Markets in a nutshell
WORLD
EQUITIES
Equity markets rallied strongly on massive global stimulus and easing of lockdowns — emerging markets matched developed markets in the magnitude of the recovery
BONDS
Most developed market government bond yields fell marginally despite new stimulus — while high-yield corporate and sovereign bonds largely recovered from the March sell-off
CURRENCIES
The US dollar was weaker — the ballooning US Federal Reserve balance sheet and surge in money supply is negative for the US dollar vs other hard currencies
COMMODITIES
Industrial metals bounced, gold rallied and WTI oil doubled — on the improved macro outlook and US dollar weakness
ECONOMY
COVID-19 lockdowns plunged the global economy into the deepest recession since the 1929 Great Depression — unemployment spiked and household savings rates soared on curtailed discretionary spending
MONETARY AND FISCAL POLICY
Nations across the globe unleashed unprecedented monetary and fiscal stimulus to support failing economic activity — the resultant debt bloat should impair potential global output for many years
SOUTH AFRICA
EQUITIES
The JSE rallied with global markets, led by surging resource stocks — financial counters were laggards, weighed down by the banking sector on prospects for lower interest margins and higher impairments
BONDS
SA government bond yields fell on improving global risk appetite and sharp repo rate cuts — the very steep yield curve reflects market anxiety for higher inflation and risk of default in the long term
CURRENCIES
The rand retraced some of its first quarter losses — improved terms of trade contributed to SA’s first quarterly current account surplus since 2002
COMMODITIES
Industrial metals bounced, gold rallied and WTI oil doubled — on the improved macro outlook and US dollar weakness
ECONOMY
The beleaguered SA economy contracted for the third successive quarter to end March — even before the brunt of COVID-19 lockdowns which are estimated to cause another 25% contraction (annualised) in the second quarter
MONETARY AND FISCAL POLICY
Government unveiled a massive fiscal relief package exceeding R500 billion to support the pandemic ravaged economy — while low inflation prompted SARB to heavily cut interest rates