Global markets experienced a more volatile week as investors digested a mix of economic data, earnings releases and ongoing geopolitical and trade uncertainty. While headlines around artificial intelligence and credit markets unsettled sentiment, underlying economic indicators continue to point to a global economy that is slowing in parts but remains broadly resilient.

In the United States, equity markets ended the week lower. The Dow Jones declined 1.31%, the S&P 500 fell 0.44% and the Nasdaq lost 0.95%. Early in the week, markets sold off after a widely circulated research paper reignited concerns about the potential disruptive impact of artificial intelligence across various industries. The report amplified existing nervousness around whether AI could accelerate structural shifts in business models and earnings patterns. Sentiment stabilized midweek ahead of NVIDIA’s quarterly results. Although the company delivered earnings that beat expectations, the strong numbers were not enough to fully reverse the cautious tone, and markets drifted lower into the weekend.

On the economic front, producer price inflation surprised slightly to the upside, rising 0.5% month on month in January and 2.9% year on year, driven largely by services prices. Factory orders declined in December, reflecting some softness in parts of the manufacturing sector. Consumer confidence improved modestly to 91.2, suggesting households remain cautious but not overly pessimistic. Initial jobless claims edged up to 212,000 but continue to point to a labour market that remains relatively stable. U.S. government bond yields moved lower during the week, with the 10-year Treasury yield declining to 3.95%, as investors sought some safety amid equity market volatility.

In the United Kingdom and Europe, markets were more resilient. The Euro Stoxx 50 rose 0.12% for the week and is now up 5.99% year to date, while the FTSE 100 gained 2.09%, taking its year to date performance to 9.86%. European equities have continued to benefit from solid corporate earnings and investor interest in diversifying beyond the U.S. technology-heavy market. German business confidence improved again in February, while inflation readings across the region were mixed but generally consistent with gradual easing price pressures. In the UK, consumer confidence slipped slightly, reflecting ongoing cost pressures, although comments from Bank of England officials about potential interest rate cuts in 2026 provided some support. Bond yields in both the UK and Germany eased modestly over the week.

Asian markets delivered stronger performance. In Japan, the Nikkei 225 rallied 3.56%, extending its year to date gain to 16.91%. Investors remain constructive on Japan’s policy direction and corporate reform momentum. Inflation data in Tokyo came in slightly ahead of expectations, reinforcing the view that the Bank of Japan will likely continue with a gradual and measured approach to adjusting interest rates.

In China, markets also advanced, with the Shanghai Composite rising 1.98% and the Hang Seng gaining 0.81%. Trading volumes improved following the Lunar New Year break, and attention is turning to upcoming policy meetings where economic targets and stimulus measures are typically outlined. The People’s Bank of China adjusted certain foreign exchange policy settings in what is seen as a move to manage currency volatility rather than signal a major change in direction.

Market Moves of the Week:

South African markets were among the strongest performers this week. The JSE All Share Index rose 4.42%, bringing its year to date gain to 10.90%. The Resources sector led the advance with an 11.39% weekly gain and is now up 28.35% year to date, supported by firm commodity prices. Financials gained 1.49%, while Industrials edged up 0.23% but remain negative for the year. Listed property rose 0.44%. Gold increased 3.27% and Brent crude oil gained 2.14%, providing additional support to the local bourse. The rand strengthened to 15.90 against the U.S. dollar, while the South African 10-year government bond yield declined to 7.97%.

The national budget was broadly well received by markets. Government maintained its projection that debt will peak this fiscal year at 78.9% of GDP before gradually declining over the medium term. Although near term deficit projections were slightly wider, the overall debt path remains stable. A reduction in weekly government bond issuance supported the local bond market. Several tax changes were announced, including an increase in the annual Tax Free Savings Account contribution limit to R46,000, a higher annual capital gains tax exclusion of R50,000 and an increase in the primary residence capital gains exclusion to R3 million. The single discretionary allowance was increased to R2 million per calendar year, and further clarity was provided on the regulatory treatment of crypto assets.

Chart of the Week:

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Data released by the Bureau of Economic Analysis (BEA) showed that U.S. growth slowed more than expected in the fourth quarter of 2025, with GDP expanding at an annualised 1.4%. The deceleration was largely driven by a sharp contraction in government spending amid the shutdown, which weighed on overall activity. Consumer spending remained comparatively resilient at 2.4%, though momentum softened relative to earlier in the year, while government spending declined 16.6%. For 2025 overall, economic growth moderated to 2.2% from 2.8% in 2024.

Separately, the BEA reported that headline PCE inflation rose 2.9% year-on-year in December, edging higher from the prior month and marking its highest level since March 2024. Core PCE — the Federal Reserve’s preferred gauge of underlying inflation, which excludes food and energy — increased 0.4% month-on-month and 3.0% year-on-year, accelerating from November’s 0.2% and 2.8%, respectively.

Minutes from the Federal Reserve’s January meeting, released on Wednesday, highlighted a clear split among policymakers over the next move in rates. While some members indicated that additional easing could be appropriate if inflation continues to cool, others pointed to “the possibility that upward adjustments” may be required should price pressures remain elevated. The minutes also noted that the “vast majority of participants” believe downside risks to employment have eased, though the risk of more entrenched inflation remains a concern.

In a 6–3 decision, the U.S. Supreme Court ruled that President Trump exceeded his authority in using the International Emergency Economic Powers Act (IEEPA) to impose tariffs on nearly all U.S. trading partners last year. President Trump responded critically to the decision and subsequently announced the implementation of a 10% global tariff, signalling continued intent to pursue an assertive trade stance despite the Court’s ruling.

UK CPI eased to 3.0% year on year in January, its lowest level in almost a year, partly due to lower fuel prices. Labour market data were also softer, with unemployment rising to 5.2% in the three months to December and wage growth slowing. The data have supported expectations that the Bank of England may cut interest rates at its March meeting, although inflation remains above the 2.0% target.

