South Africa’s economy averts technical recession in the first quarter

Tuesday saw little movement in the rand, while the FTSE/JSE All Share Index (ALSI) gained just over 0.30% as official data revealed that South Africa’s economy grew slightly in the first quarter, thus avoiding a technical recession. Following a downwardly revised 1.10% decline in the fourth quarter of 2022, data from Stats SA showed that the economy grew by 0.40% q/q in the three months to March 2023. On an annualised basis, the economy grew by a lethargic 0.20% in the first quarter, in line with market expectations, slowing from a downwardly revised 0.80% in the previous three-month period.

Wall Street closed higher on Tuesday, buoyed by gains in economically sensitive industries, as investors awaited inflation data and the US Federal Reserve's (Fed) policy meeting next week. “Inflation data is expected to show consumer prices cooled slightly on a month-over-month basis in May, but core prices are likely to have remained elevated,” Reuters reported. For the day, the Dow added 0.03%, while the S&P 500 and the Nasdaq advanced 0.24% and 0.36%, respectively.

European stocks clawed back most of Monday’s losses after shares of healthcare giant Novo Nordisk (CSE:NOVOb) rose, but gains were limited by concerns about potential interest rate hikes by major central banks on the back of sluggish economic growth. Hawkish remarks made on Monday by European Central Bank (ECB) President Christine Lagarde and Bundesbank President Joachim Nagel reinforced expectations for further rate increases from the central bank in June 2023. For the day, the pan-European STOXX 600 index advanced 0.38%.

Most Asian stocks remained under pressure on Tuesday as the economic and policy outlook in China remained uncertain. Asian currencies also struggled for direction as economic data from the US showed lacklustre growth in the country's services sector, supporting the case for the Fed to halt interest rate hikes next week. Japan's Nikkei was the saving grace, climbing to a near 33-year high on Tuesday, “with trading houses and Fast Retailing (TYO:9983) leading the gains on technical support for heavyweight shares ahead of the fixing of special quotation prices,” Reuters reported.

Following a substantial increase in the previous session, oil prices fell more than $1 a barrel as concerns about the expansion of the world economy eclipsed Saudi Arabia's vow to further reduce output. Brent crude was down 0.55% to $76.29 a barrel at 21h00. Tuesday also saw no change in US Treasury yields and a slight weakening of the US dollar, which helped gold prices maintain their recent gains.



Read full report