Global equities enjoyed a positive start to 2025, underpinned by European markets. The notable rebound in European stocks was driven by strong results in the luxury sector. Across the ocean however, America’s darling tech stocks dragged the broader bourse down after the release of China’s DeepSeek R1 AI model. However, stronger-than-expected economic growth combined with policy uncertainty in the US has bolstered the dollar as well as bond yields. China reported a 5% GDP growth for 2024, in line with Beijing’s target. Although industrial production and retail sales grew more than consensus in December, China’s future is vulnerable to US tariffs.
South Africa’s shining star was the resources sector, pulling the larger index well into positive territory. As gold and platinum soared, and the rand weakened, resource stocks rocketed higher. Financials and Industrials closed lower, and local bonds crept into the green after a volatile month. Headline inflation rose to 3.0% in December, coming in lower than consensus for a third consecutive month. On the back of lowering inflation, the SARB cut interest rates by 25bps.
- The JSE All Share kicked off the year with a strong showing, up 2.3% for the month.
- Resources (up 16.3%) were the star of the show, while Industrials inched higher (up 0.5%), and Financials (down 2.9%) dropped sharply.
- Small-caps (down 4.6%) retreated, while Mid-caps (up 0.7%) and Large-caps (up 3.3%) climbed into positive territory.
- Property had a tough month, as both the S&P SA REIT sector (down 4.1%) and the SA Listed Property sector (down 2.3%) plunged below the zero line.
- SA Nominal Bonds (up 0.4%) crept higher over the month, as Inflation-Linked Bonds saw a slight decrease, down 0.3%.
- Developed Market Equities and Emerging Market equities each had positive months. However, in US Dollar terms it was the developed markets which came out ahead, with the MSCI World Index up 3.6% and the MSCI Emerging Market Index up 1.8%.
- The rand had a poor start to the year. Relative to the U.S. Dollar (Rand depreciated 1.1%), the Euro (Rand depreciated 0.7%) and the Pound Sterling (Rand depreciated 1.8%).
- Commodity prices boasted exceptional growth last month. Gold rose 7.0%, Platinum gained 15.6%, while Brent Crude rose by 2.8%.
Source: Factset
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