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  • Writer's picturePeet Serfontein

Thoughts For the Week Ahead

The Week That Was

On Friday, US equities markets witnessed a notable rebound, with major indexes climbing as traders and investors reacted positively to unexpectedly strong labour market data.

The S&P 500 increased by 1.1%, the Dow Jones Industrial Average surged by 318 points, and the Nasdaq Composite rose by 1.2%.

The optimism was fueled by a jobs report indicating the highest employment growth in ten months, a decrease in the unemployment rate to levels below recent two-year highs, and consistent wage growth.

These indicators reinforce the perception of a resilient labour market, enhancing prospects for the US economy to achieve a "soft landing" and potentially postponing anticipated cuts in interest rates, despite ambiguous signals from US Federal Reserve officials.

Leading the gains among mega-cap stocks, Nvidia and Amazon saw rises of 2.4% and 2.8%, respectively. Conversely, Tesla experienced a 3.6% drop following the cancellation of a highly anticipated affordable car model.

Over the week, the Dow Jones suffered a 1.9% setback, marking its most challenging week in 2024, while the S&P 500 and Nasdaq fell by 1% and 1.3%, respectively.

On Friday, the JSE All Share Index experienced a downturn, dropping by 0.8% to settle at 74 775, erasing the gains from the previous session.

Looking ahead, market participants are turning their focus to the upcoming release of South Africa's monthly reserves, manufacturing, and mining data this week.

In terms of individual shares, Wilson Bayly Holmes and Barloworld were among the top performers, recording increases of 2.1% and 1.8%, respectively.

On the downside, Powerfleet, Montauk Renewables, and Telkom were the day's most significant losers, with declines of 8.8%, 7.3%, and 5.2%, respectively.

Despite Friday's setback, the JSE managed to close the week with a modest gain of about 0.3%.

The Week Ahead

This week, the financial markets in the US are focused on several key events: the release of the Federal Open Market Committee (FOMC) meeting minutes, the Consumer Price Index (CPI) report for March, and the initial April consumer sentiment index from the University of Michigan.

Market participants will closely analyse the FOMC minutes and speeches by Federal Reserve officials for hints on the timing of potential interest rate adjustments, especially following last week's strong employment figures.

Economically, headline inflation is expected to rise for the second month in a row to 3.4%, with the core inflation rate predicted to decrease to 3.7%, marking its lowest point since April 2021.

Month-over-month, both the headline and core inflation rates are forecasted to increase by 0.3%, a deceleration from February's 0.4% rise.

Consumer confidence is also anticipated to slightly decline to 79.0 in April, from a nearly three-year peak of 79.4 the month prior.

Additional US economic indicators to watch include producer and foreign trade prices, the monthly budget statement from the government, and the RCM/TIPP Economic Optimism Index.

In Europe, the European Central Bank (ECB) is poised to keep rates unchanged, with the upcoming meeting crucial for assessing the prospects of future rate reductions.

Economic data of interest includes an expected drop in Germany's exports and a more significant decline in imports, alongside potential growth in German and Italian industrial production.

In the UK, the Office for National Statistics will unveil data on GDP growth, industrial production, construction output, and the trade balance, with the economy expected to have expanded by 0.1% in February.

Asia sees a busy week with China's inflation rate and trade data for March offering insights into the effects of recent economic stimuli, while Japan focuses on currency defence strategies and the Bank of Japan's direction.

Additionally, consumer confidence and current account figures are due from Japan.

Key Themes for the Week Ahead

US inflation

The US is poised to release consumer price inflation figures for March, with analysts forecasting a deceleration in core inflation.

Following recent employment data indicating job additions and steady wage growth, expectations are for a gradual moderation of inflation, underscoring a careful approach among Federal Reserve officials regarding rate adjustments.

Federal Reserve expectations

The Federal Reserve's upcoming release of its March meeting minutes is highly anticipated, reflecting evolving expectations for rate cuts this year.

Market dynamics have shifted, now anticipating fewer rate reductions, influenced by recent employment data and Federal Reserve officials' cautious stance on monetary policy adjustments.

US corporate earnings season

The onset of quarterly financial reporting by major banks signals the start of the earnings season, with investors keen on robust corporate profits to justify the stock market's elevated valuations.

The performance of major corporations will be crucial in maintaining the equity market's momentum amid rising expectations.

Oil market trends

Oil prices have registered gains, buoyed by geopolitical tensions and supply-demand dynamics, reaching their highest levels since October.

Market participants are closely monitoring the situation in the Middle East and its potential impact on global oil supply and prices.

Global central bank movements

The European Central Bank (ECB) and other global central banks are in focus, with the ECB expected to maintain rates steady ahead of anticipated cuts.

Market expectations are aligned with a rate reduction in June, amid recent data indicating a decrease in Eurozone inflation, setting the stage for future monetary policy decisions.

South Africa News

  • President Cyril Ramaphosa refrained from outright defence of former National Assembly Speaker Nosiviwe Mapisa-Nqakula following her resignation on Wednesday last week and subsequent court appearance on Thursday facing corruption charges. The situation is unfolding as it will, and we must allow the process to proceed. The former speaker has chosen to resign, not as an admission of guilt, but out of a deep respect for Parliament.

  • With Gauteng and KwaZulu-Natal comprising over 40% of the electoral roll, the performance in these two densely populated provinces is poised to significantly impact the outcome of South Africa's elections on 29 May. Last week, the Electoral Commission of South Africa (IEC) reported that together, Gauteng and KwaZulu-Natal make up 44% of the country’s nearly 28 million registered voters, underscoring their pivotal role in the electoral process.

  • The Department of Employment and Labour has unveiled a substantial R23.8 billion initiative under the Unemployment Insurance Fund (UIF) Labour Activation Programme. This significant investment aims to offer comprehensive "training for employment and entrepreneurship programmes," designed to bolster job creation and combat unemployment effectively.

Economic Calendar

In the upcoming economic calendar for this week, several significant events are scheduled to take place.

Source: incorporates insights from reports by Reuters and


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