Looking Back at (a Newsworthy) Third Quarter

On the local front, the SA Reserve bank (SARB) cut the repo rate by 25bps to 6.5% in July. It was left unchanged in September.  The domestic economy remains weak.

Average inflation was 4.3%, which was below the mid-point of the SARB target range.  

The Rand traded in a volatile range – from a low of USD/ZAR 13.97 to a weakest level of USD/ZAR 15.50 in mid-August.

Now, looking abroad…

Global equities were essentially flat over the quarter.

In September the US and China announced a resumption of trade talks, and the US also released better-than-expected payroll and consumer data. This all helped to ease fears of an imminent recession!

Global central banks continued to support markets, with the US Federal Reserve delivering a 0.25% cut to interest rates in September.   The European Central Bank also cut rates during September, taking them further into negative territory and pledging to restart quantitative easing with EUR30bn of monthly bond repurchases from November.  

However, as central banks worked to calm markets there was plenty of geopolitical noise counteracting that…

  • President Trump facing threats of an impeachment over revelations that he pressured the Ukraine President to investigate his Democratic rival, Joe Biden.
  • British Prime Minister Boris Johnson suffering a defeat in a court battle questioning the legality of his suspension (proroguing) of Parliament.
  • A drone attack on Saudi oilfields took 5% of the global oil supply out of commission, resulting in a USD12/barrel spike in Brent crude oil prices. The spike was short lived, however, as it became clear that the disruption could be dealt with fairly easily. 

Source:  Coronation Asset Managers / Anchor Capital