JSE strengthens on well-received Medium-Term Budget Policy Statement

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The rand clawed back lost ground on Thursday after flagging the most in over eight months in the previous session as traders cheered the Medium-Term Budget Policy Statement (MTBPS) which did not unveil any negative surprises. The key elements of the statement also boded well for local equities and bonds, with the FTSE/JSE All Share Index (ALSI) logging a 1.25% gain to close at 69 131.56 points, while SA’s benchmark 10-year note yield fell to just over 9%. Finance minister Enoch Godongwana emphasised that his policy stance would remain in tandem with that of his predecessor to narrow down the budget deficit and service the country’s towering debt. Treasury upgraded its 2021 outlook for SA’s real economic growth from 3.30% to 5.10% and said it expected GDP to return to pre-pandemic levels late in 2022. Although the budget was mostly well-received, several risks to the overall economy persist. Godongwana warned that the double whammy of inadequate power supply and the pandemic’s bearing on the jobs market is likely to continue to hinder economic growth in the future.

European stocks hit record highs on Thursday amid easing concerns about China’s property sector, while solid corporate earnings from key players lifted broader sentiment. With a gain of nearly 4%, the mining sector led this rally thanks to nifty performances by Anglo American (JO: AMSJ ) and BHP Group (JO: BHPJ ). The pan-European STOXX 600 closed 0.32% higher, although gains were capped by concerns over a spike in global inflation, especially in the US.

Wall Street wobbled on Thursday as market participants booked profits from an eight-session winning streak, while higher price pressures lessened investors’ willingness to assume more risk. Inflation in the US rose the most in over three decades as prices jumped to 6.20% in October 2021. Investors were also interested to see who would be appointed as the next Federal Reserve Chair.

Sentiment in Asia was boosted by a rally in property shares amid clues that fuelled expectations for monetary policy easing. The Nikkei closed 0.59% higher at 29 277.86 points, after tracking an overnight rout on Wall Street earlier in the session, while the Hang Seng gained a little short of 1%, trading at 25 242.12 points.

In commodities, oil prices were mostly stable on Thursday, following a dip in the previous session prompted by fears that higher price pressures in the US may coerce the government to announce more crude stockpiles to reduce prices. Brent crude rose to $83.06 a barrel at 19h00 local time, while spot gold traded at $1 861.45 an ounce at the closing bell.

PSG Wealth Daily Investment Update, 12 November 2021

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