DESPITE the positive reaction domestically and globally to the arrest of former president Jacob Zuma, equity markets and the rand remained nervous last week because of volatile gold and platinum prices, mixed US economic data and the impact of the third wave of new infections across the globe.
Uncertainty over the possible extension of the level 4 lockdown also contributed to the volatility.
On the JSE, share prices mostly reacted to commodity prices. The Resources 10 Index experienced a swing of about 8 percent on Thursday (-4.1 percent) and Friday (+3.6 percent). Rand-hedge shares also experienced big swings during the latter part of the week.
In the US, equity markets once again ended the week on record highs. The Dow Jones industrial index traded for the first time above 34 800 points on Friday, and the S&P500 index rose 1 percent at the opening, to a new high of 362 points.
China announced new steps to bolster its economic recovery. Treasuries in the US retreated after eight days of rallying, on the back of worries about global growth because of the spread of Covid-19 variants.
The higher-than-expected jobless claims, 373 000, in the US, and market sentiment that a correction, or at least a pull back, on Wall Street was eminent, could not stop the bull run in the US. These positive factors boosted shares and the rand on Friday.
Brent crude recovered to R76.13 (about R1 081) a barrel after losing more than $3 earlier in the week.
The gold price also rebounded to levels above $1 800 on Friday.
The rand recovered at the end of the week flat, despite the dollar moving stronger against most currencies. On Friday afternoon, the rand traded at R14.25 to the dollar, compared with R14.27 the previous week.
On the JSE, share prices, despite much volatility, ended the week mixed, with week-long gains for listed property (3.8 percent) and financial stocks (2.51 percent).
The FTSE/JSE All Share Index ended the week flat, only 52 points, or 0.1 percent, higher at 66 385 points. Industrials were the losers of the week, shedding 2.3 percent, whereas resources turned around on Friday and ended the week 1.8 percent higher.
This week, investors and analysts will evaluate developments in South Africa, particularly the Constitutional Court’s decision on the Zuma rescission hearing, the latest lockdown measures, and the third wave of Covid-19 infections and vaccination numbers.
Today, Statistics SA will release the manufacturing production data for May, and tomorrow it will release the mining production numbers for May. On Wednesday, it will publish retail sales figures for May.
On global markets, investors will watch the release of the inflation rates by most of the members of the EU, Canada, the US and the UK. On Thursday, China will announce its gross domestic product growth for the second quarter.
Chris Harmse is an economist of CH Economics.
*The views expressed here are not necessarily those of IOL or of title sites.
BUSINESS REPORT