Hopes for an end to rate hikes lifted markets

  • Market Overview

The FTSE/JSE All Share Index (ALSI) ended the week strong on Friday, closing slightly higher amid growing conviction that the US Federal Reserve (Fed) may be done raising interest rates. Supported by advances in most key indices, the ALSI gained 3.54% for the week. The mining and precious metals index, industrial metals, and resources all performed very well. The rand also had a positive week and traded at R18.36/$ at 18h00 local time. Furthermore, S&P Global Ratings affirmed SA’s long- and short-term foreign currency rating of BB-/B and the BB/B of its local currency on Friday evening. The rating’s agency also kept the outlook on SA stable. “Locally, the focus is shifting to the upcoming policy decision by the South African Reserve Bank scheduled for 23 November, with analysts anticipating the central bank will keep its repo rate unchanged at 8.25%,” Trading Economics added.

The potential that the Fed may be at the end of its hiking cycle continued to be the main source of attention for investors, causing Wall Street to close just above the flatline on Friday. “Investors remain convinced that the Federal Reserve has enough evidence from the economy to end its rate hikes and eventually begin easing its policy in 2024, despite cautious remarks made by certain officials,” added Trading Economics.

Following a rise during the previous session, the Hang Seng fell by 2.12% on Friday. Index heavyweight Alibaba (NYSE: BABA ) Group saw a 10% decline, abandoning plans to split out its cloud division in response to US semiconductor export restrictions. As robust domestic profits lifted investor mood, the Nikkei increased by 0.48%.

Frankfurt's DAX 40 recorded a 4.60% weekly gain, closing 0.90% higher on Friday, “Investors welcomed a slew of economic data, including reports indicating a slowdown in inflationary pressures in the US, UK, and across European countries, coupled with falling oil prices and a surge in US weekly claims, which raised expectations that the Fed, BoE, and ECB might initiate interest rate cuts earlier than anticipated in 2024,” Trading Economics reported.

In commodities, Brent crude oil hovered around $78 a barrel on Friday afternoon, while spot gold traded at $1 982 an ounce at 18h00 local time.
PSG Wealth Daily Investment Update, 20 November 2023
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