Download Weekly Note - 14 July 2025
Local Market Update:
South Africa's economy is facing stagnation, with weak growth, declining business turnover, and widespread contractions in key industries like mining and manufacturing. The formal business turnover dropped 4.7% in the first quarter of 2025 compared to the previous quarter. Despite this, consumer spending remains strong, with retail trade posting its 14th consecutive month of year-on-year growth. The rand has shown some strength against the US dollar, but the economic outlook remains uncertain due to high input costs, power disruptions, and logistical challenges.
European Market Update:
Although there isn't specific news for last week in Europe, global economic trends indicate that Europe's economy is closely tied to global markets. Trade tensions and geopolitical uncertainties can significantly impact the region's economic stability. It's worth noting that the European economy has been experiencing fluctuations due to various factors, including Brexit and the ongoing impact of the pandemic.
US Market Update:
The US economy has been experiencing trade tensions with China, with both countries touting progress in talks but offering few details. The US inflation rate has been a concern, with the core consumer price index inching up 0.1% in March. The Federal Reserve's decision on interest rates will be crucial in shaping market sentiment. Additionally, Trump's tariffs on China are expected to have a significant impact on holiday shopping and global factories.
Asia Market Update:
China's economy has been impacted by trade tensions with the US, with the country agreeing to major reductions in tariffs for 90 days. Chinese stocks slipped as investors turned cautious before US talks, and the Hang Seng China Enterprises Index dropped 1.9% after climbing 3% in the previous session. The US-China trade war has had a significant impact on Chinese exporters, but some companies have been elated by the reprieve in tariffs.
Currency Market Update:
The South African rand has shown some strength against the US dollar, with a 0.3% improvement to R18.22. The rand's stability is influenced by the South African Reserve Bank's interest rate decisions and global economic activities. The ZAR exchange rate is buoyed by stable SARB interest rate decisions, which anchor borrowing costs and currency stability. Other currencies, such as the Lesotho Loti and Namibian Dollar, have remained stable against the rand.
Commodity Market Update:
Commodity prices have been fluctuating, with gold and silver prices rising, while platinum and palladium prices have been volatile. Brent crude oil prices dropped 1% to $85.10. The mining sector, crucial for South Africa's export revenue, has been bolstered by rising gold prices. The performance of commodities will continue to impact the South African economy, particularly the mining sector.