The past week saw a wave of good economic news supporting markets and currencies.

The JSE jumped on Tuesday after South African GDP data released by Statistics SA came in higher than market estimates. South Africa’s GDP annualised quarter-on-quarter number was recorded at 3.1%, which beat estimates of 1.8%. The South African economy grew by 1.3% in 2017 compared to 2016, exceeding National Treasury’s expectation of 1% growth.

The JSE closed the week 2.71% higher, with the industrial sector gaining 4.36% and the resources sector closing 2.52% higher. The financial sector took a breather and gained only 0.4% for the week.

Internationally, President Donald Trump agreed to meet with North Korea’s leader Kim Jong-un. Ahead of the talks, US officials stressed that the goals of the negotiations were complete denuclearisation, which would be subject to stringent verification and would pave the way for peace in the region.

In the past week, Trump went ahead with imposing a 25% tariff on steel imports and a 10% tariff on imports of aluminium into the United States. Exempt from the tariffs, are Canada and Mexico. Other countries that have a good relationship with the US can petition for exemptions from these levies, which would ease the potential for international trade wars.

The S&P 500 index in the US closed 3.28% higher, while the European markets also recorded a good week. The CAC 40 gained 2.68%, the FTSE added 2.19% and the DAX in Germany closed a healthy 3.83% higher. In Asia, returns were more subdued, but still healthy, with the Nikkei closing 1.36% higher and the Shanghai composite in China gaining 1.62%.

The local currency traded stronger against most developed currencies. The rand gained in the region of one percent against the USD and euro to trade at around R11.81 and R14.53 respectively. One pound will cost you R16.36.

Brent crude oil traded stable around $65 per barrel from a recent high of $70 per barrel.

With the better than expected GDP numbers and the positive sentiment in the country, South Africans can expect a positive outcome from Moody’s when the agency announces its decision on a final downgrade of SA debt. 

Regards

Johan Steyn

Regards,