drastic cut in the proposed tariff increases by both the USA (down from 147%) and China (down from 120%) to 30% and 10% on imports from the other one, S&P500 on Wall Street shot up by 5,5%, whereas the Shanghai in China initially recovered last week up to Wednesday by increasing 2.2%, but ended Friday flat for the week, with 22 point gaining only 0.65% on the pre-trade US trade discussions level the previous weekend. This coming week investors domestic and foreign await the release of South Africa's inflation rate for April to be released by STASSA on Wednesday. It is expected that the annual increase in the CPI will be 2.9%. This is higher than the annual inflation rate of 2.7% recorded for March 2025, but still lower than the 3.0% target envisaged by the Monetary Policy Committee of the Reserve Bank, that it had set 'unofficially' for their new inflation rate target. It also will be the ninth consecutive month that the rate is lower than the current midpoint target of 4.5%. The debate around when the MPC lowers its repo rate will continue. A rate of lower than 3.0% will be favorable for the Rand and especially financial shares. STATSSA will also publish the retail sales for March 2025 on Wednesday. The meeting between President Trump and President Ramaphosa on Wednesday will also attract attention of investors and will also affect equity prices, bond rates and the rand exchange rate. Globally countries like Great Britain, Canada, Japan, and the EU will announce their inflation rates for April during the week. China will release its retail numbers for April today. In the US data on home sales, jobless claims, and various Purchasers Managers Indices (PMI's) will be announced. 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. Image: Supplied BUSINESS REPORT Visit:
