Monthly Market Review

October 2024

October 2024 was marked by heightened volatility and economic challenges across global markets. Inflation concerns, rising bond yields, and weaker growth weighed heavily on investor sentiment, impacting asset classes worldwide. Below is a regional overview of key market trends and economic indicators.

LOCAL MARKETS

Exhibit 1 | Local performance (ZAR) for October 2024

Note: Data illustrated in ZAR. Source: FundFocus. Data as at 31 October  2024.  Past performance is not indicative of future performance. For illustrative purposes only and not indicative of any investment.

South Africa

Economy

In October, the National Treasury presented its Medium-Term Budget Policy Statement, which maintained cautious optimism around fiscal stability and future growth. While no major policy shifts were introduced, significant attention was given to infrastructure development reforms, with an entire chapter focused on building partnerships with the private sector that may lead to new investment platforms for infrastructure projects. The new government of national unity is still refining its fiscal strategy, but growth projections, while modest, remain positive. Importantly, the current debt-to-GDP ratio is not expected to hinder increased infrastructure spending, now seen as essential for sustained economic growth.

Equity Markets

South African equities followed global trends, with the JSE All Share Index (ALSI) and Capped SWIX declining by -0.92% and -0.91% respectively. The Property sector declined by -2.84%. Conversely, the Resources Index (RESI10) rose by 2.54%, driven by basic materials gains of 2.93%​.

Best performing equities

• Northam Platinum: +19.4%
• Impala Platinum: +19.2%
• Sibanye Stillwater: +13.6%

Worst performing equities

• Sasol: -15.4%
• Mondi PLC: -13.2%
• BHP Group: -8.8%

Bond Markets

The South African bond market faced increased yields, with the R2030 yield rising by 44 basis points and the R2048 by 58 basis points, leading to a -2.20% decline in the All-Bond Index (ALBI).

Additionally, South Africa’s trade balance improved significantly, reaching a surplus of R12.8 billion in October, up from R5.1 billion in August. Inflation in South Africa continued its downward trend, with CPI dropping to 3.8% in September, marking the lowest level since March 2021. This inflation decline bodes well for potential rate cuts in the coming months​.

GLOBAL MARKETS

Exhibit 2 | Global performance for October 2024

Note: Data illustrated in base currency of the respective regions. Source: RMB. Data as at 31 October 2024. Past performance is not indicative of future performance. For illustrative purposes only and not indicative of any investment.

Commodities

Commodities displayed mixed performance. Platinum rose due to supply constraints, while industrial metals like copper and iron ore faced downward pressure amid reduced demand from China.

Crude oil markets were volatile, influenced by U.S. production levels reaching 13.3 million barrels per day, significantly higher than that of Saudi Arabia. Coal prices also fluctuated, affected by both energy demand dynamics and regulatory adjustments​.

Currencies

The U.S. dollar strengthened against several major currencies, with the USD/ZAR exchange rate increasing by 2.95% to close at 17.69. This movement was driven by rising U.S. yields and cautious investor sentiment, which impacted emerging market currencies like the South African rand.

United States

U.S. markets experienced declines, with the Dow Jones down by 1.3%, the S&P 500 by 1.0%, and the NASDAQ by 0.8%. The bond market faced significant losses as the 10-year Treasury yield surged by 50 basis points to 4.29%, reflecting strengthened expectations of rate cuts due to persistent inflation concerns. U.S. Treasuries saw a record monthly loss – the largest in two years – as investors adjusted their outlook for interest rates. Meanwhile, crude oil production in the U.S. surged to 13.3 million barrels per day, 48% higher than Saudi Arabia’s output.

United Kingdom

The UK market struggled in October, with the FTSE 100 down by 1.5%. Inflation concerns and subdued economic growth remain key issues, as rising bond yields present a challenge to economic stability. Investor sentiment has been cautious amid these ongoing economic pressures​.

Europe

European equity markets saw broad declines, led by France’s CAC 40 dropping by 3.7%, the Euro Stoxx 50 by 3.3%, and Germany’s DAX 30 by 1.3%. Inflation and slow growth continue to dampen investor sentiment across the continent, contributing to a risk-averse environment among European investors.

Asia

In Asia, Japan’s Nikkei 225 was an outlier with a gain of 3.1%, attributed to favourable domestic policies and currency advantages. However, the region’s other major indices declined, with the Hang Seng dropping 3.9%, the CSI 300 by 3.0%, and the Shanghai Composite by 1.7%.

In early October, the Hang Seng index experienced a staggering 9% drop in a single day, marking its worst daily performance since the 2008 financial crisis. This reflects the broader challenges in the region amid inflation concerns and regional economic pressures.

Conclusion

October was a challenging month across global markets, with inflation, rising yields, and economic uncertainties shaping market movements. This cautious investment environment was reflected in declines across equities, bonds, and fluctuating commodities. As we move forward, these macroeconomic pressures will likely continue influencing global market dynamics, emphasising the need for vigilant risk management and diversification in investment strategies.