In response to investors' positive reaction to President Cyril Ramaphosa's inauguration, the local bourse pared gains on Wednesday but stayed at its highest point since August. Ramaphosa took the oath of office as Head of State yesterday, having been elected President by the National Assembly on Friday with support from minority parties such as the DA, Patriotic Alliance (PA), IFP, and GOOD, which form the government of national unity (GNU). Although Ramaphosa has yet to announce his cabinet, BusinessDay reports that speculation regarding who will be appointed to lead the various ministries has already begun. The FTSE/JSE All Share Index (ALSI) firmed 1.21% to above 81 300 points, with the rand strengthening to below R18 against the dollar as markets viewed Ramaphosa’s re-election and the incoming government as positive.
As market apprehension over the continent's political uncertainty increased, European stocks closed sharply lower on Wednesday, reversing gains from the previous two days. At the closing bell, the pan-European STOXX 600 dipped 0.2O% to settle at 514 points, while the STOXX 50 fell 0.60% to 3 885. Trading Economics reported that the European Commission formally reprimanded France, Italy, and five other countries for exceeding fiscal deficit limits, causing their markets to underperform and heightening the importance of France's upcoming elections as populist parties' rhetoric challenges fiscal discretion.
Asian equity markets traded in mixed fashion on Wednesday, following overnight gains on Wall Street spurred by a strong rally in Nvidia (NASDAQ:NVDA), which became the world's most valuable company due to its AI chip business. Investors were also encouraged by data revealing that Japanese exports exceeded expectations in May, driven by a weak yen and strong external demand. However, a private survey indicated that sentiment among large Japanese manufacturers fell in June due to concerns over rising material and import costs. Shares in Australia, Japan, South Korea, and Hong Kong rose, while Chinese stocks fell.
Thursday saw a drop in Brent crude futures to about $85 per barrel as traders watched with caution the Energy Information Administration's most recent data on US crude stocks, which was postponed by one day owing to a public holiday in the US. Trading Economics reported, "On Tuesday, industry data showed that US crude stockpiles increased by 2.264 million barrels last week, defying forecasts for a 2.2 million barrel draw. Still, oil prices hovered close to seven-week highs as geopolitical concerns in the Middle East stoked supply fears.”
Following weaker US retail sales data that increased expectations of a 2024 interest rate cut by the Federal Reserve, gold prices marginally increased on Wednesday. Spot gold was up 0.10% at $2 331.17 an ounce, while US gold futures decreased by 0.10% to $2 345.60. Data released on Tuesday indicated that US retail sales saw only a slight increase in May, implying that economic activity remained sluggish in the second quarter.
