Global markets lost momentum, as emerging market equities retraced some of their recent gains amid a sell-off in technology shares and weaker commodity prices. Despite also ending in negative territory, developed markets proved more resilient. In the US, investors rotated away from mega-cap technology shares towards industrials, healthcare and utilities as they reassessed valuations and AI-related spending requirements. Easing tensions in the Middle East, the reopening of the Strait of Hormuz and a decline in oil prices helped improve sentiment, although investors remained mindful of the Fed’s cautious policy stance. Strong labour market data also provided a supportive environment despite elevated inflationary pressures.
The South African equity market faced a challenging backdrop, as the JSE All Share Index declined. Resources came under pressure driven by lower gold and commodity prices, which overshadowed gains from Financials and Industrials. Outside of equities, listed property continued to build on recent gains, while nominal and inflation-linked bonds delivered positive returns offering support to investors. SA inflation rose to 4.5%, reflecting the impact of higher energy costs. Fuel prices rose following the reinstatement of the fuel levy, which had been temporarily reduced earlier in the year.
- The JSE All Share lost ground during the month, falling 3.7%.
- Financials (up 2.6%) and Industrials (up 2.2%) ended the month in positive territory, in sharp contrast to Resources (down 15.9%) which lagged significantly.
- Small-caps (up 2.3%) rose, while Mid-caps (down 2.1%) and Large caps (down 4.5%) tumbled.
- South African listed property extended its prior gains as the ALPI climbed 3.7% and S&P SA REIT Index advanced 4.5%.
- SA Nominal Bonds (up 1.5%) posted a strong month while Inflation-Linked Bonds (up 1.5%) matched this performance as inflation concerns continued to support this asset class.
- Emerging market equities retraced some of their previous month’s gains, with the MSCI Emerging Market Index declining 1.4%. In contrast, developed markets fared better, with the MSCI World down 0.7%.
- The rand delivered mixed performance against major currencies. The rand enjoyed modest gains against the Euro (Rand appreciated 0.8%) and the Pound (Rand appreciated 0.4%), while it weakened against the US Dollar (Rand depreciated 1.2%).
- Resources remained under pressure, extending the previous month’s losses, as Gold (down 11.8%), Platinum (down 19.4%), and Brent Crude (down 20.8%) all recorded substantial declines.
Source: Factset
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