Today’s market analysis on behalf of Daniel Wesonga, Senior Sales Manager at Pepperstone
29th January 2025
South Africa’s equity market has shown gradual improvement following a recent pullback, with the JSE FTSE All Share Index advancing by about a third of a percent. Key contributors such as energy minerals, utilities, and health services have supported market growth, while distribution services, commercial services, and manufacturing sectors have dampened the overall performance. The limited losses in these weaker sectors suggest a strong near-term upside momentum, strengthening confidence. The key support level of 84,000 points remains intact, reinforcing the potential for further upward movement.
Investor focus is now on South Africa’s interest rate decision, with expectations of a 25-basis point reduction. In November, the South African Reserve Bank lowered its key rate to 7.75%, its lowest since April 2023. A softer monetary policy could provide a more favorable environment for domestic stocks, particularly in sectors sensitive to borrowing costs. However, concerns over medium-term inflation risks could temper investor optimism.
Inflation in South Africa increased slightly to 3% in December but remains below the Reserve Bank’s 4.5% target. The uptick in housing, utilities, and food costs could weigh on consumer-driven sectors although the market’s outlook remains cautiously optimistic, with the potential for stronger performance should interest rate cuts materialize as expected.