Seasonally adjusted industrial production in the eurozone declined 1.4% month on month in December, according to Eurostat, a sharper contraction than expected. In contrast, the preliminary February PMI surprised to the upside, with new orders expanding at their fastest pace in nearly four years
 
The International Monetary Fund expects China’s economy to grow 4.5% in 2026, slightly above its October forecast but below the 5% recorded in 2025. Following its Article IV consultation, the IMF noted that while growth has been resilient, structural challenges are intensifying and emphasised the need for a stronger shift toward consumption-led growth, supported by both macroeconomic measures and deeper reforms.

U.S. equity markets closed the holiday shortened week higher. The Nasdaq Composite led gains, advancing 1.51% and recording its first weekly increase since early January. The S&P 500 rose 1.07%, while the Dow Jones Industrial Average lagged the broader market, ending the week up 0.25%.

European equities delivered solid gains over the week, with the STOXX Europe 50 rising 2.44% in local currency terms. The FTSE 100 also advanced 2.30%, touching a fresh intraweek high.

In Asia, performance was more subdued. Japan’s Nikkei 225 edged 0.20% lower. Mainland Chinese markets were closed for the Lunar New Year from February 16 and will reopen on February 24. Hong Kong trading was suspended from February 17 to 19, following a half-day session on February 16, before resuming on Friday. The Hang Seng Index ended the week down 0.44%.

Market Moves of the Week:

Headline consumer price inflation in South Africa eased to 3.5% year on year in January 2026, down from 3.6% in December 2025, according to Statistics South Africa. The main contributors to the January reading were housing and utilities, food and non-alcoholic beverages, and insurance and financial services. Core inflation, which excludes food, non-alcoholic beverages, fuel and energy, increased to 3.4%, its highest in nearly a year.
 
Separately, Stats SA’s Quarterly Labour Force Survey reported that the official unemployment rate declined to 31.4% in the fourth quarter of 2025, from 31.9% in the third quarter, reflecting a modest improvement in labour market conditions. Overall, South Africa’s labour market shows improvements across multiple measures. However, unemployment levels remain exceptionally high, underscoring the persistence of the country’s structural jobs crisis.
 
The JSE All Share Index also ended the week in positive territory, gaining 2.02%, with broad based strength across all sectors. In contrast, the rand softened slightly, depreciating 0.57% against the U.S. dollar to close at R16.03 on Friday.

Chart of the Week:

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The latest inflation data released in the U.S. by the Bureau of Labor Statistics showed further signs of easing price pressures in January. Headline consumer prices rose 0.2% month on month, down from 0.3% in December, while the annual inflation rate slowed to 2.4% from 2.7%, coming in below consensus expectations and marking the lowest level since May. The moderation was largely driven by a notable decline in energy prices, alongside favourable base effects as higher readings from a year ago dropped out of the annual calculation.

Core inflation, which excludes food and energy, increased 0.3% over the month—slightly firmer than December’s 0.2% reading and in line with forecasts. On an annual basis, core CPI rose 2.5%, matching expectations. While the headline data suggests that inflationary pressures are gradually easing, the steadier core reading indicates that underlying price dynamics remain somewhat sticky. Overall, the January report provides cautious optimism that inflation continues to trend in the right direction, even if progress remains uneven. This softer-than-expected inflation backdrop offered Wall Street a degree of relief during the week, strengthening expectations that the Federal Reserve could consider cutting interest rates later this year. Bond yields moved lower in response, with the US 10-year Treasury falling to 4.07% on Friday, its lowest level since early December, as the moderate CPI print reinforced the view that policy easing remains on the table even amid a resilient economy.

Equity markets, however, closed the week lower. The S&P 500 declined 1.39%, the Dow Jones Industrial Average fell 1.23%, and the Nasdaq Composite shed 2.1%, marking their largest weekly losses since November. Technology shares were particularly volatile, as concerns around artificial intelligence disruption and the significant capital expenditure required to support AI development weighed on sentiment.

On Wednesday, the Bureau of Labor Statistics released January labour market data that exceeded expectations. Nonfarm payrolls rose by 130,000, well above consensus forecasts, while the unemployment rate ticked down to 4.3% from 4.4% in December. Job gains were led by healthcare, followed by social assistance and construction. The strong employment report highlights the continued resilience of the US economy, tempering expectations for aggressive interest rate cuts even as inflation shows signs of easing.

In Europe, the Euro STOXX 50 Index ended marginally lower as investors digested strong US jobs data and growing concerns about AI competition. Data from Eurostat showed that the eurozone economy expanded by 0.3% in the fourth quarter of 2025, offering modest support to the regional outlook.

In the UK, political uncertainty persisted amid calls for Prime Minister Keir Starmer to resign. Economic data from the Office for National Statistics indicated that real GDP grew by just 0.1% in Q4 2025, while annual growth reached 1%. Manufacturing activity improved over the quarter, though construction contracted. Retail sales rose 2.3% year on year in January, and the FTSE 100 added 0.74% for the week.

Japanese equities outperformed, with the Nikkei 225 surging 4.96% following the February 8 lower house election, where Prime Minister Sanae Takaichi’s Liberal Democratic Party secured a supermajority. In China, markets were modestly higher ahead of Lunar New Year holidays, with the Shanghai Composite Index gaining 0.43% while Hong Kong’s Hang Seng Index was little changed. The People’s Bank of China reiterated its commitment to a “moderately loose” monetary policy stance in 2026 as inflation data pointed to ongoing deflationary pressures.

In commodities, gold rebounded after recent weakness, supported by lower Treasury yields and a softer US dollar. Oil prices, however, edged lower, with Brent crude on track for a second consecutive weekly decline amid easing concerns over potential supply disruptions linked to US-Iran tensions.

