Author: Prowess Investment Team

Global financial markets remain focused on the US government shutdown, while locally, South Africa’s trade balance registered a smaller-than-expected surplus in August.

Last week, global markets grappled with heightened uncertainty as the US faced a looming federal government shutdown. In South Africa, there is also uncertainty, as the African Growth and Opportunity Act (AGOA) nears its expiry, while Eskom and Transnet progress is not yet translating into improved GDP numbers.

Last week, the US Federal Reserve (Fed) lowered the federal funds rate target range by 25 basis points to 4% – 4.25%. The move was in line with market expectations. Locally, the SA Reserve Bank (SARB) opted to keep the repo rate on hold at 7%.

Last week, annual US headline consumer inflation increased to 2.9% in August, up from 2.7% in July. This was the fastest increase since January. Locally, according to Stats SA, real GDP expanded by 0.8% quarter on quarter in 2025Q2, following an unrevised growth of 0.1% in 2025Q1.

Global financial markets remain focused on the US CPI this week, while locally, South Africa’s Finance Minister and SARB Governor reaffirm the lowering of the inflation target framework.

Last week marked dovish signals from the US Federal Reserve and escalating political tensions. Global markets are pricing in a potential September US rate cut, while South Africa focuses on strengthening trade partnerships and refining its inflation framework.

Last week, the FOMC released minutes from its July meeting, which suggested that inflation risks outweigh job growth concerns. Locally, CPI for July came in as expected at 3.5% year on year up from 3.0% in June, reducing the case for the SARB to continue with its rate-cutting cycle at the next MPC meeting.

Global financial markets remain focused on the talks between Mr Trump and Russian President Putin. Locally, all eyes are on the CPI print later this week.

President Trump’s global tariffs came into effect last week, with South Africa failing to reach a last-minute deal to avert 30% tariffs. The focus now shifts to implementing strategies to mitigate the impact of these tariffs. A meeting between US President Trump and Russian President Vladimir Putin this Friday in Alaska reignites hope of a ceasefire in the Russian-Ukraine war.

Last week, markets were dominated by reserve bank activity. In the US, the Federal Open Market Committee (FOMC) voted 9-2 to maintain the federal funds rate at 4.25%–4.5%, extending the pause seen throughout the year. Locally, the SARB unanimously delivered a 25-basis point rate cut in-line with market consensus, taking the policy rate to 7.00%.