Download Weekly Note - 07 July 2025
Local Market Update:
South African assets were subdued last week as macro and political headwinds persisted. Inflation remains contained at 2.8%, but growth is sluggish and structural constraints limit policy flexibility. Political tensions within the unity coalition added caution. Positively, the African Development Bank approved a $474.6 million loan to address energy and logistics bottlenecks, potentially boosting medium-term competitiveness. Still, with Q1 GDP up just 0.1% and 2025 growth cut to 1.2%, a selective approach to SA Inc. remains prudent.
European Market Update:
European stocks eased, with the STOXX 600 down 0.5% amid tariff-related caution. Banks and miners led the declines. The euro extended its rally against the dollar for a ninth session, helped by capital inflows and falling confidence in US policy. A stronger euro may pressure exporters but supports local demand. Wealth managers should watch sector rotation, especially between defensives and cyclicals, as trade and currency dynamics shift.
US Market Update:
US markets rallied to new highs, driven by strong payroll and services data that reinforced economic resilience. June added 147,000 jobs, beating forecasts, though Fed Chair Powell warned that new tariffs complicate the rate cut outlook. Fewer cuts are now priced in, affecting bond yields and rate-sensitive assets. The dollar posted its worst first-half since the 1970s, down 10–11% YTD, as Trump’s $3.3 trillion fiscal package raised debt concerns. Wealth managers should assess the dollar’s impact on global allocations and review hedging in USD-based portfolios.
Asia Market Update:
Asia-Pacific markets were mixed as investors weighed US tariff threats against BRICS-aligned nations. Tensions rose after the BRICS summit, especially with China and India attending. Japanese equities slipped as caution prevailed ahead of key US data and ongoing global supply chain concerns. Chinese markets stayed range-bound amid weak growth signals and fears of more Western restrictions. Careful country selection and a focus on domestic demand—especially in ASEAN and India—remain key for EM Asia exposure.
Currency Market Update:
FX markets stayed volatile, with the dollar under pressure and EM currencies swinging on trade concerns. The dollar’s 10–11% YTD slide reflects doubts over US fiscal and trade direction, with the 9 July tariff deadline in focus. The rand traded between R17.50–R17.80/USD, sensitive to both local politics and global sentiment. Despite modest YTD gains, it remains exposed. FX positioning is critical for wealth managers, offering both protection and opportunity through active overlay strategies.
Commodity Market Update:
Oil gained last week, with Brent near $78.50/bbl on tighter OPEC+ supply, geopolitical risk, and a weaker dollar. This supports energy and resource-linked assets, though higher prices may pressure inflation in importers. Gold climbed to $3,324/oz, aided by safe-haven flows and FX volatility. With central banks cautious and risks rising, oil and gold may continue to attract hedging demand. Tactical exposure to miners and inflation-sensitive assets remains valuable.