Looking ahead, markets will focus on the Federal Reserve’s upcoming meeting minutes, US fourth-quarter GDP data, and income and spending figures. Canada’s inflation release, European PMIs, Japan’s GDP and inflation data, will also provide further insight into the global economic trajectory amid ongoing trade, fiscal, and monetary policy uncertainty.

Market Moves of the Week:

On Thursday night, President Cyril Ramaphosa delivered a candid assessment of South Africa’s most urgent challenges, pledging decisive action on crime, water shortages, dysfunctional municipalities, and the next phase of Eskom’s restructuring. Crime took centre stage, with Ramaphosa describing organised criminal networks as “the most immediate threat to our democracy, our society and our economic development.” He announced a strengthened offensive, including the consolidation of intelligence at the national level and the deployment of multidisciplinary intervention teams aimed at dismantling criminal networks. The South African National Defence Force will also support police operations in hotspot areas.
 
On infrastructure, the government has committed over R156 billion to water and sanitation projects over the next three years, advancing initiatives such as the Lesotho Highlands Water Project and the Ntabelanga Dam. Municipalities that fail to deliver services, Ramaphosa warned, will face consequences. On the energy front, the first round of independent transmission projects will begin this year, enabling private investment to expand the grid, while work continues to address load-shedding caused by transformer overloading and illegal connections.

On the markets, the FTSE/JSE All Share Index ended the week modestly higher, up 0.44%, with mining and resource-linked stocks leading gains thanks to robust demand and favourable commodity prices. Financials also performed well, reflecting continued investor confidence in banks and lenders, while industrials lagged amid currency strength and softer sector performance.

On the currency front, the rand maintained a strong position below the 16.00 level against the dollar, buoyed by high precious metal prices (gold, platinum, palladium) and improved sentiment around South African economic reforms.

Looking ahead, market and economic attention will turn to South Africa’s fourth-quarter unemployment figures, January inflation data, and December retail sales numbers.

Chart of the Week:

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Global markets delivered a mixed performance this week as investors navigated a combination of economic data, shifting policy expectations and evolving sector leadership. While overall index movements were relatively contained, underlying market dynamics pointed to a continued rotation away from narrow technology leadership toward more cyclical and value-oriented areas.

In the United States, equity markets ended the week divided. The Nasdaq declined 1.84%, reflecting pressure on large-cap technology shares, while the S&P 500 was broadly unchanged at -0.10%. In contrast, the Dow Jones Industrial Average rose 2.50%, supported by gains in more traditional and cyclical sectors. The week highlighted a shift in investor positioning, as concerns around the pace of artificial intelligence investment and its impact on corporate profitability weighed on high-growth companies that have driven market returns in recent years. At the same time, investors rotated into areas of the market that have lagged, including financials and industrials, which benefited from improving economic expectations. Economic data releases added to the cautious tone. Labour market indicators were softer than anticipated, with slower private job creation, a decline in job openings to their lowest level since 2020 and a notable rise in layoffs. Despite this, parts of the real economy showed resilience. Manufacturing activity returned to expansion territory for the first time in a year, supported by stronger new orders, while services activity remained stable and continued to expand. In fixed income markets, U.S. Treasury yields edged lower, supporting bond returns, as investors positioned more defensively amid mixed economic signals.

Across the United Kingdom and Europe, markets delivered a steadier performance. The Euro Stoxx 50 gained 0.85% and the FTSE 100 rose 1.43% over the week, supported by easing inflation and a relatively resilient economic backdrop. Policymakers maintained a cautious stance, with the European Central Bank holding rates unchanged and signalling that inflation is gradually moving back toward its 2% target. The Bank of England also left policy rates on hold but indicated that the path toward rate cuts may be approaching, particularly if inflation continues to moderate. Economic data was mixed, with retail activity softening slightly, although broader trends suggest household spending is stabilising. Overall, sentiment across the region remained constructive as investors balanced slowing inflation with steady growth.

Asian markets showed diverging trends. In China, equities struggled, with the Shanghai Composite falling 1.27% and the Hang Seng declining 3.07%. Weakness in technology shares and ongoing concerns about domestic demand continued to weigh on investor sentiment. Economic indicators provided a mixed picture. Private-sector surveys suggested modest improvements in activity, particularly in manufacturing and services, supported by export demand. However, official data pointed to slower overall momentum, highlighting the challenges China faces in reviving domestic consumption. Expectations remain that policymakers will introduce further measures to support growth in the months ahead. In Japan, equity markets moved higher, with the Nikkei 225 rising 1.75% for the week. Investor optimism was supported by expectations of continued fiscal support and political stability ahead of the country’s upcoming election. A weaker yen provided additional support for export-oriented companies, although it also underscores the delicate balance policymakers face in managing inflation and financial stability. Economic data showed that household spending declined, reflecting the ongoing pressure on consumers from rising prices. Bond yields remain elevated, reinforcing concerns around Japan’s fiscal position and the long-term sustainability of its debt levels.

Market Moves of the Week:

South African markets were relatively stable, with the JSE All Share finishing the week unchanged. Performance across sectors was mixed, with financials and listed property posting gains while resources declined amid commodity volatility and industrials were largely flat. The domestic bond market was steady, with the 10-year government yield closing around 8.06%.

On the policy front, South Africa moved to deepen its economic relationship with China through the signing of a new framework agreement aimed at expanding trade and investment ties. The agreement is expected to improve access for South African exports into Chinese markets while encouraging further Chinese investment across sectors such as mining, agriculture, renewable energy and manufacturing. Although still in its early stages, the initiative signals growing economic cooperation and could support longer-term growth and employment prospects. Overall, the week reinforced a key theme shaping global markets: leadership is broadening. After an extended period dominated by large-cap technology, investors are increasingly allocating toward value-oriented sectors, cyclical industries and regions outside the United States. Economic data remains mixed, with labour markets softening in some areas while manufacturing stabilises and inflation continues to ease. For long-term investors, this environment supports the case for diversification across geographies, asset classes and sectors, as markets adjust to shifting growth expectations and evolving monetary policy paths.

