In October, investors navigated a mixed market environment, as financial markets witnessed notable fluctuations and changing investor sentiment. After a strong start to the month, many equity markets sold off due to better-than-expected US economic data. Which led investors to rethink their expectations for the Federal Reserve’s interest rate cuts. This shift in sentiment contributed to an increase in bond yields. The FOMC will gather to decide on monetary policy on the 6-7 November, just one day after the US election.
South African equities outperformed the emerging markets aggregate, driven by strong performance in the commodities sector, particularly led by gold stocks. Following four months of declining bond yields and the clearing of the election risk premium embedded in those yields, South African bonds weakened during October in line with global markets. Headline inflation continued its downward trajectory, falling to 3.8%, its lowest level in over three years.
- The JSE All Share dipped in the negative (down 0.9%) breaking a streak of seven consecutive months of positive performance.
- Financials (down 0.4%) dipped in the red, while Industrials (down 2.8%) saw a more significant decrease. Resources (up 3.0%) remained in positive territory.
- Small-caps (up 0.1%) and Mid-caps (up 0.5%) managed to remain in positive territory, while Large-caps (down 1.1%) ended the month in the negative.
- Both the S&P SA REIT sector (down 1.5%) and the SA Listed Property sector (down 2.8%) fell over the month.
- SA Nominal Bonds (down 2.2%) and Inflation Linked Bonds (down 1.0%) weakened during October.
- Developed Market Equities outperformed their Emerging Market peers in US Dollar terms, with the MSCI World Index down 2.0% and the MSCI Emerging Market Index down 4.3%.
- Relative to the U.S. Dollar (Rand depreciated 2.6%), the Euro (Rand appreciated 0.2%) and the Pound Sterling (Rand appreciated 1.7%).
- Commodities performed well in October, with Gold (up 3.9%), Platinum (up 1.3%) and Brent Crude (up 1.9%) all achieving positive returns.
Source: Factset
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