The S&P 500 keeps hitting fresh record highs and is up nearly 11% for the year to date. This is a remarkable turnaround from the “Liberation Day” crash in April, when the S&P 500 fell by more than 11% over five days. Even more noteworthy is that this rally has unfolded against the backdrop of a range of disruptive policy moves from the Trump administration.
While the tariffs the US eventually negotiated with key trading partners are lower than initially feared, import duties are at their highest levels in decades. In addition, US President Donald Trump has redoubled his attack on the independence of many key institutions, including the US Federal Reserve.
These are developments that would normally be expected to unsettle the markets and depress stock valuations. The role of a weak dollar in shoring up assets and earnings of listed companies in the US offers only a partial explanation for the ongoing equities strength. (It is worth noting that several global indices have outperformed the S&P 500 in dollar terms).
Scratch beneath the surface, and there is a strong argument that what is actually going on is a classic Keynesian beauty contest. John Maynard Keynes, the economist, likened investing to a newspaper competition where entrants picked the six prettiest faces from a set of photographs.
They would not aim to choose the faces they liked best, but the ones they believed everyone else would think popular. In investment terms, many traders and investors are buying into the stocks that they believe everyone else will buy. Rather than valuing companies on fundamentals, they buy what they believe everyone else will buy next.
In today’s context, that is Big Tech companies and the Artificial Intelligence (AI) theme. For the year to date, much of the S&P’s advance has been driven by a handful of mega stocks. Nvidia is up 25% year-to-date, Meta 25%, Microsoft 20%, and Alphabet 21%. The former Magnificent Seven has been whittled down to the Fantastic Four.
These stocks have become the engine of index performance. Their collective weight (representing around $12.64 trillion of the S&P 500’s total market capitalisation of $54.5 trillion) and momentum has carried the market, while most other sectors have lagged behind.
It is understandable why so many investors are betting on Big Tech. The US technology sector has been an extraordinary wealth creator for stockholders over the past two decades. Outside of a handful of Chinese giants, no multinationals can compete with US software companies in terms of innovation, scale, and ability to turn new technologies into profit.
Investors also feel confident that Trump, as a vocal supporter of AI and crypto, will not undermine the big tech sector. Many traders believe that Trump will quickly reverse course if something he does panics the markets. This belief creates a feedback loop: Few traders will sell into weakness when they expect the Administration to walk back on contentious policies.
What’s more, in the most recent earnings reports, Big Tech companies have met or even exceeded expectations. For now, the above factors support the thesis that these are the stocks that everyone else will choose. This will help to extend momentum and mitigate the chances of sustained sharp corrections in the shorter term. Ultimately, it is the earnings that will matter, and they will need to not fall below the forecasts for the beauty contest to avoid coming to an end.
“We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be.”
– John Maynard Keynes, pioneering British economist
Global News
- US job openings fell more than expected in July to a 10-month low, while hiring remained moderate, signalling further cooling in the labour market, the Labor Department’s JOLTS report showed on Wednesday. The drop was led by health care, retail trade, and leisure and hospitality. Hiring in August also came in below forecasts, with private-sector payrolls rising at only half last month’s pace, according to ADP data. Markets had hoped for steadier numbers, but the softer data still lifted the S&P 500 to a record high on Thursday. Economists noted that Trump’s tariff policies and tighter immigration rules are adding pressure to both labour demand and supply.
- Twenty-six nations have pledged postwar security guarantees to Ukraine, including an international force on land, sea, and in the air, French President Emmanuel Macron said on Thursday after a summit of 35 leaders from the “coalition of the willing,” mainly European countries. Macron said he, other European leaders, and Ukrainian President Volodymyr Zelenskiy held a call with Trump, with US contributions to the guarantees expected to be finalised soon. Asked about speaking with Russian President Vladimir Putin, Trump said, “Yeah, I will be. We are having a very good dialogue.” Macron added: “The day the conflict stops, the security guarantees will be deployed.”
