Equity markets have enjoyed a month of sharp increases, interrupted only by retreats in mid-April. The relief rally has seen indices retrace many of the losses they racked up following US President Donald Trump’s announcement of sweeping new tariffs on “Liberation Day” (which we named “Obliteration Day”) on 2 April.
Last week, the S&P 500 notched up its longest winning streak since 2004. The turnaround in the equity markets is driven by fresh hopes that Trump may be softening his stance on tariffs with trading partners as well as data that suggests that American consumer spending and the job market remain resilient.
Positive signals from the White House around negotiations with China and a newly unveiled trade deal with the UK helped to keep the momentum going in global equities markets. Markets responded enthusiastically to the UK trade deal, which rolls back tariffs on British steel and autos and promises $5 billion in increased US exports.
The S&P 500 has made strong gains, recovering 13.75% over the past month, but still lags 3.29% below its 2025 starting point. The Nasdaq composite, likewise, has recovered 17.4% over the past month, helped by upbeat earnings from tech giants like Meta and Microsoft, yet it remains 7.2% lower year-to-date. The Dow Jones Industrial Average has exited correction territory after a string of daily gains, including a 564-point rise last Friday that marked its ninth consecutive advance.
However, all these gains on US bourses should be seen in the context of a US dollar that remains nearly 7.2% weaker against a basket of developed world currencies than it was at the outset of 2025.
Global indices are currently outperforming US markets, helped along by the weaker dollar. The MSCI World, our preferred index and a core component of our house-view portfolios, has returned 0.7% year-to-date today, marginally outperforming the S&P 500 with its lower concentration of US-listed equities. Looking at regional returns, when measured in US dollars, the FTSE 100 is up 15.7% over the past month and 10.8% year-to-date, while Europe’s Eurostoxx index has gained 8.51% year-to-date and 14.93% over the past month, boosted by improved economic sentiment and interest rate cuts by the European Central Bank.
Although the rebound is welcome, markets remain hostage to the whims of the Trump administration. Trump’s heated rhetoric against the Fed raised concerns about political interference in monetary policy in April. Walking back those comments then helped to settle markets.
Yet this week, Trump renewed his attack on Fed Chairman Jerome Powell. He called Powell a “FOOL who doesn’t have a clue” on social media following the Fed’s decision to hold rates steady. Trump also resurfaced his contention that Powell has a history of moving too late on monetary policy.
And while the progress on tariffs is welcome, the final details of the UK trade deal have yet to be locked down. It’s also important to note that this deal is considerably worse for both parties than the pre-Trump status quo. A 10% basic tariff on most goods remains in place, which could lead to higher prices and inflation for US consumers.
Meanwhile, the UK digital service tax, which imposes levies on tech giants like Amazon and Google, will not be changed. Tariffs were reduced and importation rules eased both ways for beef, but British food standards will be maintained. This suggests US companies won’t get much better access to UK markets.
If this deal is to be a template for the other countries the US is negotiating with, we can expect to see most countries secure more favourable tariff regimes than Trump’s opening bid. At the same time, the renewed deals will most likely be far less advantageous than the trade arrangements that preceded Trump’s return to the White House.
Despite the recent rally, the gold price has only weakened marginally. The high gold price suggests a symptom of continued weakness in the dollar and lingering fears about global economic stability. Conversely, Bitcoin has broken through the $100,000 mark, a milestone that hints at renewed risk appetite among investors.
In summary, we believe that it is premature to celebrate the bounce-back in the equities market as a sign of sustained recovery. Investors are no doubt enjoying the relief rally. But with a capricious US President, volatile politics, rising geopolitical tensions, difficult trade negotiations underway, and the Fed under fire, the storm may resume at any moment.
“The first time, I had two things to do – run the country and survive; I had all these crooked guys. And the second time, I run the country and the world.”
– US President Donald Trump
“The market is intensely focused on where the tariff rates end up, and it’s bouncing around day-to-day as those assessments change. I don’t think anybody really has a good idea of what’s to come.”
– Jed Ellerbroek, portfolio manager at Argent Capital Management.
Global News
- In its latest global outlook, Moody’s expects the world economy to expand by 1.9% in 2025 and 2.3% in 2026, a sharp cut from its previous forecast of 2.5% for both years. This is amid rising tariff barriers, geopolitical tensions, and reduced investment confidence. The downgrade follows mounting concerns over protectionist US trade policy, US-China tensions, and dampened investor sentiment in advanced economies.
