South African financial markets are bullish. The All Share Index on the JSE hit 84 600 points in intraday trading on Friday, while the gold price soared to 2 533 R44 859 an ounce in intraday trading on Tuesday reaching new record highs.
This as the rand/dollar exchange rate recorded its lowest level on Friday, at R17.70 to the dollar, since February 9, 2023. Brent crude oil dropped to 77.12 per barrel on Tuesday the lowest level since December 2022.
Markets were strongly supported by the news that the South African inflation rate came down to 4.6 in July, the lowest since July 2021. This rate is now very near to the mid-point target of 4.5 set by the South African Monetary Policy Committee.
The speech on Friday by Federal Reserve chairperson Jerome Powell indicating that the federal Open Market Commission FOMC is about to lower the Fed Bank rate at their next meeting pushed South African financial markets to these record levels at the close. It is now almost sure that the MPC will follow the FOMC in cutting its repo rate in September.
The All Share Index at the close on Friday gained 2.0 over the past five days, and is now trading 11 higher since the year to date. The financial board FIN15 is up by 3.1 over the week, trading 16.74 stronger than the beginning of the year. This index is a very good proxy for the domestic share market, showing the positive sentiment towards expected improved domestic economic and geopolitical expectations. The All Share Industrial index shot up by 2.7 over the week and trades 12.5 higher for the year to date.