- Chinese President Xi Jinping staged a powerful show of unity with Russian President Vladimir Putin and North Korean leader Kim Jong Un as the three appeared together at Beijing’s military parade on Wednesday, marking the 80th anniversary of World War II’s end. The event, reminiscent of Cold War-era alignments, showcased China’s most advanced weaponry while underscoring a shared defiance of US influence and the Western-led global order. In response, Trump criticized Xi for failing to acknowledge America’s role in China’s wartime liberation, framing the parade as a reminder of ongoing tensions between Washington and Beijing over trade, technology, and global power, and used his Truth Social platform to pointedly accuse Xi, Putin, and Kim of conspiring against the US.
- Yesterday, Trump asked the US Supreme Court to swiftly uphold his global tariffs, following a Federal Circuit appeals court ruling last Friday that he had improperly used an emergency law to impose tariffs on imports from China, Canada, and Mexico, citing fentanyl trafficking. Trump warned the decision could be “a devastation for our country” and pressed for arguments to be heard in November. If the case goes against him, the US may have to reimburse businesses over $200 billion in added costs and upend trade deals already signed.
- Gold could rise to nearly $5,000 an ounce if the Fed’s independence is undermined and investors shifted a small portion of holdings from Treasuries into bullion, Goldman Sachs Group said. Analysts, including Samantha Dart said in a note yesterday that such a scenario “would likely lead to higher inflation, lower stock and long-dated bond prices, and an erosion of the dollar’s reserve-currency status,” while gold “is a store of value that doesn’t rely on institutional trust.” Goldman outlined a baseline of $4,000 by mid-2026, a tail-risk of $4,500, and up to $5,000 in an extreme scenario. As of this morning, gold was trading at $3,552 per ounce, having run up past $3,500 this week.
- In the largest antitrust case in three decades, a US judge rejected the government’s proposal to break up Google, including a forced sale of its Chrome browser. The ruling does require Google to make certain concessions, such as sharing online search data with competitors and ending exclusive distribution contracts. The decision is viewed as a setback for the government’s efforts to curb the power of Big Tech. Following the ruling, Alphabet’s stock surged to record highs, reflecting investor confidence in the company’s continued dominance in the browser market.
- Nvidia shares slid to $170.74 on Tuesday, extending a four-day losing streak that has erased about $340 billion in market value and dragged the stock below its 50-day moving average of $171.06 for the first time since May. This technical breach is viewed by analysts as a bearish signal that could weaken the stock’s near-term momentum, raising concerns among investors who have been closely watching Nvidia’s role as the key driver of this year’s market gains.
- Chinese social media platform Xiaohongshu, a rival to TikTok, saw its valuation jump 19% to $31 billion over three months in recent transactions via a major fund, highlighting strong investor demand for an Instagram-like app. Portfolio documents from GSR Ventures Management seen by Bloomberg showed Xiaohongshu made up 92% of the fund’s assets as of June, up slightly from the previous quarter. The net asset value implied a rise from $26 billion in March. Some investors expect Xiaohongshu, known in the US as RedNote, may soon pursue a public listing amid TikTok’s US regulatory challenges, Bloomberg reported yesterday.
- Alibaba shares soared, as much as 19% in Hong Kong trading on Monday, after the company’s AI-related revenue more than doubled year-over-year and its cloud division, closely tied to AI, delivered an unexpected 26% sales jump, highlighting Alibaba’s strong positioning in China’s AI boom. The rally, one of its largest since early 2022, reflects renewed investor confidence in its strategy to capitalise on generative AI and cloud infrastructure, even as other segments like quick commerce continue to weigh on profitability.
- American AI startup company Anthropic, founded in 2021, said on Tuesday it raised $13 billion in a funding round that lifted its valuation to $183 billion, making it one of the world’s most valuable startups. Bloomberg previously reported that Anthropic initially aimed to raise $5 billion before increasing the target to $10 billion, eventually closing higher on strong investor demand. The company, whose primary focus is developing safe and capable AI systems designed to perform tasks including complex problem-solving, said its run-rate revenue has increased from around $1 billion at the beginning of 2025 to more than $5 billion in August.
