In This Edition:
RAND RESILIENCE MEETS A MIXED LOCAL MARKET BACKDROP
South African equities and bonds advanced even as the rand softened over the week, while easing domestic inflation and lower oil prices provided a more supportive backdrop for local investors.
AI STRENGTH SUPPORTS US EQUITIES AS THE FED KEEPS INFLATION IN FOCUS
Strong NVIDIA results lifted technology shares, but Federal Reserve Chair Kevin Warsh’s Jackson Hole message kept further tightening firmly on the table.
EUROPE IMPROVES UNEVENLY AS GERMANY OFFERS TENTATIVE GROWTH SIGNALS
European markets gained modestly as German data improved, although inflation pressures and weak consumer conditions remained uneven across the region.
ASIA DIVERGES AS JAPAN ADVANCES AND CHINA’S AI OPTIMISM STAYS SELECTIVE
Japanese equities benefited from lower oil and technology strength, while China’s mainland market outperformed Hong Kong amid differing views on AI investment returns.
LOWER OIL PROVIDES RELIEF, BUT INFLATION RISK REMAINS UNRESOLVED
Brent crude fell sharply during the week, offering some near-term inflation relief, although energy prices remain substantially higher for the year and continue to influence the global rate outlook.
MARKET MOVES OF THE WEEK
CHART OF THE WEEK
NVIDIA’s rapid growth in data-centre revenue highlights the extraordinary scale of investment in artificial intelligence infrastructure. Strong results during the last week helped renew momentum in global technology shares, although elevated expectations mean the company will need to continue delivering exceptional growth.
For South African investors, last week offered a useful reminder that favourable local and global developments do not always move in the same direction. The JSE and domestic bonds gained, while the rand weakened modestly against the dollar but retained its year-to-date strength. Offshore markets were supported by renewed enthusiasm around artificial intelligence following strong NVIDIA results, yet Federal Reserve Chair Kevin Warsh’s Jackson Hole address reinforced that persistent inflation remains a constraint on monetary-policy flexibility. Lower oil prices provide some relief for an energy-importing economy such as South Africa, but global rates, currencies and the sustainability of technology-led equity gains remain important drivers of offshore portfolio outcomes.
Rand resilience meets a mixed local market backdrop
South African equities advanced over the week, with the JSE All-Share Index rising 0.36% and moving 2.02% higher year to date.
The Financial 15 gained 0.83%, the Industrial 25 rose 0.78%, and listed property added 0.54%. Resources underperformed, with the Resource 10 declining 0.63%, although it remains the strongest domestic sector this year with a gain of 12.54%.
The rand weakened over the week, with the US dollar rising 0.99% to R16.17. Nevertheless, the rand remains approximately 2.39% stronger against the dollar year to date. The pound fell 0.81% against the dollar, while the euro gained 0.19% against the rand.
Domestic bonds also performed well, with the South African 10-year government bond yield declining seven basis points to 8.68%. Investors remained focused on National Treasury’s July budget figures for further indications of the country’s fiscal position.
The broader domestic inflation backdrop has also become somewhat more supportive. Statistics South Africa reported that headline CPI eased to 4.3% year on year in July from 5.0% in June, with softer food inflation, municipal tariffs and fuel prices contributing to the slowdown. For investors, the combination of lower inflation, firmer bond prices and a rand that remains stronger for the year provides some domestic support, even as global monetary conditions remain restrictive.
AI strength supports US equities as the Fed keeps inflation in focus
US equities advanced, led by technology shares. The Nasdaq gained 0.85%, outperforming the Dow Jones at 0.53% and the S&P 500 at 0.49%. Year to date, the Nasdaq has returned 13.60%, compared with 12.65% for the S&P 500 and 11.44% for the Dow Jones.
NVIDIA again drove sentiment after reporting strong quarterly results and issuing better-than-expected guidance. Continued investment in artificial intelligence infrastructure supported its shares and the broader technology sector.
The positive corporate backdrop was balanced by a cautious message from the Federal Reserve. Warsh described the economy as resilient, reiterated the Fed’s 2% inflation objective and said further tightening could be required unless inflation moved convincingly towards target. He also advocated less explicit forward guidance to preserve policy flexibility.
Headline PCE inflation rose 3.7% year on year, while core inflation increased 3.3%, in line with expectations. Durable goods orders and employment data remained supportive, although consumer confidence weakened.
The US 10-year Treasury yield declined two basis points to 4.72%, even as shorter-dated yields rose following Warsh’s speech, resulting in a flatter yield curve.
For South African investors with significant offshore allocations, this combination matters. Strong corporate earnings continue to support global equity exposure, but a Federal Reserve unwilling to declare victory over inflation could keep US rates and the dollar influential drivers of rand-denominated offshore returns.
Europe improves unevenly as Germany offers tentative growth signals
European markets delivered modest gains as improving economic sentiment and lower oil prices offset uneven inflation and consumer data. The Euro Stoxx 50 rose 0.36%, taking its year-to-date return to 11.99%, while the FTSE 100 gained 0.07% and is 8.99% higher in 2026.
Eurozone economic sentiment improved for a fourth consecutive month, while Germany’s growth data and business confidence exceeded expectations. This strengthened hopes that Europe’s largest economy may be emerging from its prolonged stagnation.
Conditions were weaker elsewhere. France’s economy stagnated while inflation accelerated, and Spain also reported a sharp rise in headline inflation. In the UK, retail-sector data pointed to continued weakness in consumer demand.
The UK 10-year government bond yield was unchanged at 5.07%, while the German 10-year yield rose two basis points to 3.27%.
The divergence within Europe reinforces the importance of looking beyond headline regional index performance. For offshore investors, earnings exposure, sector composition and the differing interest-rate outlooks across individual markets remain important considerations.
Asia diverges as Japan advances and China’s AI optimism stays selective
Asian markets diverged. The Nikkei 225 gained 0.58%, extending its year-to-date return to 31.90%, as lower oil prices and NVIDIA’s results supported Japanese technology and semiconductor shares.
Expectations of further Bank of Japan tightening remained elevated. The Japanese 10-year government bond yield rose five basis points to 2.93%, as inflation data strengthened the case for another rate increase.
Chinese markets were mixed. The Shanghai Composite rose 1.20%, although it remains 0.42% lower for the year, while the Hang Seng declined 1.64% and is down 0.87% year to date.
Mainland technology shares benefited from enthusiasm around AI, while Hong Kong was pressured by Alibaba’s large equity placement and concerns about the returns companies may generate from heavy infrastructure spending. Industrial profit data continued to show an uneven recovery, with technology-related industries outperforming sectors more exposed to domestic demand.
The week therefore highlighted two distinct forces in Asian markets: technology-led optimism on the one hand and a changing interest-rate and domestic-demand environment on the other.
Lower oil provides relief, but inflation risk remains unresolved
Commodity prices weakened. Gold fell 3.34% to approximately $4,454 per ounce, while Brent crude declined 6.60% to $88.16 per barrel. Despite the weekly fall, Brent remains 44.88% higher in 2026, keeping energy prices an important inflation risk.
For South Africa, weaker oil prices can help contain imported fuel and inflation pressures, while the fall in gold contributed to weaker performance from domestic resources during the week. The broader investment implication is that commodity markets continue to pull local and offshore portfolios in different directions.
Lower oil may offer some near-term relief to global inflation expectations, but the Federal Reserve’s continued focus on persistent price pressures means investors should not assume that a single week of declining energy prices materially changes the global rate cycle.
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