Qatar’s neighbours commissioned sanctions against the country, Comey stood up to US President Donald Trump, and Moody’s downgraded South Africa’s credit rating a notch – it’s been another busy week at home and abroad.
Global News
- Qatar has been isolated by land, sea and air in a coordinated diplomatic move taken by other countries in the region—a response to its alleged support for Islamic militant groups. Brent Crude ended the week 3.6% lower.
- Former FBI director, James Brien Comey, made several damning allegations about President Trump in his testimony on the development of the Intelligence Community Assessment on Russian interference in the 2016 US elections.
- Snap elections, a gamble to increase Theresa May’s majority for Brexit negotiation in the UK saw the Prime Minister and her Conservative Party lose ground to the Labour Party, resulting in a hung parliament. May has formed an alliance with the Democratic Unionist Party from Northern Ireland to prop up her party’s power.
- The European Central Bank left interest rates unchanged in its meeting last week.
- The CAC40 and FTSE100 respectively lost 0.82% and 0.27% last week, while the S&P500 and the Nasdaq indices dropped by 0.30% and 1.55% respectively.
Local News
- South Africa has fallen into recession. GDP for the first quarter of 2017 contracted by 0.7% year-on-year, falling for the second quarter in a row. This is the first-time South Africa has faced recession since the 2009 global financial crisis.
- Moody’s lowered South Africa’s credit rating to one notch above junk status, with a negative outlook.
- The FTSE/JSE All Share Index (ALSI) fell 1.25% for the week. The JSE Industrial 25 and the JSE Financial indices decreased by 1.88% and 2.4%, respectively. The resource sector increased by 1.22%.
- The ALSI one-year return has dropped from 9% on 23 May 2017 to 4.4% as at last week.
- Naspers, the biggest share on the JSE, has fallen by 8.5% from its recent highs, where it was up 40% for 2017.
- Business confidence has fallen to its lowest level in seven months, due to South Africa’s political uncertainty, policy concern, and the possibility of further downgrades in the future.
- The JSE Mid-Cap Index has fallen 10.6% while the JSE Small Cap Index lost 8.7% over the last three months.
- The rand has benefitted from an emerging markets upturn, gaining 2.6% against the US dollar over the last three weeks.
Source: Dynasty, Stanlib, Efficient Select, Prescient, Moneyweb, and Bloomberg Markets etc
