The local bourse was marginally weaker, closing at 83 438 points on Monday as investors anticipated the release of second-quarter GDP data from South Africa and key economic reports from major global economies later this week - looking for clues on the future direction of global monetary policy. Meanwhile, the seasonally adjusted Absa Purchasing Managers’ Index (PMI) for South Africa fell to 43.6 in August 2024 from 52.4 in July, indicating the sharpest contraction in the country's manufacturing activity since January. At the close of business, the rand had weakened 0.24% to R17.86/$, 0.36% to R19.75/€ and 0.36% to R23.45/£.
European stocks bounced back from early losses to end broadly higher on Monday, building on August's strong gains as markets continued to analyse the economic outlook for clues on future credit costs and corporate earnings. The Eurozone’s STOXX 50 rose 0.30% to finish at 4 972, its highest level since mid-July, while the pan-European STOXX 600 recovered from initial losses to close flat at 525, maintaining the record high from the previous session. The intra-day recovery was driven by the tech sector, following gains in US tech stocks from Friday’s session, as investors anticipate that solid results from this week’s ISM PMIs and Friday’s jobs report will support expectations of a soft landing by the Fed.
Chinese stocks fell, reversing gains from the previous session as investors responded to the latest business activity reports. Official data released over the weekend indicated that manufacturing activity in China contracted further in August, while services activity remained in expansion for the 20th consecutive month. Meanwhile, a private survey released yesterday showed that the manufacturing sector returned to growth and expanded more than anticipated last month. The Shanghai Composite dropped 1.10% to close at 2 811, while the Shenzhen Component dropped 2.11% to 8 172 on Monday.
US stock and bond markets were closed for Labor Day, leading to light trading.
In commodities, Brent crude oil futures remained near $77 per barrel on Monday after experiencing significant selling pressure in recent sessions, driven by rising expectations of increased supply. OPEC recently revealed plans to boost production, with eight OPEC+ countries expected to raise output by 180 000 barrels per day. Concerns about Chinese demand growth also grew after an official survey indicated that factory activity dropped to a six-month low in August, with falling factory prices and fewer orders. This came after EIA data showed that US oil consumption in June fell to its lowest seasonal level since 2020, further intensifying fears about demand from major markets.
Gold remained below $2 500 per ounce on Tuesday, extending its decline from last week’s record highs, as investors awaited US data to refine their expectations for the size of the Federal Reserve’s interest rate cut.
