MARKETS IN A NUTSHELL
WORLD
EQUITIES
Global equity markets rallied strongly after the Q4 2018 sell-off — US markets enjoyed their best first quarter return in 20 years
BONDS
US 10-year bond yields fell sharply as investors reacted to the US Federal Reserve’s policy U-turn — the US yield curve briefly inverted as bond prices rallied
CURRENCIES
The US dollar weakened after the Fed’s U-turn — but resumed its gains latterly
COMMODITIES
The oil price rose on supply disruptions from Venezuela, further Saudi-led OPEC production cuts and a surprise US stockpile decline — while iron ore surged on severe supply disruptions following a Vale tailings dam failure in Brazil
ECONOMY
Despite continued US economic strength, the broader macroeconomic environment deteriorated — European economic weakness and fears of slower Chinese growth compound late cycle growth concerns
MONETARY AND FISCAL POLICY
The Fed’s new dovish policy stance signals concern for global economic health — it announced that no further interest rate hikes are likely in 2019 and that it will slow the pace of quantitative easing withdrawal
SOUTH AFRICA
EQUITIES
The FTSE/JSE Capped All Share Index also rose, led higher by resource counters on commodity strength and rand weakness — but industrial and financial counters declined on economic headwinds
BONDS
SA government bond yields tracked global yields lower amid renewed risk appetite — the SA All Bond Index posted positive returns
CURRENCIES
The rand weakened on US dollar strength — but recovered at quarter end as Moody’s delayed its credit rating review
COMMODITIES
The oil price rose on supply disruptions from Venezuela, further Saudi-led OPEC production cuts and a surprise US stockpile decline — while iron ore surged on severe supply disruptions following a Vale tailings dam failure in Brazil
ECONOMY
Economic growth was marginally positive, but stressed as shown by Mboweni’s downbeat budget and the return of erratic Eskom load shedding — the looming elections make meaningful economic reforms improbable in the near term
MONETARY AND FISCAL POLICY
SARB revised down its 2019 forecast for economic growth and inflation, but kept interest rates steady — high real yields are an attractive investment opportunity but they are too restrictive, raising the possibility of a repo rate reduction later this year