JSE reaches new heights as rand strengthens

The All Share index on the JSE on Friday recorded  a week high level for a third consecutive week. The index improved over the week by 1.38% to a new record level of 97 128 points. For the first six months of the year the index gained 15.2%, increasing by 18.6% in the last quarter.

This despite the geo-political woes from the rampant Trump tariff spree, the Trump-Ramaphosa meeting in the US, the Israel-Iran conflict up to tension in the Government of National Unity.

All and all it seems that South Africa is isolated and far away from the Middle East fiasco, with the precious-metals bonanza of gold, platinum and palladium leading the appetite for investments in shares and bonds.

The Resources 10 index led the charge, gaining 2.6% last week, 24.5% over the last quarter and a massive 47.7% since the beginning of the year. The Rand exchange rate also continues to recover week by week.

In intra-trade last week, the currency improved to R17.50/$, R23.87/£ and R20.72/€. This is a 22 cents improvement against the Dollar, 44c appreciation against the Pound and 21c strengthening against the Euro.

Against the US dollar the Rand has improved by R1.09/ $ since the beginning of the year. The strong improvement in the Rand/$ last week and the return of the Brant oil price to levels much lower than $70 (R1 232) per barrel are likely to reverse the sudden strong increase in fuel prices at the beginning of August.

After the first week of the new month calculating the over-recovering for petrol is around 20c per liter although the price for diesel remains under pressure with an under-recovering of 60c per liter. The US share market recovers strongly but lower interest rates are still in balance.

With in two weeks after President Donald Trump send in the US bombers to eliminate Iran’s nuclear facilities, equity prices on Wall Street recovered quickly and sharply. During this time, the S&P 500 index gained 5.0% and with the 1.7% increase last week reached a new all-time high.

Although US bond yields have been moving lower over the past few weeks, there was a strong increase in new jobs of 147 000 in the non-farm job market in June. With the unemployment rate moving lower to 4.1% from 4.2% in May 2025, and expectations that the US core inflation rate will remain on 2.80%, the Federal Reserve may abstain yet again in lowering its bank rate during its July meeting. On Friday just after the jobs report, the odds of a cut at the Fed's July 28-29 meeting fell to 5% from an earlier 25% possibility.

Prospects for this coming week

Investors will await the release of the US Federal Open Market Committee meeting’s minutes on Wednesday. The minutes will shed light and prospects for lowering the Federal Reserve’s bank rate in months to come.

Domestically Statistics South Africa will publish the May manufacturing production data. It is expected that the annual manufacturing production decreased by 3.0% after a disappointing annual growth of -6.0% in April. The manufacturing sector suffered during the first quarter of 2025 with a negative growth rate of -2.0%, contributing -0.2 of a percentage point to the very week GDP growth of only 0.1%.

Chris Harmse is the consulting economist of Sequoia Capital Management and a senior lecturer at Stadio Higher Education.

*** The views expressed here do not necessarily represent those of Independent Media or IOL.

BUSINESS REPORT