- Forecasters expect that Trump’s ongoing trade war will slow economic growth in both 2025 and 2026, as rising tariffs drive up prices and weigh on consumer spending. According to the latest Bloomberg survey of 82 economists, conducted between 18 and 23 April, the US economy is projected to grow by just 1.4% in 2025 and 1.5% in 2026, several percentage points below last month’s estimates. The median respondent predicts a 45% chance of a downturn in the next year, up from 30% in March.
- Fed Chairman Jerome Powell on Wednesday said the Fed will keep interest rates unchanged at 4.25% to 4.5%, emphasising a patient approach amid growing economic uncertainty driven by Trump’s trade policies and rising tariffs. Powell warned that sustained tariff increases could fuel inflation, slow growth, and raise unemployment, though it’s unclear if the inflationary impact will be short-lived or persistent. The Fed stated it sees no urgency to adjust rates until clearer data emerges. Despite recession concerns and businesses delaying investment, the labour market remains strong, with 177,000 jobs added in April. Trump renewed his criticism on Thursday of Powell, calling him a “FOOL” and complaining that the Fed is refusing to lower interest rates.
- Trump is proposing higher tax rates for some of the wealthiest Americans to help balance the cost of his tariff-focused economic plan. According to sources, his proposal includes introducing a new 39.6% tax bracket for individuals earning $2.5 million or more, and couples making at least $5 million. Trump reportedly discussed the idea during a phone call with House Speaker Mike Johnson on Wednesday. He also restated his intention to eliminate the carried interest tax break, which benefits venture capitalists and private equity fund managers, one source noted.
- India and Pakistan shot down each other’s drones and missiles over densely populated cities in a second day of military hostilities, while the US continued to seek to ease the flare-up between nuclear-armed neighbours triggered by last month’s deadly militant attack in the disputed region of Kashmir. India’s Ministry of Defence said yesterday it had “neutralised” Pakistan’s attempt to strike a “number of military targets in Northern and Western India” using drones and missiles. Pakistan’s Defence Minister Khawaja Asif has said Islamabad will only hit military targets in India, not those that are civilian.
- German conservative leader Friedrich Merz was elected chancellor in a second round of parliamentary voting on Tuesday after a surprising initial setback, narrowly securing enough support to lead a coalition with the centre-left SPD. His shaky start comes amid high expectations for strong leadership following the collapse of Olaf Scholz’s government, as Germany faces mounting crises and growing domestic and international calls for it to assert a more active role in Europe and beyond.
- Under a newly established trade framework with the UK, the island nation will expedite the customs process for US goods and lower trade barriers on “billions of dollars” worth of exports, including agricultural products, chemicals, energy, and industrial goods such as beef and ethanol. The British government confirmed that auto tariffs will be cut to 10% and metal duties eliminated entirely. Trump announced the agreement yesterday, describing it as a “breakthrough” that US officials believe could pave the way for additional deals to broaden access for American products. The deal marks a political victory for Prime Minister Keir Starmer, showcasing the results of his sustained diplomatic engagement with Trump. However, it falls short of the “full and comprehensive” trade agreement Trump had previously promised and does not constitute the full US-UK free trade pact he pursued during his first term. (The Bank of England on Thursday cut its key interest rate by 25 bps to 4.25%, citing concerns over weaker global growth due to US tariffs.)
- The EU is considering imposing additional tariffs on up to $108 billion worth of US exports if trade negotiations with Trump’s administration fail to deliver a satisfactory outcome. The proposed retaliatory measures would primarily affect industrial goods, including Boeing aircraft, American-made cars, and bourbon, recently reinstated after being excluded from an earlier list. The draft proposal will undergo consultations with EU member states and other stakeholders until 10 June and may be revised before being finalised. This development comes as the European Commission, the EU’s executive body responsible for trade, begins formal talks with US officials this week.
- Trump, after his first Oval Office meeting with new Canadian Prime Minister Mark Carney on Tuesday, said there was nothing Carney could say to him that would convince him to reduce tariffs on Canadian goods. Trump has complained that Canada has treated the US unfairly, citing a massive trade deficit, even though official statistics have proven Trump wrong. Yet, Canadian exports to the US tumbled 6.6% while shipments to other countries soared, indicating how tariffs are altering trade flows. During the meeting, Carney said Canada “is not for sale, it won’t be for sale – ever”.
- India and Britain struck a “landmark” trade deal on Tuesday, the UK government said, marking progress on lowering and removing tariffs at a time when Trump is raising US import taxes to historic levels. The two nations’ agreement is “the biggest and most economically significant bilateral trade deal the UK has done since leaving the EU,” the UK Department for Business and Trade said in a press release. As a result of the agreement, bilateral trade is expected to increase 60% from the 2024 level in the long run. Discussions started three years ago.
