Global economies on re­cov­ery path

The Star Early Edition - - PRICES - Dr Chris Harmse Chief econ­o­mist Re­bal­ance Fund Man­agers

MORE and more eco­nomic in­di­ca­tors last week sug­gested that the do­mes­tic and global economies were on a re­cov­ery phase.

The UK an­nounced that its un­em­ploy­ment rate was down 4.5 per­cent, while China’s eco­nomic growth rate ticked up from 6.7 per­cent to 6.9 per­cent dur­ing the sec­ond quar­ter.

Ex­pec­ta­tions also exists that favourable eco­nomic growth data for the US, France and the UK will be re­leased this week.

Var­i­ous de­vel­oped coun­tries will also pub­lish their lat­est in­fla­tion, re­tail and con­sumer con­fi­dence in­dices in the course of the week.

On the do­mes­tic front, re­tail sales in­creased 1.7 per­cent in May, while the in­fla­tion rate came down sharply dur­ing June to 5.1 per­cent.

The Mon­e­tary Pol­icy Com­mit­tee (MPC) also cut the repo rate by 25 ba­sis points to 6.75 per­cent on Thurs­day. In re­ac­tion, share mar­kets con­tin­ued their bullish move­ment of the last three weeks, while bond rates de­creased no­tice­ably and listed prop­erty shares also im­proved.

The rand could not im­me­di­ately whether the storm af­ter the sur­prise an­nounce­ment by the MPC to lower its repo rate.

How­ever, on Fri­day af­ter­noon, just af­ter the close of the JSE, the rand traded at R12.93 to the dol­lar. This was 11c, or 0.7 per­cent, stronger than the pre­vi­ous Fri­day’s close of R13.04.

Against the pound, the cur­rency gained 28c, or 1.6 per­cent, over the week, trad­ing at R16.736 at the close of the JSE Fri­day af­ter­noon. Against the euro, the rand lost 13c, or 0.8 per­cent, over the week to trade at R15.07 as the euro ap­pre­ci­ated strongly against ma­jor cur­ren­cies.

The all share in­dex on the JSE gained 565 points, or 1.1 per­cent, in the week to close at 54 162.71 points on Fri­day. The in­dex is now 5 per­cent up this month and 6.9 per­cent higher since the be­gin­ning of the year (year to date).

Over the week, the in­dus­trial in­dex gained 1.8 per­cent and is now 13.5 per­cent higher for the year to date.

Fi­nan­cials also im­proved last week by 1.5 per­cent, while re­sources had de­creased by 1.9 per­cent as the stronger rand took its toll.

The listed prop­erty in­dex gained 0.3 per­cent.

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