Financial overview (see Downloads for full report)

Local financial markets weren't spared the carnage that took place in international markets, but the FTSE/JSE All Share Index's return of -0.3% hides most of the extreme volatility that took place intra-month. At the bottom, the All Share Index was nearly 9% lower that at the start of the month. The resources sector suffered the worst from the downward revisions to global growth – ending 1.5% lower. Given the volatile conditions, the industrial and financial sectors fared well, gaining 0.3% and 1.2% respectively.

Domestic economic growth slowed down to 1.3% in the second quarter of this year, compared to a downwardly revised 4.5% in the first quarter. The manufacturing, mining and agricultural sectors contracted during this time. In response to the slowdown in domestic economic growth and the international developments, the South African Reserve Bank has indicated that they are willing to act. This has resulted in financial market participants pricing in the full possibility of an interest rate cut by next year February, notwithstanding current high inflation. Consumer price inflation for June accelerated to 5.3%.

Local bond yields followed international bond yields lower, on the back of slower growth expectations and the potential for more accommodative monetary policy. The All Bond Index gained 3.5% and Listed Property, initially negatively impacted by the equity market sell-off, benefitted from lower bond yields to end the month 2.8% higher. The rand depreciated against the other major currencies and closed the month at R6.99 against the dollar.

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