This publication provides a monthly review of major indexes, important macroeconomic indicators and an overview of the highs and lows of the stock market for the period.
Summary
Global:
- Geopolitical tensions in the Middle East re-escalated during the month after the fragile ceasefire broke down. As a result, global equity market performance was subdued, with the MSCI World Index ending the month slightly higher at 0.5% (USD), while the MSCI Emerging Markets Index declined 3.3% (USD), despite a strong recovery late in the month. Over the past 12 months, the MSCI World Index has returned 20.9%, while the MSCI Emerging Markets Index has returned 34.0% (both in USD), with emerging markets remaining comfortably ahead.
- US economic growth slowed to 1.5% in the second quarter, below expectations of 2.1%. While consumer spending remained resilient, growth was constrained by lower government spending and weaker business investment.
- US inflation surprised to the downside, easing to 3.5% year-on-year from 4.2% previously. Market forecasts suggest inflation is likely to remain around the 3.5% level during 2026.
- The US Federal Reserve, Bank of England and Bank of Japan all left interest rates unchanged. The Federal Reserve noted that inflation remains above target and reiterated a cautious approach amid ongoing geopolitical uncertainty.
- China’s economy slowed more than expected, growing by 4.3% in the second quarter of 2026, its weakest pace in over three years, largely due to continued weakness in the property sector.
- Rising Middle East tensions pushed oil prices higher, with Brent crude oil rising by 20%, from approximately $73 to $88 per barrel at month-end. At the time of writing, oil has eased to around $83 per barrel as peace talks resume.
- Gold remained above the $4,050/oz level and gained 1.0% during the month, supported by safe-haven demand amid heightened geopolitical uncertainty.
Local (South Africa):
- Despite heightened market volatility, South African equities ended the month in positive territory. The FTSE/JSE All Share Index (ALSI) rose 1.2%, supported by gains in the resource sector, with Sasol increasing by 20% on the back of higher oil prices. Listed property gained 2.3%, while bonds, as measured by the FTSE/JSE All Bond Index (ALBI), declined 1.4%. Over the past 12 months, SA equities have returned 17.2%, outperforming the MSCI World Index’s 9.9% return in rand terms.
- Inflation increased to 5.0% from 4.5%, driven primarily by higher fuel prices and a sharp increase in passenger transport costs.
- Nevertheless, the SARB left the repo rate unchanged at 7.0% at its July meeting, citing the need to support economic growth while remaining vigilant to inflation risks. The SARB also revised its 2026 GDP growth forecast upward to 1.4% from 1.2% previously.
- The SARB lowered its 2026 inflation forecast to 4.0% from 4.4%, reflecting lower expected food and fuel inflation, and noted that the current policy stance remains appropriate following the May rate increase.
- The rand weakened by 1.0% against the US dollar, moving from R16.39 to R16.56, as emerging market sentiment softened and the SARB’s decision to leave interest rates unchanged added further pressure.