- Top US trade officials are set to meet with their Chinese counterparts tomorrow in an effort to ease tensions in the ongoing trade war. However, Treasury Secretary Scott Bessent noted on Tuesday that the talks are unlikely to produce a formal agreement. In a move to bolster its position ahead of the discussions, China announced measures on Wednesday that could inject $291 billion into its economy. Additionally, Beijing increased its gold reserves for the sixth consecutive month in April, capitalising on high gold prices amid continued trade tensions. This comes as Russian President Vladimir Putin and Chinese President Xi Jinping held bilateral talks in Moscow yesterday, highlighting their countries’ growing alliance and shared goal of challenging the US-dominated global order.
- Tesla sales kept sliding across Europe’s biggest electric-car markets in April, despite the company rolling out an updated version of its most popular vehicle. The company only registered 512 new vehicles last month in the UK, the Society of Motor Manufacturers and Traders said on Tuesday. This was down 62% from a year earlier. Tesla’s plunge was even more pronounced in Denmark, the Netherlands, and Sweden, with sales dropping by at least two-thirds in each country.
- Warren Buffett will step down as Berkshire Hathaway CEO by the end of the year after having been at the forefront of American capitalism for decades. Buffett, 94, built Berkshire into a $1.1 trillion colossus. On Saturday, Buffett said he plans to ask the company’s board to approve making Gregory Abel, his heir apparent, CEO by the end of the year. Although Abel will have final say over operations, Buffett will remain Chairman and “would still hang around and conceivably be useful in a few cases”. Buffett owns 14% of the company, which is worth $164 billion.
- Novo Nordisk shares gained 6.9% on Wednesday on expectations that some competition for its blockbuster obesity shot Wegovy will subside, paving the way for a sales rebound later this year. Novo is battling rival Eli Lilly & Company for supremacy in the booming obesity space and losing patients to cheaper copies of its best-sellers produced by some US pharmacies. CFO Karsten Munk Knudsen said he expects a step-up in the second half as competition from copycats abates. (Novo Nordisk is held by Fundsmith, one of our preferred global equity managers).
- WeightWatchers, a 62-year-old program that revolutionised dieting for millions of people around the world, has filed for bankruptcy, it said on Tuesday. The company, now known as WW International, has struggled with about $1.5 billion in debt and has failed to keep pace with more convenient weight loss options, including GLP-1 drugs like Ozempic. The process is anticipated to erase its debt, and it expects to emerge in about 40 days as a publicly traded company.
- Mattel, the toy manufacturing giant and maker of Barbie, plans to raise prices on American toys due to tariffs, it said on Monday in its earnings report. To mitigate future losses, it plans to diversify its supply chain outside of China and “where necessary, taking pricing action in its US business”. Mattel CFO Anthony DiSilvestro said during its earnings call that the current tariffs would cost it roughly $270 million this year and “that’s before you consider any of the mitigating action”.
- Shein Group and Temu saw double-digit sales declines in the week after they raised retail prices to cover the costs of increased US tariffs, indicating that Trump’s punitive trade measures have taken a toll on the shopping platforms’ popularity. Shein’s US sales dropped 23%, with Temu sales down 17%, both in the period from 25 April to 1 May, when compared with the previous seven-day period. This is according to Bloomberg Second Measure, which analyses credit and debit card data.
- As at Thursday’s close the S&P 500 was 0.4% down for the week.
Local News
- Initial data from the South African Revenue Service indicates there are 2,850 individuals with net assets of more than R50 million, who have a total of R245 billion in local assets and R150 billion in foreign assets. This is according to Finance Minister Enoch Godongwana, who was answering a parliamentary question about the possible introduction of a wealth tax. The wealthy pay R7 billion in personal income tax, which would be put at risk if these individuals decided to change tax residency because of a wealth tax.
- Moody’s Ratings agency has lowered South Africa’s growth forecast for 2025 due to expected slow global growth, driven by tariff uncertainty and trade tensions. It said on Tuesday that GDP for 2025 will only grow by 1.5%, a 0.2 percentage point decrease from its previous forecast. This growth forecast is in line with the 1.7% estimate from the South African Reserve Bank, but more optimistic than the downwardly revised 0.8% forecast by the International Monetary Fund last week.
- The upcoming National Budget, to be presented by Godongwana on 21 May, will likely focus on the second phase of Operation Vulindlela. This initiative, launched by President Cyril Ramaphosa on Wednesday at the Union Buildings, aims to drive economic growth and improve service delivery through structural reforms. Building on phase one’s success, which unlocked R500 billion in investment, reduced data costs by 51%, and achieved over 90% of its reform targets, the second phase will focus on energy, logistics, and local government reforms, as well as expanding infrastructure investment to R1 trillion, advancing digital public infrastructure, and promoting urban densification. Read here for the details on all the plans, which could help grow the economy between 3% and 5% by 2029.
