Rand strengthens as inflation rises to 3% in June 2025

The South African rand firmed on Wednesday as inflation rose only modestly, supporting expectations that the central bank will remain on course to continue cutting interest rates. At 14h45 GMT, the rand was trading at 17.5550 to the US dollar, up around 0.20% from Tuesday’s closing level. Consumer price inflation rose to 3% year-on-year in June, up slightly from 2.80% in May and broadly in line with forecasts. Analysts noted that the subdued inflation reading leaves room for further monetary policy easing, with the South African Reserve Bank scheduled to hold its rate-setting meeting next week. Meanwhile, the local stock market climbed to a fresh record high.

US stocks extended gains on Wednesday following reports that a trade deal between the United States and the European Union is close to being finalised, reinforcing earlier optimism stemming from an agreement with Japan. The S&P 500 rose 0.60% to a new record of 6 350, the Dow Jones surged by 400 points, and the Nasdaq 100 edged up 0.20%. The latest developments suggest that the US may reduce proposed tariffs on EU goods to 15%, down from the previously threatened 30%, echoing similar concessions granted to Japan and boosting confidence that the threat of harsh levies will ease by August.

In the United Kingdom, the FTSE 100 notched its third consecutive record close, supported by improved sentiment around US trade negotiations. Optimism followed confirmation of a US-Japan trade deal that imposes a 15% tariff rather than the initially planned 25% and includes a $550 billion investment fund focused on US infrastructure. Informa led the day’s gains, jumping over 5% after it raised its full-year revenue growth guidance to above 6%, driven by 20% growth in the first half and stronger-than-expected margins.

European stocks also rallied, ending a three-day losing streak as traders responded positively to signals that the US may opt for lower tariff rates following its Japan deal. The Eurozone’s STOXX 50 index rose 1.10% to 5 350, while the pan-European STOXX 600 climbed by the same margin to close at 550. Despite this renewed optimism, no material progress was reported in EU-US trade talks.

In Asia, Japanese markets surged, with the Nikkei 225 jumping 3.51% to close at 41 171 and the broader Topix Index rising 3.18% to 2 926. The rally pushed Japanese shares to one-year highs, following President Trump’s announcement of a trade deal that includes a 15% tariff on Japanese exports to the US - lower than previously feared. In contrast, Chinese markets were more subdued. The Shanghai Composite edged up just 0.01% to close at 3 582, while the Shenzhen Component slipped 0.37% to 11 059, as uncertainty over the trajectory of US-China trade negotiations weighed on sentiment.

In commodities, WTI crude oil futures dropped below $65 per barrel, marking a fourth consecutive day of losses as investor attention remained focused on trade developments. Gold prices also eased to around $3 420 per ounce, ending a three-day winning streak and retreating slightly from a five-week high. The metal’s safe-haven appeal was dampened by a flurry of trade agreements that reduced near-term uncertainty.