Financial News 8th May 2023

Market Overview
The FTSE/JSE All Share closed at 78 132.77 last week, increasing by 0.39%. During the previous week, the basic materials and consumer discretionary sectors were the biggest contributors increasing by 2.98% and 1.15% respectively. The telecommunication and consumer staples sectors were the biggest detractors decreasing by 6.45% and 3.20% respectively. 
Looking at the MSCI indices, developed markets decreased by 0.45% during the previous week while emerging markets increased by 0.51% over the same period.

Euro inflation edges higher
The inflation rate in the Euro Area slightly increased to 7.0% in April, from March’s 13-month low of 6.9%. Energy prices and the cost of services rose at a faster than expected rate. On the other hand, inflation slowed for food, alcohol and tobacco. The latest data suggests that the ECB is likely to continue its efforts to combat inflation.

US Fed raises rates
The Federal Reserve raised rates by 0.25% to 5.25% during its May meeting, marking the 10th increase and bringing borrowing costs to their highest level since September 2007. The bank indicated that this could be the end of the tightening cycle although it would depend on data in the coming months.
As the Fed aggressively hiked interest rates over the past year, the value of long-term treasury and mortgage bonds decreased, leading to a hole in the balance sheets at some banks. There are fears that additional hikes could fuel further uncertainty in the banking sector.

*Commentary and Indicators provided by PPS Investments.

JSE lifts as focus falls on US inflation data this week
The JSE was firmer on Monday morning, along with its global peers as investors looked ahead to a key US inflation data release later in the week. Read the full Business Day article here>

Rand firmer as dollar weakens
The rand firmed in early trade on Monday, with the dollar slightly weaker on bets that US interest rates might have peaked. Read the Moneyweb article here>

Oil rises on worries about tightening supplies
London — Oil rose on Monday as easing US recession fears shifted market focus to tightening supplies, offering support after crude prices registered three straight weekly declines for the first time since November. Read the full Business Day article here>

Yellen says no good alternative to congress lifting debt cap
Treasury Secretary Janet Yellen said there are “simply no good options” for solving the debt limit stalemate in Washington other than Congress lifting the cap and cautioned that resorting to the 14th Amendment would provoke a constitutional crisis. Read the full Moneyweb article here>

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