Author: Prowess Investment Team

Global financial markets continue to be dominated by US trade policy, while locally, all eyes are on the SARB rate decision this week.

The US monetary policy path remains unclear amidst the ongoing tariff uncertainty as markets expect the Fed to keep its benchmark rate unchanged at the upcoming meeting later this month. Local CPI data is due out this week, with inflation expected to print at 3.1% with markets pricing in a 25-basis point repo rate cut.

Last week, President Trump unveiled new trade tariffs targeting key trade partners. Locally, President Cyril Ramaphosa responded to President Trump’s 30% tariff on South African products.

Federal Reserve Chair Jerome Powell emphasized a cautious approach to interest rate cuts due to new tariffs, which may increase inflation. US President Donald Trump announced on Monday 7 July that the US would subject imports from South Africa with a 30% tariff that would take effect from 1 August. However, there remains optimism about further negotiations with the US.

Global financial markets remain relatively and watchfully calm for now, with the ceasefire between Iran and Israel having taken effect, while locally, the dismissal of the DA Deputy Minister Andrew Whitfield has again threatened the stability of the GNU.

Last week, the Israel-Iran war dominated news headlines, as the conflict drove a risk off sentiment in global markets, a trend that is likely to continue following US air strikes against three Iranian nuclear facilities over the weekend. Locally, the Financial Action Task Force (FATF) announced that South Africa has successfully completed all 22 action items from its grey listing Action Plan.

Global markets remain fixated on developments around the worsening Israel-Iran conflict. Locally, SA is working towards being removed from the Financial Action Task Force (FATF) ‘grey list’.

Last week, U.S. Federal Reserve policymakers continued to adopt a cautious stance on interest rates amid mixed employment data and tariff concerns. In South Africa, the Reserve Bank’s proposal to lower the inflation target could save billions in debt costs.

Last week, President Donald Trump’s reform agenda suffered a setback after a US trade court ruled that most of the recently introduced global tariffs were illegal. Locally, the Monetary Policy Committee (MPC) of the SA Reserve Bank (SARB) decided to cut the repo rate by 25 basis points to 7.25% (prime to 10.75%).

Global financial markets continue to battle with the impact of tariffs, while locally, Finance Minister Enoch Godongwana finally delivered the long-awaited budget 3.0.