Mpho Molopyane, Chief Economist at Alexforbes
Locally, the focus remained on politics. The multi-party cabinet places the government of national unity (GNU) on a firmer footing, with increased cabinet oversight and accountability expected to lead to a more efficiently run state and an improved growth trajectory. Despite disappointing first quarter GDP, forward-looking indicators suggest an improvement in economic conditions.
Globally, June was another important month for major central banks. The European Central Bank followed through with a rate cut, while the US Federal Reserve’s revised dot plot indicates a reduction in expected rate cuts for the year.
Inflation dynamics continued to evolve positively, with consumer inflation easing in the US and the UK.
On the growth front, divergences in advanced economies and mixed Chinese data suggest additional policy support may be needed to maintain growth momentum.
Although the month started with market optimism, fuelled by encouraging economic data, persistent global inflation dampened this enthusiasm. Global equity markets ended the month with mixed performance, driven by strong growth in IT and communication services sectors, leading the US and Taiwan to outperform.
In South Africa, the national elections brought political stability, and boosted confidence in the rand and local assets, particularly SA Inc. stocks.
Despite mixed signals, we are confident in maintaining a robust allocation to risk for the medium term due to clear signs of economic resilience, but remain cautious given short-term macro data volatility.
ENDS
