Financial News 25th March 2024

Market Overview
The FTSE/JSE All Share closed last week at 73 254.19, increasing by 0.36%. The oil & gas and telecommunication sectors were the biggest contributors, increasing by 8.66% and 4.57% respectively during the week. The consumer discretionary and financial sectors were the biggest detractors, decreasing by 3.84% and 1.57% during the same period.
Looking at the MSCI indices, developed markets increased by 3.14% during the previous week while emerging markets increased by 1.67% over the same period.

Jump in SA inflation
Consumer price inflation increased to 5.6% year-on-year in February 2024, up from the 5.3% year-on-year print in January, and the ninth consecutive month that inflation has been within the 3% – 6% target band. This however remains above the 4.5% target set by the South African Reserve Bank (SARB) which was last achieved in April 2021. Month-on-month inflation increased by 1.0%, after an increase of 0.1% in January.
The largest contributors to inflation were housing and utilities (1.4%), miscellaneous goods and services (1.2%), and food and non-alcoholic beverages (1.1%). On a subsector level the increase in electricity prices by 15.2% remains a strain on consumers however, the increase in food and non-alcoholic beverages moderated somewhat to 6.0%. 
Leading into 2024, the global narrative predicted that inflation and interest rates would begin to fall in the first half of the year. So far, that has not materialised, resulting in mediocre returns for local risk assets. At PPSI we have maintained a cautious approach, holding neutral exposures to both local equity and bonds due to the relatively low-priced valuations. The SARB remains hawkish and is unlikely to intervene on interest rates while inflation exceeds their internal target of 4.5% or before US interest rates fall.

US interest rates remain unchanged
The US Fed has left the interest rate unchanged at a 23-year high of 5.25%-5.5% for a fifth consecutive meeting in March 2024, in line with market expectations. Policymakers continue to plan to cut interest rates three times this year, as predicted in the December quarterly forecast.

Thanks to PPS Investments for the weekly Market Overview.

South African rand edges higher ahead of rate decision
The South African rand edged higher at the start of a week that will include the central bank’s decision on its interest rates. Read the full article here>

Interest rates likely to remain steady on Wednesday due to inflation risks
Interest rates are likely to remain unchanged, at best, with the repo rate steady at 8.25% at this week’s meeting of the Monetary Policy Committee (MPC) of the SA Reserve Bank (SARB) because inflation risks had escalated, economists said over the weekend. Read the full article here>

Asian stocks hardly changed as traders await US inflation data
Equities dither ahead of US core personal consumption expenditures price data that could derail the outlook for lower interest rates. Read the full BusinessDay article here>

US Fed holds rates amid persistent price pressures
The news the previous week that US inflation rate data were higher than expected was followed up last week by the US Federal Reserve’s Open Market Committee (FOMC) decision to keep interest rates unchanged. Read the full article here>

Gold gains amid hope of June rate cut
Gold prices rose on Monday as renewed bets that the US Federal Reserve would begin cutting interest rates in June and a softer dollar lifted bullion’s appeal. Read the full BusinessDay article here>

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