Prowess Investments Market Update 23-27 October 2023

Market participants continue to monitor developments around the situation in the Middle East very closely, while locally, Kuben Naidoo resigns as SA Reserve Bank Deputy Governor tilting the MPC in a more hawkish direction. Today the finance minister will deliver the Medium-Term Budget Policy Statement at 2pm with investors closely watching how the government will stabilize revenue shortfalls, higher spending, and a swelling deficit.

International Market Developments

US markets ended the week firmly on the backfoot with stocks posting their biggest weekly decline in a month as the threat of an escalating conflict in the Middle East weighed on risk appetite. Reports of drone attacks in Iraq and Syria, cruise missiles fired toward Israel by Houthi rebels in Yemen and Israel’s strikes against Hamas and Hezbollah kept investors on edge.

Disappointing results from major tech stocks hurt investor sentiment this past week. However, better-than-expected economic data worked to offset this, with GDP expanding 4.9% in 3Q (vs market expectation of 4.5%) and Amazon reporting numbers after the bell which may boost sentiment.

This week sees the FOMC meet on Wednesday.

Local Market Developments

Locally, it has been reported that Deputy Governor Kuben Naidoo of the SARB has tendered his resignation. President Ramaphosa and SARB Governor Kganyago are yet to accept his resignation, but it is expected to take effect as early as November. Naidoo is widely regarded as a dovish member of the MPC, and his departure is anticipated to tilt the MPC in a more hawkish direction.

Minister of Finance, Enoch Godongwana delivered a speech at the Inclusive Growth Forum over the weekend, though he was unable to speak extensively about the upcoming medium-term budget coming up on Wednesday. Today investors will be closely monitoring and watching outcomes from the MTBPS.

Finally, massive congratulations to the Springboks for successfully retaining the Rugby World Cup in France over the weekend.

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