Financial News 3rd April 2023

Market Overview
The FTSE/JSE All Share closed last week at 76 100,17, increasing by 2.15%. Basic materials and oil & gas were the best performing sectors increasing by 3.00% and 2.99% respectively. The technology sector was the lone detractor, decreasing by 0.59% during the previous week.
Looking at the MSCI indices, developed markets increased by 2.61% during the previous week, while emerging markets increased by 1.50% over the same period.

Another steep rate hike for SA
The Monetary Policy Committee (MPC) decided to increase the repo rate by 50 basis points to 7.75%. Short term interest rates have now increased by 4.25% since the low of 3.5%. The decision was split among the MPC members with three members preferring the 50 basis point increase and two members preferring a 25 basis point increase. As inflation remained above the top end of the target band and had marginally increased in the most recent print, an interest rate hike was expected, although the expectation was for 25 basis points.

The main reason for a higher than expected interest rate hike was an increase to the inflation expectation. This expectation increased to 6.3% for 2023 and 5.8% for 2024, with inflation forecast to move back within the target band in the third quarter of 2023 and to the mid-point of the target band in the final quarter of 2024. The recent hawkish stance of the MPC was displayed in this meeting with the larger than expected interest rate increase and shows the severity with which the MPC wants to fight inflation.

indicators 31march2023

Rand slips after OPEC+ oil cut
The South African rand slipped in early trade on Monday as the dollar firmed following a decision by major oil producers to reduce supply. Read the full Reuters report here>

Five key charts to watch in global commodities this week
The UN is set to release its monthly report on global food costs on Friday. Its price index, which tracks five major exported food commodity groups, fell for 11 straight months in February to the lowest level since September 2021 after surging to a record last year following Russia’s invasion of Ukraine. Read the full Moneyweb article here>

Diesel set for solid cut on Wednesday, petrol steady
The diesel price may be cut by 78c a litre next week, while the petrol price should remain largely unchanged. Read the full News 24 article here>

Seven likely consequences from the banking crisis that most people haven’t realised yet
The Federal Reserve and other central banks are reassuring everyone that the financial system is sound and bears little comparison to 2008. Read the in-depth analysis published on Moneyweb here>

Alarm bells ringing at Eskom

Embattled power utility Eskom has revised its energy outlook for the next year, showing red across the board. The group’s latest Generation Adequacy Report provides an outlook for energy supply over the next 52 weeks, including the risk of shortages over the period. Read the full article published in Businesstech today here>

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