Indicator

Price

Change

Ranges

$ / R

16.70

+4

16.40 – 16.80

€ / R

18.70

-6

18.60 – 18.90

£ / R

22.06

+5

21.80 – 22.20

AUD/R

11.60

+4

11.45 – 11.70

€ / $

1.1193

-0.0064

UST 10 Year

5.25%

Unchanged

Indicator

Price

Change

Gold $

4 156

-24

Brent $

101

+1

DOW

51 176

+0.49%

JSE Top 40

100 779

+0.61%

$ index*

102.29

+0.39

Bitcoin $

86 204

+212

September was a challenging month for investors, both globally and locally. After a period of relative resilience, markets were reminded that geopolitical events can still have a meaningful impact on economic growth, inflation expectations and investor sentiment.

The primary driver of market weakness was the renewed focus on energy prices.  Ongoing tensions in the Middle East continued to support elevated oil prices, raising concerns that inflation could remain higher for longer than many investors had hoped.  While central banks have made significant progress in bringing inflation under control over the past few years, the prospect of sustained energy price pressures raised questions about how quickly interest rates can ultimately normalise.

Global equity markets responded negatively as investors reassessed the outlook for inflation and economic growth.  Government bond yields moved higher during the month as markets priced in the possibility that interest rates could remain elevated for longer.  While bond markets are often overlooked by retail investors, their movements can have a significant influence on equity valuations and investor behaviour.  As yields rose, sentiment towards risk assets weakened, contributing to broad-based declines across many international markets.

South Africa was not immune to these developments.  The JSE experienced a difficult month, largely reflecting weakness in global markets rather than any significant deterioration in domestic economic conditions.  South African equities continue to be influenced by international capital flows and shifts in global investor sentiment, and September provided another example of how global events can quickly find their way onto local trading screens.

Despite market weakness, the domestic economic backdrop remains relatively stable. Inflation is considerably better behaved than many feared earlier in the year when oil prices first began climbing, and the South African Reserve Bank remains focused on maintaining price stability while supporting longer-term economic growth and as a result of these pressures the Reserve Bank raised the Repo rate by 0.25%.  Consumers continue to face financial pressure, but there is little evidence at this stage that South Africa is facing the type of inflation shock that characterised previous economic cycles.

MARKET INFORMATION

Attention is also increasingly turning towards the upcoming local government elections. While election campaigns inevitably generate political noise, one of the bigger developments was the failure of the ANC to register a number of candidates before the required deadline in several municipalities.  The Electoral Commission subsequently confirmed that those candidates would not appear on the ballot, despite attempts to challenge the decision through the courts.  Reports indicate that some of the affected municipalities would traditionally have been regarded as ANC strongholds.

For investors and taxpayers, the story is less about politics and more about execution. Elections are ultimately an exercise in organisation, administration and accountability.  The inability to meet clearly communicated deadlines raises legitimate questions about competence, particularly when voters are being asked to entrust municipalities with service delivery and public finances.

As election day approaches, investors should expect political rhetoric to intensify and market volatility to remain elevated.  However, the focus should remain on the bigger picture. Markets can generally look through campaign promises and election slogans.  What matters is whether the outcome produces better governance, improved service delivery and a more supportive environment for economic growth.

After all, politicians may contest the election, but it is the South African taxpayer who is entitled to vote and have their say, they will ultimately live with the result.  Think carefully and vote for the party that will look after your interests and take care of the taxes raised.