The Bull Run continues worldwide

While the Public Sector is preparing for a national strike, investors should take note of their demand of a 12% increase; this figure is not a thumb suck, but a very real indicator of the real inflation rate in SA. The risk/reward of investing money on call or money markets with banks should be carefully scrutinised, investors may just be losing hands down with so-called "safe" or "low risk"
investments.

The latest official GDP statistics from Statistics SA (StatsSA) showed that South Africa's economic growth rate slowed in Q1 (the quarter to March) compared with the previous quarter.  The economy expanded by an annualised 4.7% in Q1, an effective slowdown when compared with 4Q 2006, in which gross domestic product
(GDP) grew by 5.6%.

On a y:y basis, economic activity increased by 5.4% in Q1 with the same period last year.

The South African Reserve Bank (SARB) will meet next Wednesday and Thursday and the SA Repo rate could be raised by 50 basis points.  South Africa's producer price index (PPI) rose to 11.1% y:y in April, up from 10.3% in March. This is an increase of 1.7% m:m basis after March's increase of 1.2%.

This is the highest PPI has been since December 2002. The Monetary Policy Committee (MPO) will now consider whether there will be two or just one more rate hike this year. 

According to Customs & Excise figures, South Africa recorded a deficit of 5.7 billion rand for its trade with non- Southern African Customs Union trading partners in April after the 2.7 billion rand deficit in March.

We expect South Africa's foreign trade balance to increase by 3.6 billion rand deficit in April. South Africa recorded a worst-ever deficit in October 2006 of 12.943 billion rand.

The JSE:

Sectors: The construction sector is accelerating growth and utperformed other sectors and recorded rapid growth of 21.3% compared to 6.5% in Q1 2006.
In Gauteng alone, economic activity worth R1.2 trillion in onstruction and related aindustries over the next three years is on the cards.

Construction will become a driver of growth in South Africa's economy by feeding into other sectors.

Index movements:

Resources 20; Y: Y increase of 36.13%, with a high of 53 223 and a low of 51 241.

Industrials; y:y increase of 41.75%, with a high of 20 199 and a low of 19 599.

Financials (FINI 15); y:y increase of 30.53%, with a high of 9 848 and a low of 9 515.

The Gold mining index had a y:y DECREASE of -2.20%%, with a high of 2 813 and a low of 2 709.

The All Share Index (ALSI) moved between the 28 300/28 600 level for most of May, with a high of 29 126 and a low of 28 223.

Gold: Gold, which generally moves in tandem with the Euro, gained because the U.S. dollar's weakness against the Euro, but the metal failed to break the $ 700 level. Gold will need big money from funds buying it to make a sustained move back to $675.

Currency: Most emerging market currencies haven't done that well in May. The rand rallied to a six months high against the greenback but a stronger US$ can weaken the rand to 7.35 levels. However, the market will be waiting for the Monetary Policy Committee's (MPO) decision next week before reacting.

World Markets:

US: New York - US stocks climbed for most of May on buyout talks in most industries. The Conference Board's consumer confidence index rose to 108 this month from 104 in April, raising worries about interest rate hikes. Investors shrug off news that first-quarter growth was revised to 0.6% from an initial estimate of 1.3%.

The Dow Jones Industrial Average hit a record high of 13,673 points. For the month of May, the Dow powered ahead with a 4.3% gain.

The S&P 500 Index had a record closing high of 1,530.62 points. For the month, the broad index advanced 3.2%.

The NASDAQ Composite had a record closing high of 2,607.90, while it gained 3.1% in May.

Behind the U.S. market's record-breaking performance this year is a seemingly never-ending source of mega deals, including private-equity takeovers.

Europe: European Exchanges were trading positive, and most shares ended higher.
The London FTSE 100, showed moderate volatility on its way to a new record. The Frankfurt DAX showed little volatility on it's steady climb to the new record of 8 000 points. In Paris, the CAC40 reached a new record of 6 212 points in May, tracking the US S&P500 within 2%

Pacific Rim: Most Asian markets advanced in May, led by China.
Tokyo shares climbed and markets in Shanghai and Seoul continued to hit new
records. Singaporean, Australian and Indian stocks also rose for most of the
month.

Hong Kong shares started to drop on concerns that Chinese authorities will
curb the booming stock market. Authorities in China are trying to get their
market to achieve a soft landing without bursting the bubble.

The KeyNews Team
www.keynews.co.za