Chart of the Week:

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After three consecutive cuts, the Federal Reserve left the fed funds rate unchanged at 3.50%–3.75%, in line with expectations, in a 10–2 vote, with two officials favouring a 25-basis-point reduction. The accompanying policy statement struck a more constructive tone on growth, noting activity has been expanding at a solid pace, while inflation remains somewhat elevated and labour market conditions are showing signs of stabilisation. At the press conference, Chair Jerome Powell said rates did not appear “significantly restrictive” given economic momentum and reiterated that decisions would be taken on a meeting-by-meeting basis.

On Friday morning, U.S. President Donald Trump nominated former Federal Reserve governor Kevin Warsh to succeed Jerome Powell as Fed chair when Powell’s term expires in mid-May, subject to Senate confirmation. Warsh served from 2006 to 2011 and was a finalist for the role in 2017. He is viewed as a pragmatist who argues the Fed has strayed from its mandate and that its balance sheet is excessive, with his nomination seen as largely easing recent concerns over central bank independence. The announcement sparked a rebound in the dollar, weighing on precious metals and pushing gold and silver lower after investors had piled into the sector.

U.S. producer prices climbed by the most in five months in December, partly reflecting pass-through from import tariffs and pointing to renewed inflation pressures. The figures, published by the United States Department of Labor, came in above expectations and were driven mainly by higher services prices, especially trade margins, hotel accommodation and airfares. Goods prices were unchanged, while the data reinforced the likelihood that the Federal Reserve keeps interest rates steady for now. Separately, the Conference Board’s consumer confidence index fell sharply in January to its lowest level since May 2014, undershooting expectations as households reported weaker views on the economy and labour market.

The eurozone economy expanded 1.5% in 2025, up from 0.9% in 2024 and ahead of the European Commission’s 1.3% forecast, as stronger investment, household spending and exports offset political and economic uncertainty. Fourth-quarter GDP rose 0.3% quarter on quarter, slightly above expectations and in line with the prior pace, with faster growth in Germany, Spain and Italy helping to counter sluggish momentum in France.

British Prime Minister Keir Starmer visited Beijing this week to reset relations between the United Kingdom and China after years of strain linked partly to Hong Kong. After talks with President Xi Jinping, Starmer said the UK was entering a new, “sophisticated” relationship, with the two sides agreeing to study greater market access in business and financial services, cut Chinese whisky tariffs from 10% to 5%, and introduce visa-free travel for Britons. In response, U.S. President Donald Trump later warned Starmer that closer UK–China business ties would be “very dangerous.”

The S&P 500 Index edged slightly higher to finish the week up 0.34%, while the Nasdaq Composite and the Dow Jones Industrial Average ended marginally lower, down 0.17% and 0.42% respectively. In Europe, the STOXX Europe 50 Index was flat at -0.01%, while the UK’s FTSE 100 Index gained 0.79%.

In Asia, markets were mixed. Japan’s Nikkei 225 Index fell 0.97%, while mainland China’s Shanghai Composite Index slipped 0.44%. Meanwhile, Hong Kong’s Hang Seng Index gained 2.40%.

Market Moves of the Week:

The South African Reserve Bank held its repo rate at 6.75% at its first policy meeting of 2026, with the Monetary Policy Committee opting for caution amid ongoing global and domestic uncertainty and inflation expectations still above the 3% target. While two members favoured a 25-basis-point cut, the majority preferred to maintain the current stance, and the Bank’s projections continue to anticipate gradual easing as inflation trends lower. Governor Lesetja Kganyago noted that inflation is contained but services price pressures persist, and decisions will remain data dependent as the economy navigates risks including currency and administered price developments.

Similar to global peers, the JSE All-Share Index fell 1.83% over the week, dragged lower by a 4.60% drop in resources, while industrials (-1.11%) and SA property (-0.52%) also detracted from returns. Financials were the only sector to record gains, rising 0.44%. In currency markets, the rand strengthened earlier in the week to around R16 per dollar—its firmest level since mid-2022 on the back of elevated gold prices—before ending Friday at R16.13 after a rebound in the dollar, leaving it 0.13% weaker over the week.

Chart of the Week:

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Global markets navigated another week shaped by geopolitical uncertainty and shifting investor sentiment, as renewed U.S. tariff threats briefly unsettled risk appetite before attention returned to economic data and corporate earnings. A fresh round of company earnings is testing whether the AI-driven profit cycle is broadening beyond a narrow group of technology leaders, while recent geopolitical developments underscored how quickly policy uncertainty can re-emerge and influence market confidence. Although volatility proved short-lived, the episode highlighted the persistent tension between political risk and economic fundamentals that continues to define the global investment landscape.

In the United States, markets were initially rattled by an escalation in tariff rhetoric linked to President Trump’s push to acquire Greenland, triggering a sharp risk-off reaction. U.S. equities declined, the dollar weakened, Treasury yields fell and gold surged to record highs, briefly reviving the “sell America” narrative that had emerged at times in 2025. Sentiment improved later in the week after Trump softened his stance and signalled a potential framework for a deal, allowing markets to stabilise. Beneath the political headlines, economic data remained broadly resilient: real GDP growth was revised higher to an annualised 4.4% in the third quarter, core inflation held at 2.8% year-on-year, jobless claims remained near historically low levels and business activity indicators showed modest improvement. Together, these data suggest the U.S. economy continues to expand at a solid pace, even as political uncertainty injects episodic volatility.

