Prowess Investments Market Update 29 January – 5 February 2024

Last week’s highlight was the US Fed’s FOMC interest rate decision to keep interest rates unchanged in line with expectations. The announcement highlighted that the Fed does not expect to reduce the rates until there is greater confidence that inflation is moving sustainably toward their 2% target level.

Against a very challenging economic backdrop, President Ramaphosa will deliver the SONA on Thursday and will seek to highlight the government’s gains over the last year as well as offer a glimpse into the government’s future vision and priorities.

International Market Developments

Fed Chair Jerome Powell noted that while inflation is slowing, more data is needed to confirm the decelerating trend.

The US economy added 353K jobs in January 2024, compared to an upwardly revised 333K in December, and way above market forecasts of 180K. It is the biggest rise in employment in a year which, together with an acceleration in wage growth, signals that the labour market remains tight. This resulted in government bond yields around the world starting the week higher, with the yield on the US 10-year Treasury note, seen as a proxy for global borrowing costs, rising to 4.11%. The markets are now pricing for the first rate cut to take place in May 2024.

The European Central Bank also expects better prospects for inflation over the next few months. However, the timing of the first interest rate cut will be data dependent.

Local Market Developments

The Mining Indaba 2024 kicked off this week under the theme: ‘Embracing the power of positive disruption: A bold new future for African mining’. The mining industry, once one of the larger contributors to the South African economy, has faced various headwinds over the last year in the form loadshedding, logistical bottlenecks and lower commodity prices.


Leave a Reply

Your email address will not be published. Required fields are marked *