Gold prices remained above the $2,100 level on Wednesday, currently sitting at $2178.64, reaching an all time high. The rand often mirrors global economic trends and is seen as a riskier asset, but it also serves as a proxy for gold, one of South Africa's key exports.
In the Johannesburg stock market, the Top-40 index closed over 1.43% higher. South Africa's benchmark 2030 government bond saw a marginal increase, with the yield dropping by 0.5 basis points to 10.095%.
Shoprite has reported a 13.9% increase in sales for the half-year ended 31 December 2023, reaching R121 billion. This marks 58 months of continuous market share gains in its core South African supermarket business, outpacing rivals like Pick n Pay, Massmart, Spar, and Woolworths.
Key highlights from the interim results include:
Core business segment sales up by 14.6% to R97.5 billion.
Diluted headline earnings per share (Dheps) rose by 7.6% to 621.4 cents.
Interim dividend per share increased by 7.7% to 267 cents.
A net addition of 369 stores in the past 12 months, totaling 3,543 stores.
Creation of 2,202 new jobs over the six months.
Checkers and Checkers Hyper division reported 13.7% growth in sales.
Checkers Sixty60 on-demand delivery sales surged by 63.1%.
Shoprite and USave saw sales increases of 13.1% and 12.3%, respectively.
Despite challenges like load shedding, Shoprite has seen an increase in profits and dividends. The group continues to invest in various areas, including technology, supply chain, and people, adding 197 new stores and creating 2,617 new jobs in the last six months. Shoprite's share price showed resilience on Tuesday, while Pick n Pay and Spar shares declined by over 2% and 3%, respectively.
South Africa's current account deficit widened significantly in the fourth quarter of 2023 to 2.3% of GDP, up from a revised 0.5% in the third quarter, according to the South African Reserve Bank (SARB). The deficit for the entire year was 1.6% of GDP, slightly lower than the National Treasury's estimate of 1.8%. In rand terms, the deficit expanded to R165.5 billion in the October-December period, from R34.4 billion in the previous three months. The trade surplus narrowed to R88.1 billion in the fourth quarter from R181.1 billion in the third quarter, with the annual trade surplus more than halving to 1.5% of GDP in 2023 from 3.4% in 2022. The narrowing trade surplus was attributed to a greater increase in the value of imports compared to exports. Imports that saw a rise in value included crude oil and refined petroleum products. While exports of fruit and manufacturing products increased, exports of pearls, precious, and semi-precious stones declined.South Africa's economy grew by just 0.6% in 2023, hampered by inefficiencies at state-owned companies Eskom and Transnet. The rand depreciated by more than 7% against the dollar over the year, contributing to the increase in the cost of imports.
Mixed Market Performance: The S&P 500 and Nasdaq Composite hit new intraday highs, driven by hopes of an upcoming Fed rate cut, while small-cap and value shares outperformed.
Labor Market Cooling: The Federal Reserve's Beige Book and the Labor Department's report indicated a softening labor market, with job openings and quits rate declining. However, the employment report showed more jobs added than expected, but with a higher unemployment rate and slower wage growth.
Fed Chair's Testimony: Jerome Powell's comments before Congress suggested the Fed might be closer to cutting rates, leading to a slight increase in market expectations for a rate cut by June.
🇪🇺 Europe: Record Highs and ECB Caution
Continued Gains: The STOXX Europe 600 Index reached a new record high, extending its winning streak for the seventh consecutive week.
ECB's Steady Hand: The European Central Bank kept rates unchanged and signaled potential rate cuts in June, while lowering its inflation and growth forecasts.
🇬🇧 UK: Budget Announcements and Market Response
FTSE 100 Sees Slight Decline: The FTSE 100 Index dipped amid global market fluctuations and domestic economic updates.
Budget Highlights: Chancellor Jeremy Hunt announced a payroll tax cut and changes to child benefit rules, partially funded by extending the windfall tax on oil and gas companies.
Economic Outlook: The Office for Budget Responsibility indicated that spending cuts are still needed to balance the budget, with taxes expected to rise to 37.1% of GDP by 2028–2029.
🇯🇵 Japan: AI Optimism and Policy Speculation
Mixed Equity Performance: Japanese stocks saw mixed results, with the Nikkei 225 slightly down and the TOPIX gaining, amid strong corporate earnings and AI-driven optimism.
Bank of Japan's Stance: Speculation continues about the BoJ's potential move away from negative interest rates, with some board members suggesting a closer virtuous cycle between wages and prices.
Economic Data: Household spending declined sharply, while nominal wage growth exceeded expectations, highlighting mixed economic signals.
🇨🇳 China: Growth Targets and Market Measures
Market Confidence: Chinese stocks gained as recent government measures to stabilise markets bolstered investor confidence, despite an uncertain economic outlook.
NPC Announcements: At the National People's Congress, Premier Li Qiang set a growth target of around 5% and announced plans to support the property sector and enhance technological self-reliance.
Economic Indicators: The Caixin/S&P Global services PMI remained in expansion territory, indicating continued growth in the services sector.