Global economies on recovery path

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.