Inflation Rise & S&P Rating
Inflation Rise & S&P Rating
Statistics South Africa on Wednesday released April’s consumer price index which was at 4.5%, compared to the 3.8% reported in March. The big culprits behind the rise in inflation were increases in fuel prices and alcoholic beverages.
Statistics South Africa on Wednesday released April’s consumer price index which was at 4.5%, compared to the 3.8% reported in March. The big culprits behind the rise in inflation were increases in fuel prices and alcoholic beverages. This put some pressure on the rand. Some instability in Turkey placed emerging market currencies in focus which, combined with a weaker inflation figure, had the currency trading close to R12.70 to the US dollar on Wednesday.
On Thursday, the monetary policy committee of the South African Reserve Bank decided to keep the repo rate unchanged at 6.5%, in line with expectations. This action by the central bank supported the currency and the rand strengthened to below R12.50 against the USD.
Standard & Poor’s Global Ratings (S&P) on Friday affirmed South Africa’s sub-investment grade credit rating and kept its outlook stable, noting that the country’s improved economic growth remained tentative and that the government’s debt burden continued on a rising path. S&P rates South Africa’s foreign currency debt BB and its local currency debt BB+, having downgraded the country to junk status last year following a deterioration in the economic outlook and public finances.
A shift in tone from North Korean officials in recent weeks prompted US president Donald Trump to cancel a long-planned summit with North Korean Leader Kim Jong Un, Trump wrote in a letter to Kim. The meeting had been scheduled for 12 June in Singapore. Global equities edged lower in response to the news.
The JSE all-share index (ALSI) closed 1.50% lower, with the biggest detractor being the resources sector, which gave back almost all of the previous week’s gains, closing 5.05% lower. The industrial sector lost 0.91% in value, while the financial sector gained 1.15% for the week.
Brent crude oil traded softer at around $76 per barrel.
Not much news is expected on the economic front in the coming week. Markets are expected to recover somewhat and hopefully our cold spells will stay away for another week.
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Market data provided by I-Net | News article provided by Securitas with 4D Wealth
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