- A bitcoin company linked to Trump’s two eldest sons more than doubled in value on its Nasdaq debut on Wednesday, valuing their stake at over $1.5 billion. Shares in American Bitcoin Corporation, a bitcoin miner, rose as high as $14.52 before closing up 16.5% at $8.04. Eric Trump and Donald Trump Jr. each own about 20% of the company, American Bitcoin Executive Chairman Asher Genoot has said. Based on 908.6 million outstanding shares, their holdings were worth $1.5 billion at the close and as much as $2.6 billion at the stock’s peak.
- As at Thursday’s close the S&P 500 was 0.65% up for the week.
Local News
- Global companies are expected to expand or establish operations in South Africa by 2030 to tap its talent pool, according to research by Robert Walters and reported on by Bloomberg on Tuesday. The offshoring sector could grow to 1.6% of GDP, adding R42 billion in value and creating more than 212,000 skilled jobs. South Africa’s strong English skills, time-zone alignment with Europe, and growing reputation for high-quality business and tech services are driving the trend, particularly for roles in accounting, financial analysis, and auditing.
- Optimism among South Africans since the establishment of the Government of National Unity (GNU) in 2024 is fading, partly due to political disagreements within the coalition, Ipsos data showed yesterday. Public sentiment that the country was heading in the right direction, which initially rose to between 36% and 40% in the months following the GNU’s formation in July 2024, has declined consistently through April 2025. By September 2025, 80% of citizens recorded pessimistic sentiment regarding the GNU. The ANC’s national executive committee has called for a possible expansion of the GNU in response to the weakening public confidence.
- National Treasury and South African Reserve Bank (SARB) said on Monday, in a joint statement, that a new inflation target will be announced “as soon as is practical,” ending weeks of public disagreement over monetary policy. National Treasury said its 2024 Macroeconomic Policy Review supports a lower target, noting that “low and stable inflation is good for economic growth” and that monetary policy goals have largely been met. The statement follows tension in July when the Bank signalled a 3% target, prompting a public rebuke from Finance Minister Enoch Godongwana.
- The ANC plans to revisit a debate on expanding the central bank’s mandate at a key meeting later this year, Business Day reported on Wednesday, citing a party document. The ANC said, while maintaining SARB’s independence is important, it “must operate in a manner that supports transformation and development,” balancing inflation control with employment and growth objectives. The document noted that a focus on fiscal consolidation and inflation targeting had led to austerity, budget cuts, and underinvestment.
- Large volumes of South Africa’s exports to the UK are still paying full duties under a trade deal meant to provide tariff-free access, costing the economy billions. At a Wednesday seminar co-hosted by the Department of Trade, Industry, and Competition and the South African Chamber of Commerce and Industry with the British High Commission, figures released showed that in 2024 alone, R2.7 billion in vehicle exports paid the standard 10% UK tariff instead of 0%. White wine exports worth R951 million, and fruits and nuts worth R430 million, including R70 million in avocados, also missed out on preferential access.
- Business Leadership South Africa CEO Busi Mavuso has called for an urgent review of how electricity tariffs are set, saying the current system is flawed. In her weekly newsletter on Monday, she argued prices should be determined through a competitive market in which firms compete to offer better value. Mavuso highlighted a recent court-approved R54 billion tariff clawbacks for Eskom, which followed a miscalculation by energy regulator Nersa, which adds to an already planned near 13% price increase this year. A new Competition Commission report released yesterday shows water and electricity tariffs have surged more than double that of headline inflation since 2020.
- South Africa’s proposed Tobacco Products and Electronic Delivery Systems Control Bill is being hailed as a landmark step for public health, with advocates such as Bintou Bityeki of the Campaign for Tobacco-Free Kids saying it will save lives through smoke-free public spaces, plain packaging, and graphic health warnings. But tobacco companies argue for separate rules on smokeless products, while informal traders warn that banning single-cigarette sales could criminalise their trade and threaten over two million livelihoods. The Bill marks a major regulatory shift as South Africa moves to align with global tobacco control standards.
