A quiet week

Public holidays dominated the past week, with financial markets largely ignoring the results of the elections, which were mostly in line with expectations, reports the Nedcor Economic Unit.

Instead, some recovery in the US dollar pushed the rand lower against the US unit. It fell to an intra-day low of R6,67 on Wednesday before recovering late in the week to close at R6,42 on Friday.

But this was still down from the previous week’s close of R6,34. The local unit eased to R7,76 against euro from R7,67 but firmed to R11,61 against the British pound from R11,64 a week ago. Bond prices also ended the week down, with yields on the longer dated R153 2010 and the R194 2008 rising to 9,67% and 9,63% respectively from 9,58% and 9,52%.

Losses in the key resources sector dragged the overall equity market down, with the FTSE/JSE all-share index closing 0,8% lower over the week at 10757,2 from the previous close of 10846,4.

Resources lost 2,5% to end the week at 10704,2 from 10975,7, while the gold index was down by 3,9% to 2042,4 from 2125,3. However, industrial and financial stocks continued to show some positive growth, gaining 0,5% and 0,1% respectively to end the week at 8958,6 and 10072,2.

The Independent Electoral Commission declared the third democratic elections held last week free and fair. The ballot was for both national parliament and regional government, with over 20 parties standing for election.

This week’s focus will be on the Reserve Bank’s Monetary Policy Committee meeting on Wednesday and Thursday. A relatively firm rand has improved the short-term inflation outlook, despite continuing signs of strong domestic demand and we therefore do not expect any change in interest rates later this week.