- Regular BusinessLIVE commentator, Justice Malala, says that there can’t be a fourth tabling of the National Budget beyond the one planned for 21 May. He says that Godongwana cannot afford to fail again as “his credibility is in tatters”. A fourth Budget would destroy Godongwana, ruin South Africa’s reputation as a country of solid economic institutions and traditions, render the Government of National Unity unworkable and could require a new election soon after.
- Godongwana has confirmed that the Government has no intention of nationalising the South African Reserve Bank, citing the significant fiscal cost such a move would entail. Responding to a parliamentary question from the EFF, Godongwana acknowledged that full government ownership of the central bank would align with international norms. However, he emphasised that any potential benefits of nationalisation must be weighed against the substantial expense of compensating the roughly 800 private shareholders currently holding stakes in the bank.
- The DA on Tuesday challenged amendments to the Employment Equity in court, stating that the new targets undermined fairness for all. The state, however, maintained that the amendments are lawful tools to accelerate transformation. Part of the law seeks to introduce numerical targets for the representation of black people, women, and people with disabilities in companies with more than 50 employees. The DA argued that the law would further drive unemployment and hinder job growth.
- The Pretoria High Court on Tuesday confirmed it has jurisdiction to hear the legal challenges brought by medical schemes and doctors against the National Health Insurance Act and ordered President Cyril Ramaphosa to furnish the record of his decision to assent to the contentious legislation. This marks a small victory for the Board of Healthcare Funders and the South African Private Practitioners Forum after the President’s legal team tried to convince the high court that they had taken their fight to the wrong place and should have filed their respective applications in the Constitutional Court.
- Electricity and Energy Minister, Dr Kgosientsho Ramokgopa, has announced updated regulatory rules governing network charges for third-party energy transportation. This means that consumers will no longer be solely dependent on Eskom for electricity supply, paving the way for greater choice, efficiency, and investment in the sector. This comes as Eskom contends that National Energy Regulator of South Africa violated its own regulations by issuing licences to private electricity operators without the proper industry rules. It said this could jeopardise the integrity of the electricity supply chain.
- Transnet has awarded a R17 billion concession contract to five private sector partners, including a Bidvest-led consortium, to fund, construct, and operate several liquid bulk terminals at the Port of Richards Bay. The construction of the five terminals for liquid bulk and green fuels terminals is expected to create thousands of jobs, in line with South Africa’s energy security blueprint.
- The Financial Sector Conduct Authority is assessing the transactional fee practices across registered banks. This is after it detected significant disparities in the fees charged by different banks for the same or relatively similar products or services. The authority also has concerns about the lack of adequate disclosure by some banks of these fees and their poor understanding by customers.
- Sappi swung to a $20 million loss in the three months to end-March over concerns about declining US clothing imports, which have put pressure on the price of dissolving wood pulp. This comes as China’s clothing sector adopts a more cautious stance towards the US, with one of Sappi’s most popular products, dissolving wood pulp used as part of the clothing and textiles sector, being hard hit by the trade war. Sappi reported a $29 million profit a year ago. Sappi’s adjusted earnings before interest, taxation, depreciation and amortisation, or core profit, slumped more than 40% in the second quarter.
- Global packaging and paper company Mondi reported a rise in earnings for the first quarter, driven by higher sales volumes, good cost control, and fewer planned maintenance shutdowns. Its core earnings rose almost €30 million in the quarter to March from the previous three months. Yet, it said yesterday that second-order impacts from tariffs could affect trade flows, consumer confidence, and supply chains.
- Prosus will report more than $430 million in adjusted earnings before interest and tax for its e-commerce portfolio for the 2025 financial year, exceeding its goal of $400 million, it said yesterday. The group has completed strategic planning, communicated the plan to employees, and started the financial year 2026 well, it said. The group will report its full-year results in June.
- Anheuser-Busch InBev, the world’s largest beer brewer and owner of South African Breweries, kicked off 2025 with solid profit growth, up by $100 million, even as it sold less beer. Beer sales were down 2.2%, it said yesterday. Its higher earnings were thanks to stronger pricing, growing demand for premium and non-alcoholic brands and the continued rise of its digital BEES Marketplace platform. Underlying earnings per share rose 7.1% to $0.81, and 20.2% on a constant currency basis.
- As at the time of writing, the rand was 1.2% stronger against the dollar, and the ALSI was 0.7% down for the week.
Sources: Dynasty, BusinessLIVE, Bloomberg, Business Report, CNN, AFP, eNCA, Daily Maverick, WSJ, NYT, Reuters etc