Across Europe, the macro backdrop showed tentative improvement but remained uneven, with stabilising inflation and improving business sentiment offset by persistent structural headwinds. Eurozone inflation rose 0.2% month-on-month in December, while survey data pointed to modest expansion and stronger forward-looking confidence, particularly in Germany. However, the region’s trade surplus narrowed sharply, highlighting the ongoing drag from weak external demand and elevated global uncertainty. Overall, the data suggest that while recession risks have eased, the recovery remains fragile and heavily dependent on the global trade cycle.

In the UK, the economic picture was similarly mixed. The unemployment rate held at a five-year high of 5.1% and wage growth continued to slow, signalling a gradual cooling in the labour market, while inflation surprised slightly to the upside in December. At the same time, retail sales rebounded and consumer confidence improved modestly, indicating that household spending remains resilient despite persistent cost-of-living pressures. Against this backdrop, renewed progress on U.S.–EU trade relations helped stabilise sentiment, although ongoing political and trade tensions continue to constrain Europe’s growth outlook and leave the region highly sensitive to global policy and geopolitical developments.

In Asia, Japan experienced heightened volatility as political uncertainty and fiscal concerns weighed on markets. An early election announcement and proposals for expansionary fiscal measures raised questions about the sustainability of public finances, triggering sharp moves in long-dated government bond yields. Economic data painted a mixed picture: industrial production declined on a year-on-year basis in November, while business activity improved, with both manufacturing and services PMIs moving further into expansionary territory. Inflation moderated to 2.1% year-on-year and the Bank of Japan kept policy unchanged, maintaining a cautious stance amid rising sensitivity to bond yields and fiscal risks.

China, meanwhile, reported GDP growth of 4.5% in the fourth quarter and 5% for 2025, again meeting its official target, but underlying trends revealed a more fragile recovery. Nominal growth slowed, fixed asset investment declined for the first time in decades and retail sales remained subdued, underscoring persistent weakness in domestic demand even as industrial output strengthened.

Global equity markets ended the week slightly lower, reflecting a broadly cautious risk environment. The Dow Jones fell 0.53%, the S&P 500 eased 0.35% and the Nasdaq slipped 0.06%. European equities underperformed, with the Euro Stoxx 50 down 1.35% and the FTSE 100 declining 0.90%. In Asia, market performance was mixed: Japan’s Nikkei 225 and Hong Kong’s Hang Seng recorded small losses, while Chinese equities outperformed, with the Shanghai Composite rising 0.84%. Bond markets were relatively stable overall, while commodities strengthened, led by a sharp rally in gold and a solid rise in oil prices. Bitcoin declined over the week but remains modestly higher on a year-to-date basis.

Market Moves of the Week:

The South African rand strengthened over the week, closing near R16.10/$ as markets positioned ahead of the upcoming interest rate decision and continued to price in supportive global and domestic dynamics. The currency remains close to its strongest levels since mid-2022, underpinned by record-high gold prices, improved fiscal metrics, a credible monetary policy framework and a softer U.S. dollar. The rand has gained more than 2% against the dollar since the start of 2026, with further upside possible should commodity prices remain firm and global risk sentiment stay supportive. However, structural constraints, including weak domestic growth prospects and the currency’s inherent volatility, suggest that recent gains remain vulnerable to shifts in global conditions.

On the macro front, inflation remains well contained, reinforcing expectations that monetary conditions could gradually ease in the year ahead. Consumer inflation rose 0.2% month-on-month in December, following a decline in the previous month, while headline CPI increased to 3.6% year-on-year from 3.5%, remaining within the Reserve Bank’s target range. Domestic data painted a mixed picture: retail sales rose 0.6% month-on-month in November and accelerated to 3.5% year-on-year, signalling resilient consumer activity, while mining production deteriorated, falling 5.9% month-on-month and declining 2.7% year-on-year, marking a sharp reversal from the prior month’s gains. Overall, South Africa’s macro environment reflects a cautiously improving inflation backdrop and resilient consumption, tempered by ongoing weakness in the mining sector and a still subdued growth outlook.

Local equities advanced over the week, with the JSE All Share Index rising 1.76%, supported by a strong rebound in resource stocks (+7.16%) and solid gains in financials (+1.18%), while listed property also advanced (+0.75%). Industrials lagged the broader market, declining 3.02%. The rand strengthened against the U.S. dollar to around 16.10, while the 10-year South African government bond yield declined to 8.15%, reflecting improved sentiment in local fixed income markets.

Chart of the Week:

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Global equity markets delivered mixed performances over the week, with small-cap and value stocks extending their year-to-date outperformance relative to large-cap and growth-oriented shares. The start of the fourth-quarter earnings season in the US set the tone, particularly within the financial sector, where results and market reactions varied.

Several major US banks reported earnings during the week. JPMorgan Chase and Citigroup shares declined after both institutions posted lower quarterly profits, while Morgan Stanley and Goldman Sachs advanced, supported by results that broadly exceeded market expectations. Technology shares provided some support to broader markets, led by the semiconductor sector. Taiwan Semiconductor, Nvidia, Micron and peers rallied on strong earnings updates, continued AI-driven optimism, and news of a US–Taiwan trade agreement committing approximately USD 250 billion toward US-based semiconductor manufacturing.

Outside of precious metals, markets were notably calm despite heightened political uncertainty in the United States. Late Sunday, news emerged that Federal Reserve Chair Jerome Powell was under investigation by the US Department of Justice regarding testimony on cost overruns related to the Federal Reserve’s headquarters renovation. Powell pushed back strongly, characterising the investigation as politically motivated amid renewed pressure from President Donald Trump to accelerate interest rate cuts and challenge central bank independence. Market reaction, however, remained muted.

On the macroeconomic front, US inflation data surprised modestly to the downside. Core CPI rose 0.2% month-on-month and 2.6% year-on-year in December, below consensus expectations. Headline CPI increased 0.3% month-on-month and remained steady at 2.7% year-on-year, easing concerns that prior methodological adjustments would lead to a renewed acceleration in inflation.

