SA’s inflation rate quickens more than expected

  • Market Overview

The local bourse closed firmer on Wednesday, adding 0.70% as strength in resource-linked sectors and industrials outweighed losses in financials. Meanwhile, investors digested data that showed headline inflation reached a five-month high of 5.90% in October 2023, while analysts had expected it at 5.50%. Core inflation, which strips out volatile food and energy to better reflect underlying inflation trends, eased slightly to 4.40% in October 2023, from 4.50%. The focus now turns to the upcoming policy decision by the South African Reserve Bank to be announced later today. At 20h00, the rand had weakened 1.42% to R18.87/$, 0.96% to R20.46/€ and 0.93% to R23.50/£.

Wall Street ended higher on Wednesday as traders digested recent economic data and kept an eye on bond yields ahead of the Thanksgiving holiday. “ Durable goods orders fell more than expected to point to an economic slowdown while initial claims were lower than anticipated,” Trading Economics reported. The S&P 500 and the Nasdaq gained 0.40% each, while the Dow Jones rose 184 points.

Rate-sensitive property counters drove European stocks to a two-month high on Wednesday, while British accountancy software company Sage reported better-than-expected annual revenue and announced a share repurchase plan. Adding to the positive market sentiment was the release of data showing that the volatility of the Eurozone’s stock market fell to its lowest point in four months. The pan-European STOXX 600 closed 0.30% higher, with real estate stocks leading gains.

Stocks in Asia traded in mixed fashion on Wednesday following a weak lead on Wall Street as the US Federal Reserve indicated that its monetary policy will remain tight and provided no hint that it would begin lowering interest rates in the near future. Stocks in Hong Kong and Japan recorded minor gains with tech giant Baidu Inc (NASDAQ: BIDU ) a top performer following better-than-expected third-quarter results. However, other tech and industrial counters were the biggest laggards leading to China's stock market decline. The Shanghai Composite Index and the Hang Seng fell 0.11% and 0.79% respectively, while the Nikkei added 0.29%.

Oil prices dropped by almost 1% after Opec+ producers postponed a meeting on production cutbacks, casting doubt on the world's crude supply. A rise in inventories also pressured prices lower on Wednesday. Brent crude settled 2.10% lower to trade at $80.72 a barrel, after falling more than 4% to a low of $78.41 earlier in the session. At 20h50, spot gold was down 0.10% to trade at $1 996.33/oz as traders continued to assess the monetary policy outlook.

PSG Wealth Daily Investment Update, 23 November 2023

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