The rand weakened for the third consecutive day on Friday, with the JSE closing lower as investors mulled ongoing election results. This decline also wiped out the month's gains, leaving the rand about 0.30% weaker for May 2024. The dynamics of local political coalitions and the delay in US interest rate cuts weighed on investor sentiment. Over the weekend, the ANC experienced its most humiliating electoral defeat in 30 years, losing nearly 17% of the vote in a single election, with its support dropping from 57% in 2019 to 40% this year. This situation forces the party to make significant compromises if it wants to remain in power for the next five years. High-level discussions, involving both past and present leaders of South Africa’s major political parties, including former president Thabo Mbeki and former DA leader Tony Leon, are expected to commence today.
The S&P 500 and the Nasdaq reversed earlier gains on Friday, dropping by 0.40% and 1.30%, respectively, as traders took profits from Nvidia (NASDAQ:NVDA). In contrast, the Dow Jones increased by over 200 points, supported by rises in Salesforce (NYSE:CRM) and UnitedHealth (NYSE:UNH) shares. Investors were considering the potential timing of US Federal Reserve rate cuts following the expected PCE inflation figures. The S&P 500 is set for a 1.20% decline, marking its first losing week in six, while the Nasdaq is down 1.60% and the Dow by 1.80%.
The Hang Seng fell by 150.58 points or 0.83% to close at 18 079.61 on Friday, reversing its morning gains due to losses across most sectors, particularly in property and tech. Sentiment turned negative amid a downward revision in US Q1 GDP data and yuan weakness. Additionally, official PMI figures in China for May were disappointing, showing an unexpected drop-in factory activity and a slowdown in the service sector. The index declined by 2.80% for the week, marking its second consecutive weekly drop after the IMF advised Beijing to shift its focus from industrial policies supporting priority sectors like manufacturing to those promoting consumption. Meanwhile, the Nikkei 225 Index rose by 1.14% as global bond yields fell following the downward revision in US GDP data, raising hopes that the Fed might cut interest rates at least once before the end of the year.
European stocks ended a volatile session with mixed results as investors analysed a series of economic data for clues about the policy direction of major central banks. The Stoxx 50 fell by 0.10% to close at 4 977, while the Stoxx 600 edged up by 0.20% to close at 518. Both headline and core inflation rates in the Eurozone exceeded expectations, sparking worries that the trend of disinflation in Europe might not proceed as anticipated.
Gold prices bounced back to trade above $2 350 per ounce on Friday, following the PCE inflation figures from the US, which provided investors with some reassurance that the Fed may have room to cut interest rates this year.