For the week, US equity indices ended lower, with the S&P 500 down 0.4%, the Dow Jones Industrial Average declining 0.3%, and the Nasdaq Composite falling 0.7%.

Geopolitical developments also came into focus. Widespread protests in Iran prompted President Trump early in the week to suggest possible US military action, warning that Iran was approaching a “red line.” He simultaneously signalled support for protesters and began withdrawing US troops from select Middle Eastern bases. By midweek, the tone softened as the administration indicated assurances had been received that executions would halt and violence against protesters would subside.

In Europe, markets were more constructive. The STOXX Europe 50 Index gained 0.53%, supported by resilient economic data and earnings. Germany recorded its first annual economic growth in three years, with GDP expanding 0.2% in the fourth quarter and for the full year. The Bundesbank forecasts growth of 0.6% in 2026, driven by increased defence and infrastructure spending. In the UK, GDP grew 0.3% month-on-month in November, exceeding expectations, with services, production and manufacturing contributing positively. The FTSE 100 rose 1.09% for the week.

Asian markets were mixed. Japanese equities rallied sharply, with the Nikkei 225 Index gaining 3.84% and hovering near record highs. Optimism was underpinned by reports that Prime Minister Sanae Takaichi may call a snap general election, potentially strengthening political stability. In contrast, mainland Chinese markets declined after regulators tightened margin financing rules for domestic investors. Economic data showed exports rising 6.6% in December and a record USD 1.2 trillion trade surplus for 2025. The Shanghai Composite fell 0.45%, while Hong Kong’s Hang Seng Index rose 2.25%.

Commodity markets reflected ongoing geopolitical uncertainty. Brent crude oil rose 1.6% on the week, settling near USD 64 per barrel after a volatile period marked by concerns over Iranian supply disruptions. Prices eased later in the week as the likelihood of immediate US military intervention diminished, despite a continued build-up of US forces in the region. Gold prices were volatile, but still recorded a weekly gain of approximately 2%, after reaching a record high midweek. Safe-haven demand moderated as geopolitical tensions eased and expectations for near-term US rate cuts continued to fade.

The coming week will feature a busy US economic calendar, as agencies catch up following the government shutdown. Key releases include personal income and spending data, PCE inflation measures, and another estimate of third-quarter GDP. Leading indicators such as S&P PMIs and the University of Michigan consumer sentiment survey will also be closely watched. Internationally, PMIs will be released across the Eurozone, UK, Japan, Australia and India. The UK will publish inflation, labour market and retail sales data, while China’s final GDP print for the year and the Bank of Japan’s monetary policy decision will be key focal points for Asian markets.

Market Moves of the Week:

The South African rand weakened modestly on Friday, as market participants positioned ahead of next week’s inflation release, which is expected to provide further insight into the health of Africa’s most industrialised economy and the South African Reserve Bank’s (SARB) interest rate trajectory for the year ahead.
 
Inflation eased for the first time in three months in November, slowing to 3.5% year-on-year and remaining comfortably within the SARB’s 3% target band. At its most recent policy meeting, the central bank cut the repo rate by 25 basis points to 6.75% in a unanimous decision, noting that an improved inflation outlook had created scope for a less restrictive policy stance.
 
Looking ahead, a further rate cut at the end of January is increasingly likely, supported by subdued inflation dynamics and the continued resilience of the rand amid a weaker US dollar. A further 25 basis point reduction would lower the repo rate to 6.50%, bringing the prime lending rate down to 10%. Such a move would provide additional relief to indebted consumers and enhance the domestic economy’s resilience against ongoing global uncertainty.
 
Equity markets responded positively over the week. The FTSE/JSE All Share Index advanced 1.74%, led by strong gains in resource stocks, reflecting firmer commodity prices and renewed investor appetite for mining counters.

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US markets began the year on a confident footing. The Dow Jones rose 2.32% over the week, while the S&P 500 gained 1.57% and the Nasdaq advanced 1.88%. This was not just a technology-driven rally. Smaller companies and value-oriented shares outperformed, which signals growing confidence in the broader economy. Beneath the market strength, the economic data was more nuanced. Job growth slowed sharply in December and prior months were revised lower, confirming that the labour market is cooling. Job openings also declined, which points to easing demand for workers. Manufacturing remains under pressure, with activity still contracting, but the services sector continues to show resilience and even signs of improvement.

European equities built on improving sentiment this week. The Euro Stoxx 50 rose 2.51% and the FTSE 100 gained 1.74%, reflecting growing optimism that the region may be stabilising after a difficult period.

Economic data helped support this view. Industrial production and manufacturing orders in Germany surprised positively, while retail sales across the eurozone also exceeded expectations. Inflation eased to 2.0%, which is exactly in line with the European Central Bank’s target and a welcome development for consumers and businesses.

That said, the outlook is not without risks. Services inflation remains elevated, which means interest rates are likely to stay higher for longer. In the UK, housing data showed ongoing softness, with mortgage approvals slipping and house prices falling again in December. This continues to weigh on household confidence. Overall, Europe is showing signs of progress, but the recovery remains uneven. Market returns this week reflect cautious optimism rather than full conviction.

China delivered a split performance this week. The Shanghai Composite rose 3.82%, driven by enthusiasm around artificial intelligence and domestic technology stocks, while Hong Kong’s Hang Seng declined 0.39%, highlighting the uneven nature of investor sentiment.

Trading activity in mainland markets has increased sharply and retail participation remains elevated, which reflects strong speculative interest in selected sectors. However, the economic backdrop remains fragile. Consumer inflation has improved modestly, but producer prices are still falling year on year, which continues to pressure corporate profitability.

China remains heavily dependent on policy support. Investors are watching closely for further stimulus measures in 2026, as additional easing could meaningfully influence both economic growth and market performance.

This remains a market with significant upside potential, but also elevated risk, which reinforces the importance of maintaining balanced exposure.

