Financial News 7th August 2023

Market overview
The FTSE/JSE All Share closed last week at 76 960.63, decreasing by 1.97%. The telecommunication and oil & gas sectors decreased by 6.73% and 6.26% respectively during the week. There were no positive sectors during the previous week. 
Looking at the MSCI indices, developed markets decreased by 2.31% during the previous week while emerging markets decreased by 2.37% over the same period.

UK rates see another increase
The Bank of England raised interest rates by 0.25% to 5.25% during its August 2023 meeting, marking the 14th consecutive increase, as the central bank continues to battle high inflation. The Monetary Policy Committee voted 6-3 in favor of the quarter-point hike, with two members preferring a second straight 50 bps increase and one voting to keep rates unchanged. 
Policymakers noted that they will ensure the Bank Rate is restrictive until inflation returns to the 2% target sustainably in the medium term. Meanwhile, the central bank expects inflation to fall significantly further to around 5% by the end of the year, a quicker decline than it had anticipated in May and return to the 2% target by 2025..

Euro growth slow but positive
The Eurozone economy grew by an estimated 0.6% year-on-year during the second quarter of 2023, lower than the 1.1% expansion in the previous period but slightly ahead of market consensus of 0.5%. It was the weakest pace of growth since the 2020-21 period of recession due to a large drop in real incomes and surging interest rates.

Our thanks to PPS Investments for the Market Overview

Rand on back foot as caution reigns
The rand fell on Monday, adding to losses of more than 4% against the dollar last week, as global markets were in a cautious mood after a mixed US jobs report and before US and Chinese inflation figures later this week. Read the full Moneyweb article here>

Asian shares slip, oil steady after drone attacks: Markets wrap
Asian shares were mostly lower Monday as traders assessed a mixed US jobs report for clues on the Federal Reserve’s next decision. The intensifying Ukraine-Russia conflict also weighed on sentiment. Read the full Moneyweb article here>

Oil stands firm near four-month high on Opec+ cuts
Oil prices edged down on Monday, but were still near their highest levels since mid-April after top producers Saudi Arabia and Russia pledged to keep supplies down for another month to tighten global markets further and support prices. Read the full Business Day article here>

Gold inches up from three-week lows as investors await US inflation data
Gold prices were off three-week lows on Monday after slowing US job growth knocked the dollar and bond yields from their recent highs, while investors braced for this week’s inflation test that could influence the Federal Reserve’s policy path. Read the full Business Day article here>

Rand is 50% undervalued, Big Mac index shows
The latest update to The Economist’s Big Mac index shows that – theoretically – the rand should be trading at R8.94/dollar. Read the full News24 article here>

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