Rand slips as focus shifts to inflation and monetary policy announcement

The South African rand took a step back on Tuesday, shedding some of the gains driven by the gold price’s historic rally to an all-time high. By 15h07 GMT, the rand was trading at R18.15 to the dollar, down more than 0.30% from its previous close. Domestically, attention this week is focused on today’s inflation figures and Thursday’s monetary policy announcement. Economists surveyed by Reuters suggest that the South African Reserve Bank could adopt a cautious stance given the prevailing risks. On the Johannesburg Stock Exchange, the Top-40 index closed about 0.50% higher, while the benchmark 2030 government bond saw a slight improvement, with the yield dropping 3.5 basis points to 9.125%.

In the United States, Wall Street traded lower on Tuesday, with the S&P 500 falling 1.30%, the Dow Jones dropping around 340 points, and the Nasdaq declining 1.70%, following two days of gains. Investor sentiment remains cautious due to concerns about the economic growth outlook and the potential impact of former President Trump’s policies on the US economy. Additionally, the Federal Reserve’s two-day FOMC meeting began yesterday, with traders eagerly awaiting updated economic projections and the Fed's policy outlook, which will be released today. Markets are currently anticipating two rate cuts this year, with the likelihood of a third cut increasing.

In contrast, the UK saw positive market movement on Tuesday, with the FTSE 100 rising about 0.50%, extending its winning streak to five sessions. This was driven by strong gains in mining and energy stocks, with Antofagasta climbing 2.60% and Anglo American gaining 2%, supported by rising copper and gold prices. Shell advanced by 1.10%, and BP rose 1.60%, as oil prices increased for a third consecutive session. Investors are also closely watching geopolitical developments, including talks between US President Trump and Russian President Putin regarding a potential 30-day ceasefire in Ukraine.

Markets in the Eurozone mirrored the positive trend, with major European bourses advancing for a third consecutive session on Tuesday. Both the STOXX 50 and STOXX 600 gained 0.30%. Traders are closely monitoring a crucial vote in Germany on historic debt reforms, which aims to amend the country’s debt brake rule to allow for greater fiscal flexibility, enabling increased spending on defence and infrastructure. The talks between Trump and Putin regarding a potential ceasefire in Ukraine also remain in focus.

In Asia, Japan’s markets posted strong gains, with the Nikkei 225 Index jumping 1.20% to close at 37 845, while the broader Topix Index rose 1.29% to 2 784 on Tuesday. These gains continued the recent upward trend, bolstered by Wall Street’s recovery and easing recession concerns following positive US retail sales data. Japanese stocks also benefitted from a weaker yen, improving the profit outlook for the country’s export-driven industries and making local assets more attractive to foreign investors.

China’s markets followed suit, with the Shanghai Composite edging up 0.11% to close at 3 430, and the Shenzhen Component gaining 0.52% to 11 015 on Tuesday. Both benchmarks hovered near multi-month highs as investors turned their attention to upcoming earnings reports. Over the weekend, Beijing unveiled a special action plan aimed at boosting consumer spending and stabilising the stock and real estate markets. However, a policy briefing scheduled for Monday provided little in terms of fresh catalysts.

In commodities, WTI crude oil futures fell to $67.20 per barrel on Tuesday, reversing recent gains as concerns about oversupply weighed on the market. Slowing global trade and shipping, exacerbated by the ongoing trade war instigated by President Trump, are dampening oil demand. Meanwhile, gold prices rose above $3 030 per ounce on Tuesday, reaching a new record high as tariff uncertainty and tensions in the Middle East boosted demand for safe-haven assets.