Japan was one of the strongest performers globally this week. The Nikkei 225 rose 3.18%, supported by strong gains in technology shares and a weaker yen, which benefits export-oriented companies.

Encouragingly, the economic backdrop is also improving. Household spending rebounded strongly in November, driven by higher spending on vehicles and everyday consumption such as food and dining. This suggests that Japanese consumers are becoming more confident again, even though real wages remain under pressure. The Bank of Japan continues to signal that interest rates may rise gradually during 2026 as inflation and growth become more sustainable. Markets appear comfortable with this path, viewing it as a sign of economic normalisation rather than a threat to growth.

Market Moves of the Week:

Local markets posted positive returns over the week. The JSE All Share gained 1.74%, with resources performing particularly well as the Resources 10 Index rose 3.86%. Financials gained 1.06%, industrial shares rose 0.49%, and listed property advanced 1.89%.

Despite the positive market performance, the economic data continues to paint a challenging picture. The Absa Purchasing Managers’ Index fell to 40.5 in December, the weakest reading since the lockdown period. This confirms that South Africa’s manufacturing sector remains in contraction and under significant strain.

The weakness was driven by falling employment and declining inventories, both of which signal soft demand conditions. While business activity showed some improvement, economists broadly agree that manufacturing is likely to drag on growth into 2026. GDP growth expectations remain subdued at around 1.0% to 1.3%.

There was, however, one encouraging signal. Business expectations for the next six months improved sharply, suggesting that confidence could recover if conditions stabilise and operational challenges ease.

For investors, this reinforces the importance of maintaining offshore diversification while selectively taking advantage of opportunities within the local market.

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As we kick off 2026, we’d like to wish you a happy, healthy and prosperous year ahead. As always, we remain focused on helping investors navigate an evolving global landscape with discipline, perspective and a long-term mindset.

2025 reinforced an important lesson for investors: portfolios are rarely rewarded for reacting to political noise. Despite an almost constant stream of policy headlines, markets delivered robust returns, underscoring the value of staying invested and focused on fundamentals. Below, we highlight some of the key themes that shaped the year.

Key themes that shaped 2025

• Markets outperformed despite political noise: Strong returns across asset classes reinforced the importance of avoiding politically driven investment decisions.
• AI moved from promise to dominance: Breakthroughs in artificial intelligence reshaped industries, accelerated capital investment and emerged as a defining structural theme, with regulation lagging innovation.
• Trade tensions resurfaced: Aggressive tariff rhetoric, particularly between the U.S. and China, contributed to episodic volatility, despite temporary truces limiting near-term disruption.
• Geopolitical risks remained elevated: Conflicts across multiple regions heightened global uncertainty and influenced energy markets and investor sentiment.
• Volatility returned to markets: Global equities swung between a sharp pullback and record highs as technology shocks, trade risks and central bank uncertainty collided.
• Consumers showed selective resilience: Spending on entertainment and leisure remained firm despite tighter financial conditions.
• Climate risks moved into sharper focus: Extreme weather events highlighted growing economic, insurance and infrastructure risks.
• Property affordability deteriorated: Housing and rental markets continued to reprice higher globally, intensifying affordability pressures amid structural supply constraints and the lagged impact of higher interest rates.

U.S. economic data over the holiday-shortened week presented a mixed but broadly constructive picture. Housing activity showed tentative signs of recovery, with pending home sales posting their strongest monthly gain since early 2023 as easing mortgage rates and solid wage growth improved affordability. House prices rebounded modestly in October, while year-on-year gains remained contained, suggesting price pressures are cooling rather than accelerating. Mortgage rates fell for a third consecutive week, ending 2025 at their lowest level of the year and beginning to draw buyers back after a subdued housing market.

Monetary policy remained a central focus following the release of minutes from the Federal Reserve’s December meeting. While the Fed delivered a 25 basis-point rate cut, policymakers struck a cautious tone, emphasising the need to balance easing inflation against lingering upside risks to prices and growing downside risks to employment. Markets reacted calmly, with investors continuing to price in a low probability of near-term rate cuts as the Fed maintains a data-dependent, wait-and-see approach.

Labour market signals were less clear-cut. Initial jobless claims fell to one of the lowest levels of the year, although seasonal distortions around the holidays likely contributed to volatility. Continuing claims also edged lower, pointing to limited immediate deterioration, even as broader indicators suggest hiring momentum has slowed through 2025 and the unemployment rate has risen to a four-year high. Manufacturing data echoed this late-cycle dynamic, with pockets of improvement in regional surveys offset by ongoing weakness in parts of the industrial sector.

Across Europe, data pointed to a gradual cooling in economic momentum. Spanish inflation eased further in December, driven by lower fuel prices, although core inflation remained sticky, reflecting persistent services pressures. France saw a modest improvement in registered unemployment on a month-on-month basis, but joblessness remains materially higher than a year ago. In the UK, house prices unexpectedly declined, highlighting ongoing affordability constraints, while Sweden’s central bank signalled a prolonged pause in policy rates through 2026 as it waits for inflation to normalise more convincingly.

In Asia, Japan and China offered contrasting signals. The Japanese yen remained under pressure near multi-year lows, fuelling speculation around potential official intervention, while government bond yields climbed to their highest levels since the late 1990s on expectations of gradual policy normalisation. In China, manufacturing activity stabilised, with the official PMI returning to expansion territory for the first time in eight months. While the improvement was modest, it supports expectations of a measured policy approach in 2026, complemented by longer-term initiatives such as Beijing’s new national venture capital fund aimed at fostering domestic innovation and technological self-sufficiency.

