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INVESTMENT MARKET UPDATE

AUGUST 2025

What developments have unfolded in local and global markets throughout the month of AUGUST?

50%

Tariffs imposed on Indian imports to the US

+11.4%

SA Resources return in August

3.5%

SA inflation print for July

ANALYTICS - AUGUST COMMENTARY:

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GLOBAL MARKET

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🌐 Global Markets: A Balancing Act Between Doubt and Determination

August began with a stumble. A disappointing U.S. jobs report—just 73,000 payrolls added, alongside sharp downward revisions to previous months—sent shockwaves through markets. The S&P 500 dropped 1.6% in a single day, and short-dated Treasury yields tumbled, with the 2-year yield registering its steepest one-day fall in months.

But sentiment quickly turned. At the Jackson Hole symposium, Federal Reserve Chair Jerome Powell signaled that rate cuts were likely, citing a shift in the “balance of risks.” This dovish tone helped the S&P 500 recover and finish August up roughly 2%, even reaching fresh record highs.

Meanwhile, political pressure on the Fed intensified. President Trump’s move to dismiss Governor Lisa Cook raised concerns about central bank independence and long-term inflation risks. Investors responded by boosting rate-cut bets, weakening the U.S. dollar (the Dollar Index fell ~2%) and driving gold prices to new records above $3,500/oz as a safe haven.

Across the Atlantic, France re-entered the spotlight. Prime Minister François Bayrou announced an 8 September confidence vote tied to budget cuts, triggering a sell-off in French government bonds (OATs). The OAT–Bund spread widened to 80bps, and at one point, French 10-year yields traded within single digits of Italy’s—a rare convergence that underscored rising fiscal-political risk in Europe

Despite these tensions, global equity markets held their ground. Investors seemed increasingly willing to look past short-term volatility, focusing instead on long-term fundamentals and central bank support.

Global Market Highlights:

  • MSCI World Index: +1.5%
  • MSCI Emerging Markets: +1.8%
  • S&P 500: +2.0%
  • FTSE 100 (UK): +2.6%
  • Shanghai Composite (China): +2.4%
  • Hang Seng (Hong Kong): +2.1%
  • Nikkei (Japan): +1.2%
  • Gold: Surged above $3,500/oz
  • Dollar Index: -2.0%

Key Themes for Investors:

  • Central bank signals—especially from the Fed—point to a likely rate-cut cycle, supporting risk assets.
  • Political pressure on monetary authorities (e.g., Fed leadership changes) raises longer-term inflation concerns.
  • Safe-haven demand surged, with gold hitting new highs amid geopolitical and fiscal uncertainty.
  • China’s tech sector gained momentum following government plans to triple chip supply by 2026.
  • European fiscal risk re-emerged, with France’s budget vote triggering bond market stress.

Rand / US Dollar:

  • In August, the Rand gained 2.3% against the USD, from a loss of 1.7 in July, a gain of 1.5% in June and 3.1% in May.
  • This compares with the long-term monthly average
    • appreciation of 3.9%
    • depreciation of -4.2%

 

Rand / Euro:

  • In August, the Rand gained 0.3% against the EUR. In July, the Rand gained 0.5% against the EUR, lost 2.6% in June and from 4.0% in May.
  • This compares with the long-term monthly average:
    • appreciation of 2.8%
    • depreciation of -3.2%

 

Rand / British Pound:

  • In August, the Rand gained 0.2% against the GBP. In July, the Rand gained 1.8% against the GBP, flat in June and from 3.6% in May.
  • This compares with the long-term monthly average
    • appreciation of 3.1%
    • depreciation of -3.1%

 

SMARTIE BOX IN RANDS:

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LOCAL MARKETS

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South African Markets: Policy Support and Structural Reform Fuel Optimism

South Africa’s financial markets continued to impress in August, with local equities outperforming emerging market peers for the fifth consecutive month. The JSE All Share Index not only held above the 100,000 mark it briefly touched in July—it climbed further, driven by strong performance in the resources sector and renewed investor confidence.
On the policy front, the South African Reserve Bank (SARB) delivered another 25 basis point rate cut, bringing the repo rate to 7.00%, effective 1 August. More importantly, the SARB signaled a strategic shift, now preferring to anchor inflation at the bottom of its 3–6% target band, around 3%. This unanimous decision followed a May cut and came amid a firmer rand and slightly easier bond yields, with the 2035 benchmark easing to ~9.58% near month-end.
Inflation data supported the SARB’s stance:
  • July CPI rose to 3.5% year-on-year (0.9% month-on-month), driven by food & non-alcoholic beverages (+5.7%) and housing & utilities (+4.3%)
  • Producer Price Inflation (PPI) edged up to 1.5% year-on-year
In plain terms: prices are rising a bit faster, but still comfortably within the SARB’s target range. As long as fuel and food costs don’t surprise to the upside, there’s room for measured further rate cuts, especially if global conditions remain supportive.
In a major structural reform, the government approved 11 private train operators to access 41 routes on Transnet’s network. This long-awaited move aims to ease rail bottlenecks that have hampered bulk exports like coal, iron ore, chrome, manganese, and fuel. While implementation will take time—permits, contracts, and ramp-up—the reform is expected to:
  • Improve miners’ throughput
  • Reduce logistics costs
  • Support the trade balance and the rand over time
Authorities emphasized that this is additive capacity, not a replacement for Transnet, with contracts ranging from 1 to 10 years and a clear goal to lift freight volumes to 250 million tonnes by 2029.

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  • The JSE All Share had another strong positive month, up 3.5%.
  • All three major sectors supported the bourse, as Industrials (up 1.1%), and Financials (up 0.8%) continued to grow, while Resources (up 11.4%) surged higher again.
  • Small-caps (up 1.9%) and Large-caps (up 3.9%) boasted healthy returns, while Mid-caps (down 0.6%) contracted slightly.
  • The SA Property markets delivered another positive month for investors, as the ALPI added 2.8%, and the S&P SA REIT index grew 2.2%.
  • SA Nominal Bonds (up 0.7%) took a slight breather for the month. Inflation-Linked Bonds inched higher, up 1.7% on the back of the month’s slightly higher inflation print.
  • Developed Market Equities closed higher in US dollar terms, as the MSCI World Index rose 2.6%, outperforming the MSCI Emerging Market Index (up 1.5%) for only the third month this year.
  • The rand had a strong month in terms of dollar relative performance. Relative to the US Dollar (Rand appreciated 2.1%), the Euro (Rand depreciated 0.1%) and the Pound Sterling (Rand appreciated 0.1%).
  • Resources had another strong month, as Gold (up 5.5%) and Platinum (up 6.2%) climbed higher. Brent Crude dropped 6.1% over the month, as supply increased.

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MONTHLY RETURNS:

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