Thank you for your continued loyalty. Below you can find our market commentary which take a broad look at key events, decisions and impact-drivers from the last month, which offer a viewpoint as we look ahead.
The energy sector, specifically around oil, has been volatile on the back of President Trump pulling out of the agreement with Iran. Germany and France have been trying to save the deal. The Bank of America is already forecasting the price of oil could climb to $100 a barrel by next year.
In Europe, stocks have retreated with Bonds, as global tensions mount in the political arena. The US Dollar has come under pressure as the Euro and Pound continue to climb.
In contrast to tensions with Europe and the US, China has started talks with Japan. We are seeing relationship mending in Asia, with growth potential for all sides. These measures taken by China are seen as an offset to counter trade sanctions with the US.
On the local front, our Bonds have climbed for the third week, as emerging markets bond funds, had their second biggest weekly outflow year-to-date, in their longest run since the fourth quarter of 2016. Our BCI (Business Confidence Index) declined for April 2018 by 1.6 index points, from 97.6 in March to 96 in April. The good news is that the level remains above 95 since November, where it came from levels that were last seen in Apartheid days.
Mining Production has also decreased by 8.4%, year on year, and that’s as we enter the South African strike-season. Manufacturing production has also fallen 1.3% year-on-year, in March of this year. The two sectors hardest hit were clothing and electronics. The local bus strike is costing the country R589 Million each week, according to Transport economist from North West University, Ofentse Mokwena. So as months go, the last two months have not been filled with positive news. Markets showed signs of recovery, but it’s been sluggish.
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