Market Moves of the Week:

Global markets delivered a strong but increasingly differentiated performance in 2025, with equity returns broadening beyond the dominant U.S. technology trade. U.S. equities posted solid double-digit gains, led by the Nasdaq (+20.4%) and supported by a resilient S&P 500 (+16.4%), despite choppier conditions into year-end. Outside the U.S., returns were equally compelling: Japan’s Nikkei 225 surged 26.2% on improved corporate governance and yen dynamics, European equities ended the year firmly higher (Euro Stoxx 50 +18.3%, FTSE 100 +21.5%), while China and Hong Kong rebounded meaningfully after a weak start to the year. Bond markets reflected shifting monetary dynamics, with U.S. and UK 10-year yields ending the year modestly lower, German yields higher, and Japan’s 10-year yield rising sharply as expectations of policy normalisation intensified.

South African markets were standout performers in 2025, underpinned by a powerful recovery in resources and improved global risk sentiment. The JSE All Share Index rose 37.7% for the year, driven by an exceptional 138.2% gain in the Resource 10 index, while financials (+20.7%) and industrials (+16.7%) also delivered solid returns. Listed property rebounded strongly, ending the year up 30.5% despite some volatility in December. Commodities were mixed, with gold emerging as a clear winner (+65.0%) amid persistent geopolitical uncertainty and strong central bank demand, while Brent crude declined sharply (-18.5%) on supply dynamics and slower global growth. The rand strengthened materially over the year, with USD/ZAR appreciating 12.1% in favour of the currency, supported by improved sentiment and a softer U.S. dollar, while South Africa’s 10-year bond yield declined 82 basis points, reflecting easing inflation pressures and improved fiscal and policy credibility.

Chart of the Week:

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The Bank of Japan delivered a widely expected 25 basis point increase in its benchmark interest rate, lifting it from 0.50% to 0.75%, the highest level since 1995. The decision was unanimous and reflected growing confidence that the central bank’s economic outlook will be realised.

The U.S. Bureau of Labor Statistics reported that nonfarm payrolls rose by 64,000 in November, beating expectations and rebounding from the 105,000 jobs lost in October due to the federal government shutdown. Job gains were led by health care and construction, while the unemployment rate edged up to 4.6%, its highest level in over four years.

US consumer inflation eased more than expected in November, with headline CPI rising 2.7% year on year, down from 3.0% in September and below market expectations. Core inflation, which excludes food and energy, slowed to 2.6% year on year, the softest underlying inflation outcome since early 2021. The Bureau of Labor Statistics noted that data collection was affected by the recent federal government shutdown, while inflation in essential categories such as food and electricity remained relatively elevated.

Meanwhile, S&P Global’s Flash US Composite PMI pointed to a moderation in business activity in December, falling to 53.0 from 54.2 in the previous month. While the index remained in expansionary territory, the reading was the lowest in six months, reflecting slower growth across both manufacturing and services.

UK inflation fell more than expected in November, with headline CPI easing to 3.2% year on year from 3.6% in October, marking its lowest level in eight months. The Office for National Statistics noted that the decline was driven in part by lower prices for certain food items, including cakes, biscuits and breakfast cereals. Following the softer inflation outcome, the Bank of England voted to cut interest rates by 25 basis points to 3.75%, taking the base rate to its lowest level since February 2023.

The European Central Bank (ECB) left the deposit rate unchanged at 2.0% for a fourth consecutive meeting. President Christine Lagarde said policy remains “in a good place,” while reiterating a data-dependent, meeting-by-meeting approach amid ongoing uncertainty. The ECB also marginally lifted its growth outlook, forecasting GDP growth of 1.4% in 2025, 1.2% in 2026, and 1.4% in 2027–28.

In China, data from the National Bureau of Statistics showed that retail sales rose 1.3% year on year in November, the slowest pace since the pandemic, highlighting ongoing weakness in consumption despite government efforts to stimulate demand. Fixed asset investment fell 2.6% over the first 11 months of the year, missing expectations, while industrial output rose 4.8% year on year, underscoring the economy’s continued reliance on exports. Earlier in December, Chinese leaders signalled that they are unlikely to materially ramp up stimulus next year, even as they reiterated support for growth.

U.S. equity markets ended the final full trading week of the year mixed, as the Dow Jones Industrial Average fell 0.67%, the S&P 500 finished broadly flat, and the Nasdaq Composite rose 0.48%.

European equities posted modest gains in local currency terms, supported by signs of steady economic growth and a more accommodative monetary policy backdrop. The STOXX Europe 50 Index advanced 0.69%, while the UK’s FTSE 100 gained 2.57%.

Asian equities were weaker over the week. Japan’s Nikkei 225 fell 2.61%, pressured by losses in technology stocks amid valuation concerns and elevated spending on artificial intelligence. Chinese markets also declined, with the Shanghai Composite down 0.34% and Hong Kong’s Hang Seng Index falling 1.03%.

Market Moves of the Week:

South African consumer inflation edged lower in November, with headline CPI slowing to 3.5% year on year from 3.6% in October. The moderation was supported by lower fuel prices and a firmer rand, according to Statistics South Africa (Stats SA). Core inflation, which excludes food, non-alcoholic beverages, fuel and electricity, edged slightly higher to 3.2% from 3.1% in October, indicating that underlying price pressures remain broadly stable.

Producer price inflation, which measures changes in the cost of goods before they reach consumers, was unchanged at 2.9% year on year in November, according to Stats SA. Electricity and water producer prices eased to 15.3% from 16.1%, while mining producer inflation rose to 19.9%. While recent readings point to contained inflation pressures, both producer and consumer inflation are expected to trend higher in the months ahead due to base effects.
 
The JSE All-Share Index advanced 1.37% over the week, supported by a strong 3.00% gain in the financial sector. The industrials and property sectors posted modest gains of 0.50% and 1.28%, respectively, while the resource sector marginally declined by 0.12%. Meanwhile, the rand strengthened modestly, appreciating 0.72% against the U.S. dollar to close at R16.75 on Friday.

Chart of the Week:

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