Markets - The week in Perspective

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In the past week, various local and international events again had an impact on South African consumers and investors. On Monday, the Department of Energy announced a 5c per litre increase in the petrol price, which is well below the price hike expected. 

In the past week, various local and international events again had an impact on South African consumers and investors. On Monday, the Department of Energy announced a 5c per litre increase in the petrol price, which is well below the price hike expected. Government announced that it will intervene by subsidising the shortfall in the fuel price to an amount of R400 million.

The JSE fell on Tuesday after data released by Statistics SA indicated that South Africa’s GDP contracted for a second consecutive quarter. The local market closed the week 2.36% weaker. This contraction put the economy in a technical recession. The GDP contracted by 0.7% in the second quarter of 2018, following a first quarter contraction of 2.2%. A recession occurs when the economy declines significantly for at least six months, as SA experienced in the previous two quarters. The last time this happened was in 2009.

Moody’s Investors Service has cut its estimate for South Africa’s 2018 GDP growth from 1.5% to between 0.7% and 1%. The agency is expected to provide a rating update for SA in October.

South Africa was excluded from the list of countries set to receive relief from tariffs implemented by the Trump administration. The steel and metals industry in particular will be the one to suffer, as the 25% on steel and 10% on aluminium tariffs are likely to hurt a sector that is already in decline.

The rand lost 3.74% against the USD to trade at around R15.22 to the dollar, while losing 3.33% against the euro to trade at R15.23. The price of Brent crude oil weakened by 1.71% to trade at $76.4 per barrel.

The US nonfarm payrolls rose a better than expected 201,000 on Friday, while the unemployment rate held steady at 3.9%. Average hourly earnings rose at an annual rate of 2.9%, the fastest pace since May 2009.

Jitters over the potential for Italy to blow past European Union budget limits were calmed as several highly placed Italian officials vowed that the government’s 2019 budget will raise deficits by less than feared.

It is evident that the emerging market crisis is far from over and that at present global growth favours the developed markets.

 

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SECURITAS – Wealth Management





















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Market data provided by I-Net | News article provided by Securitas with 4D Wealth