Market commentary

It’s been a bit of a quiet week, with little significant political news making its way to the fore and data largely remaining in line with expectations. So, after taking a welcome breather, the tone in the market is now one of ‘wait and see’.



Political bickering continues in the US, as Joe Biden and Donald Trump face off in the race to the Oval Office. As the race intensifies, it comes as no surprise that the statements made by the two rivals have become even more controversial and bold with each passing day, including accusations of collusion and inciting violence.

Chinese diplomats then found themselves in the crosshairs of the US yet again this week, as the White House imposed yet another round of restrictions on Chinese diplomats based in the US. When asked for comment, US Secretary of State Mike Pompeo noted that the US is merely asking for reciprocity, pointing to the restrictions on US diplomats in China. 

Meanwhile, US economic data continues to point to a drawn-out recovery, and the Federal Reserve is expected to remain accommodating in the upcoming monetary policy review. The dollar remained under pressure this week before finding some reprieve on Thursday. This reprieve came as the European Central Bank (ECB) expressed concerns over the strength of the euro, indicating that intervention from the ECB is also imminent. The ECB’s concerns triggered a weakening in the euro, with the dollar then gaining momentum to trade at a one-week high against the currency.

Europe has largely struggled to gain economic momentum, and its anticipated recovery plan now includes initiatives such as making the economy more competitive, supporting jobs and training, and directing further investment towards transport and the renovation of buildings. Additionally, France is due to announce €100bn worth of stimulus.

Turning to Brexit, the contentious split between the EU’s chief Brexit negotiator, Michel Barnier, and UK Prime Minister Boris Johnson seems to have intensified as the deadline fast approaches. With negotiations close to a complete collapse and uncertainty remaining rife, Barnier has expressed that he is both worried and disappointed in the way that the Brexit talks have gone. 

From a data perspective, the following releases warrant mention:


  • Manufacturing PMI in August rose to 53.1 points 
  • Total vehicle sales gained some traction, exceeding expectations, reaching 15.2m 
  • Factory orders added 6.4% month-on-month in July
  • Initial jobless claims dropped to 881k , bringing the four-week average to just over 991k


  • Non-manufacturing PMI accelerated to 55.2 points in August, while manufacturing PMI remained flat at 51 points
  • Caixin Manufacturing PMI improved to 53.1 points in August, while the Caixin services PMI remained steady at 54 points 


  • Manufacturing PMI remained flat at 51.7 points in August, while services PMI contracted to 50.5 points. 
  • CPI came in at -0.2% year-on-year in August
  • Unemployment marginally undershot expectations, reaching 7.9% in July 


  • Manufacturing PMI remains flat at 55.2 points in August, while services PMI ticked up to 58.8 points 
  • Nationwide HPI gained 3.7% year-on-year in August



Ramaphosa’s 2017 Nasrec victory brought not only hope but ‘Ramaphoria’ to local sentiment and markets. The event was seen as a silver bullet for the South African economy. Since then, however, Ramaphosa’s government has drawn increasing criticism, with corruption within the ruling party seemingly running rampant, and new scandals continuously making newspaper headlines without any real consequences for those implicated. More recently, Ramaphosa’s footing within his party has again been called into question, reminding us of the factionalism that exists even in a post-Zuma party, and stirring fears that Ramaphosa could face the axe for not towing the party line. 

Against this backdrop, the NEC kicked off its meeting over the weekend of 28 August, with Ramaphosa positioning himself for a war on corruption. The president made it clear that corruption is unacceptable, and that the gross misuse of power reported during the COVID-19 pandemic was something that the ruling party simply cannot tolerate. President Ramaphosa’s announcement that those accused of corruption will lose their position until they have been cleared comes at a critical stage, as many South Africans have given up hope of ever seeing those responsible for the looting, corruption and destruction of the economy face the music. However, many are still waiting for the announcement of official prosecutions, and whether there will be judicial consequences as well.

The local currency struggled to gain momentum to either side this week, trading in a broad range of R16.50 to 16.90/$, while waiting for a new catalyst to give the unit some direction. Local political events continue to only contribute a fraction to the currency’s movements, although political policies will weigh in on our fiscal position, which will ultimately dictate the course the country takes.

Local data this week saw private sector credit decline from previous levels, while the trade balance dipped to R37.4bn. Manufacturing PMI provided some cheer, reaching 57.3 points compared to the previous 51.2 points, while total vehicle sales year-on-year plummeted by 26.3% - largely as a result of the lockdown restrictions imposed earlier this year. Standard Bank PMI also increased from 44.9 points to 45.3 points in August. 



The European interest rate decision by the ECB will come into focus in the week ahead, as we anticipate additional stimulus packages intended to assist the European economy. We also turn our attention to local GDP data, after the previous release indicated an economic contraction for the third consecutive quarter.

We will also be keeping a close eye on political developments in the US, any escalation in tensions between the US and China, and the ongoing Brexit saga.

Data to keep an eye on in the week ahead includes:


  • US Labour Day 
  • CNY trade balance and import/export numbers


  • EU employment and GDP
  • Local GDP
  • Local business confidence


  • US JOLTs job openings


  • Local current account, mining and gold production, and manufacturing production
  • ECB interest rate decision
  • US PPI and initial jobless claims


  • UK trade balance, manufacturing production and GDP
  • US CPI

The rand started the day in the middle of the trading range at R16.77/$, R19.82/€ and R22.23/£.


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