Financial News 30th January 2023

Market Overview
The FTSE/JSE All Share closed last week at 80 791.36, increasing by 1.92%. The technology and telecommunication sectors were the best performing increasing by 4.86% and 4.52% respectively. The consumer staples and basic materials sectors were the biggest detractors, decreasing by 0.44% and 0.99% respectively.
Looking at the MSCI indices, developed markets increased by 2.77% during the previous week while emerging markets increased by 1.98% over the same period.

SA rate hike below expectations
The South African Reserve Bank raised interest rates by 0.25% to 7.25% at its January 2023 meeting, below market expectations of a 0.50% increase. This is the 8th consecutive rate hike since November 2021, to anchor inflation expectations more firmly around the mid-point of the target band of 3-6% and achieve the inflation target in 2024. Regarding economic activity, the bank sees growth of only 0.3% in 2023, well below an earlier estimate of 1.1%, mainly due to extensive power cuts and other logistical constraints.

US growth surprises
The US economy expanded an annualized 2.9% at the end of Q4 2022, beating forecasts of 2.6%. Consumer spending which accounts for about 68% of GDP, increased 2.1% for the period, down slightly from 2.3% in the previous period but still positive. Along with the boost from consumers, increases in private inventory investment, government spending and non-residential fixed investment helped lift the GDP number.

What the repo rate hike means for bond, vehicle debt
South Africans with home loans have come under fresh pressure following the South African Reserve Bank (Sarb) announcing its eighth successive hike in the repo rate last week – and should brace themselves for more hikes, according to experts. Read the full article here>

SA financial markets remain bullish, but load shedding takes it toll
South African share and bond markets remained strong last week despite the increase in the repo rate by the Monetary Policy Committee (MPC) and the continuous load shedding, which has started to take a toll on the economy. Read the full article here>

Yellen: Power cuts a ‘considerable challenge’, but strong fundamentals help SA’s investment case
US Treasury Secretary Janet Yellen has described load shedding as a “considerable challenge” for doing business in South Africa, but said there are still solid fundamentals which are supportive of investment. Read the full article here>

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