Markets In A Nutshell
World
South Africa
Equities
World
Positive vaccine trials and the first UK and US inoculations propelled equity bourses to new highs—further buoyed by the passage in the US of another $900 billion relief package
South Africa
The JSE rallied on buoyant emerging markets sentiment and higher commodity prices—listed property gained most, but the sector was down 34% for the year given its structural headwinds
Bonds
World
US long bond yields edged higher on modest employment gains and COVID-19 vaccination approvals—but European yields trended lower as the much of bloc went into harsh lockdown
South Africa
The SA government bond yield curve moved lower and flatter—long bond yields fell on the risk-on environment amid hopes for a faster return to normal in 2021
Currencies
World
The US dollar was weaker on the sheer scale of US monetary stimulus—while an 11th-hour Brexit trade deal buoyed the euro and pound
South Africa
The rand gained on broad-based US dollar weakness—emerging market currencies should stay well bid given prevailing optimism for 2021 growth
Commodities
World
Industrial commodity prices surged as market sentiment for economic recovery gained momentum and the dollar weakened—growing long-term inflation risks should keep precious metals prices well bid
Economy
World
Economic activity improved as momentum built on less stringent lockdowns—but new, more transmissible SAR-CoV-2 variants and onerous winter lockdowns suggests the pace of recovery could slow
South Africa
The economy recovered at pace but hit speedbumps with an unexpected summer second-wave and bungled vaccine procurement—economic activity is expected to have contracted at least 5% in 2020
Monetary and fiscal policy
World
The major central banks (excluding China) maintained extremely loose monetary policies—in the US, the Democratic Party clean sweep now makes higher corporate taxes and increased spending more probable
South Africa
The mini-budget was disappointingly vague on government’s strategy to arrest the rapidly deteriorating public finances—reliance on public wage reductions and incomprehensible support for bankrupt SOEs does not bode well for the debt spiral