- The Development Bank of South Africa disbursed R17.5 billion to development projects in the year to end-March, up 2.9%, helping catalyse more than R91 billion in infrastructure finance while boosting profitability despite a challenging economic environment. CEO Boitumelo Mosako said the bank, which has not needed a government capital injection for over a decade, uses its equity to leverage additional development finance. About 70% of the bank’s book is in South Africa, with the rest across sub-Saharan Africa, with currency fluctuations affecting results.
- Business confidence in South Africa slipped again in the third quarter, with the RMB/BER Business Confidence Index dropping one point to 39, below the long-term average of 42, with more than 60% of businesses dissatisfied with trading conditions. Isaah Mhlanga, chief economist at RMB, said yesterday that local business confidence trends were “not out of line with that in other economies” as conditions normalise into a new world order. The quarter was marked by new US tariffs on exports. New vehicle trade confidence was a standout performer, gaining 12 points to 54, its second reading above 50 this year as it was boosted by interest rate cuts.
- Shoprite is planning to enter the banking sector, aiming to leverage its large customer base and data as it seeks new revenue streams. Group CEO Pieter Engelbrecht said on Tuesday that the retailer, which recorded about 1.2 billion customer visits and R252 billion in sales for the year ended June, already has a banking account that it plans to market as the country’s only zero-cost option. By adding financial services, Shoprite hopes to strengthen customer loyalty and use its extensive store network to provide accessible banking, positioning itself as a strong competitor to traditional banks. The group also expects to create about 10,000 more jobs in the next 12 months as it plans to open 309 new stores across its brands.
- Woolworths’ food division is pulling further ahead of competitors, even as the group reported a 23.9% drop in annual headline earnings per share. The decline was largely driven by weak performance at its Australian subsidiary, Country Road Group, which continues to face a challenging retail environment. By contrast, Woolworths’ South African operations showed resilience, with robust food sales and solid gains in fashion, beauty, and home, highlighting a mixed overall picture for the group
- Discovery Bank announced on Wednesday that it had achieved its first profitable period in the second half of the year ending June, reaching the milestone ahead of plan after years of losses, supported by a growing base of quality clients. The bank, launched in 2019, had steadily cut its operating losses from R1.2 billion in 2020 to R990 million in 2022. On the same day, parent company Discovery Holdings forecast a 27–32% increase in headline and normalised earnings per share, citing strong results across its Health, Life, Invest, Insure, and Vitality divisions, boosted by AI investment, pricing improvements, one-off gains, and better claims ratios.
- Sun International’s shares rose nearly 7% to touch R50 on Monday after the group signalled a strong recovery, forecasting a more than 56% jump in interim headline earnings for the six months to June. The improvement was driven by solid trading across its casinos, hotels, resorts, and its fast-growing SunBet platform, supported by tighter cost controls. However, the company also noted setbacks, including costs linked to its failed R7.3 billion bid for Peermont and other one-off financial impacts, which weighed on basic earnings.
- Aspen Pharmacare on Wednesday said it is advancing its generic semaglutide GLP-1 strategy for type 2 diabetes and obesity as it reported a 10% increase in normalised EBITDA in 2025 for its Commercial Pharmaceuticals division. This was driven by injectables, over-the-counter, and prescription drugs. The division, accounting for over 70% of group revenue, benefited from the rollout of Mounjaro in South Africa and the integration of a Latin American product portfolio. Earnings were weighed down by rand strength, and the company declared a dividend of 211 cents per share, down 41.2% from last year.
- As at the time of writing, the rand was 0.15% weaker against the dollar, and the ALSI was 0.2% down for the week.
Sources: Dynasty, BusinessLIVE, Bloomberg, CNN, Business Report, AFP, Associated Press, Reuters, etc.
