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It has been a decidedly positive week for the
JSE and global markets, with the JSE making up 3.4% of the previous
week’s losses. The local recovery comes on the back of global
haemorrhaging around the EU debt questions. Global markets have
become increasingly volatile of late, in light of a number of major
global concerns being digested and disseminated. Global fiscal
problems headlined by Greece as well as the definite slowdown now
being seen in the numbers from China, is causing major market froth
at present. The major culprits, namely the PIGS (Portugal, Ireland,
Greece and Spain) countries, have all lost in excess of 15% in US
Dollars since April’s highs.
Strong manufacturing and local mining
operations contributed to a surprise Q1 GDP number of 4.6%. A
slowdown in rampant food prices as well as a strong Rand, meant that
consumer inflation showed a better than expected number of 4.8%.
Producer price numbers were the only figures to detract from the
week’s releases as they rose year-on-year to 5.5%, compared to
March’s 3.7% increase.
Credit demand numbers released last week
showed that South Africa’s economic recovery is still fragile.
Private sector borrowing fell more steeply than expected, led by
another sharp fall in credit demand from companies. Private sector
credit demand dived by 0,9% compared to the same month last year,
accelerating from the March decline of 0,7%, according to data from
the Reserve Bank.
There is no surprise in the Rand’s
misbehaviour of late, as risk aversion came to the fore once again,
and the minor currency touched R8.00 to the Dollar before tracking
back down to finish at R7.75 to the Dollar.
Gold, the go-to safe haven commodity, had a
good week as contagion spread across the globe, finishing up over
the key $1 200 an ounce level at $1 207. Brent Crude Oil also come
off its’ ceiling of $79-80 a barrel, on fears of reduced demand, to
$73 a barrel for the black stuff.
"another
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Article
by: Duncan Wilson, Private Wealth Manager - NFB Private
Wealth Management
Phone: +27 (041) 582-3990 | Email:
dwilson@nfbpe.co.za
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