Markets Buoyed by Dovish Monetary Policies

  • Market Overview

The local bourse closed up by 1.27% on Thursday after the South African Reserve Bank (SARB) kept the repo rate unchanged as expected.

The Monetary Policy Committee (MPC) unanimously voted to keep the repo rate at a record low of 3.50%, as Covid-19 continues to weigh on global prospects and the recent unrest in parts of the country is likely to slow our ongoing recovery.

The implied policy rate path of the Quarterly Projection Model (QPM) indicates an increase of 25 basis points in the fourth quarter of 2021 and in each quarter of 2022.

A dovish pledge from the European Central Bank (ECB) boosted investor sentiment on the continent with most major indices, except London’s FTSE 100 , closing in the green.

Asian shares also ended the day up after a rebound in consumer and financial shares.

Wall Street traded in red at 18h30 after a Labour Department report showed that Americans filing for unemployment benefits reached a two-month high last week.

Data showed that initial jobless claims increased by 51 000 to a seasonally adjusted 419 000 in the week ending 17 July.

“Investors have been closely following the health of the jobs market on which the Federal Reserve’s monetary policy hinges, especially after a series of higher inflation reading recently sparked fears about a sooner-than expected paring of policy support as the economy reopens,” Reuters indicated.

Commodity markets were mixed last night with gold falling below $1 800 an ounce at one point, while Brent crude continued to rise on forecasts of tighter supplies throughout this year.

PSG Wealth Daily Investment Update, 23 July 2021

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