One of the biggest bullish markets during September is likely to continue

South African financial markets had one of their most positive months since Covid last month. The uncertainty in the US due to surging inflation against unemployment that remain under pressure not only boosted precious metal prices, the Rand and bonds, but also increased the expectations of another US rate with the expected US non-farm payrolls that was  to be published on Friday.

The All Share index on the JSE recorded record levels for four consecutive weeks up to October 3, 2025. Last week the index increased by 3 008 points, or 2.9%, breaking easily through the 108 000 and 109 000 levels for the first time, testing the 110 000 level at the close (109 778). From the beginning of the year the index is up by 28.5%.

All the sub-indices on the JSE recorded their best weeks of the month last week. It was exceptional that domestic listed shares (SA. Inc) traded strongly last week. The financial board (FIN15) gained 2.02% ending the month 1.0% in the green. On the industrial board the IND25 index increased 3.3% last week and trades 21.3% higher for the year-to-date. The resources board, given record levels for the gold price and strong surges in the platinum metal group and palladium prices, added 2.3% last week, accelerated by 16.0% last month and is up by 113.6% for the year.

The gold price tested the $3 900 level on Friday, closing on $3 380 per ounce on Friday, trading 8.3% higher last month and is up 47% since the beginning of the year. Platinum ended the week 6.1% higher, gaining 9.4% last week and traded 75.7% up for the year. The palladium price shot up by 7.4% last month and is now 40.0% up for the year to date.

On the foreign exchange market, the Rand appreciated last month against the major currencies. The Rand/dollar rate improved by 12 cents last week to close on Friday at R17.22/$ and ended the month 57c stronger and traded at its best level over the last year. Against the pound the Rand improved marginally last week by only 2c to R23.20/£ but gained 66c during September. Against the Euro the currency (R20.22/€) appreciated by 9c and 48c during last week and last month, respectively. The All-Bond Index (ALBI) gained 0.75% last month and its return increased by 10.5% from the beginning of the year.

The rally may continue.

Investors, the public and analysts are debating whether this current strong rally in most financial assets and precious metals will continue or is markets near a strong downward correction. The reality lies in the US unemployment and inflation rate data over the next few months. Whereas the US created on average 164 000 new jobs over the six-month period of November 2024 to April 2025, the economy could only create on average 26 000 new jobs over the last four months up to August 2025. In reaction the US Federal Reserve decreased its bank rate with 25 basis points last month, despite the surge in the core inflation rate to 2.9%, declaring that the job data for September will be crucial for their decision at their next meeting on 28-29 October.

The release of the non-farm data for September that were scheduled for last Friday, 3 October, however, did not take place, due to the current US government shutdown on a budget dispute between the Republicans and Democrats. Most US government services are suspended, meaning that 40% of the federal workforce - about 750 000 people - are expected to be put on unpaid leave.

These uncertainties in the US economy and administration will lead to the ongoing strong increase in haven assets like Gold and platinum in coming weeks. It is expected that the Rand will continue to appreciate against the dollar and may test the R17.00/$ level. This will boost the prices of SA Inc, especially financial shares and bond returns, till at least the end of the year, when more clarity will emerge on possible further US rate cuts.

Prospects for this coming week

Apart from the uncertainty about the US government shutdown this coming week, investors await the US balance of trade data for August (showing effects of tariffs) to be released on Tuesday. The important US Federal Open Market Committee minutes of their previous meeting will be released on Wednesday. Federal Reserve chairperson Jerome Powell will deliver a policy speech at the Community Bank Conference hosted by the Federal Reserve board on Thursday.

Domestically, Statistics South Africa will release South Africa’s manufacturing production figures for August 2025 on Thursday.

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.

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