The Markets Daily

I read something rather distressing this morning – it would seem that the price of coffee beans are at a seven-year high and could continue and reach a 10-year high as Brazil, the worlds largest producer of Arabica beans, is being hit by waves of frost, following drought conditions before, this is expected to affect younger trees and reduce the harvest next year.

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I must confess, I’m breathing a deep sigh of relief that this is the last week of July. It has been a particularly tough month for South Africa and hopefully a new month will bring about some hope and optimism, and warmer weather. 

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Anyone with a mortgage, overdraft or vehicle repayment would know that the SARB kept the repo rate at 3.50% yesterday. This was in line with our view. I’m taking liberties by quoting the thoughts of our macro and FI teams on yesterday’s proceedings. 

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The big events for the second half of this week are concentrated on today. Domestically, the SARB’s July repo rate decision, and globally, the ECB’s interest rate announcement, the first since the change in its inflation target. In both cases, the expectation is for interest rates to be kept on hold and, in the case of the ECB, for the continuation of its asset-purchase programme.

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Like this year, most work weeks are split into two discernible halves. It’s usually a data release or policy events in the latter half of the week that determine the course of trading outcomes. That’s depending on how covid-19 figures have fared, of course. It’s puzzling then, with the respective flare-ups in the Delta variant and restrictive measures that have been imposed, that markets have shaken off Monday’s madness.

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The end of 2020 saw a shift from intense concern and uncertainty due to the pandemic to a sense of optimism as more and more data indicated that not one but many vaccinations were approved for use. Vaccines represented freedom and the beginning of the end of the pandemic....

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July thus far has been a rather intense month for South Africa as the third wave of covid engulfed the country, followed by unrest last week in KwaZulu-Natal and Gauteng, and this week, the third of the month will see the start of Jacob Zuma’s Corruption Trial.

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We’re nearing the end of one of the most tumultuous weeks in SA’s recent history. 

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South Africa is almost a week into the social unrest. Momentum is lessening as a greater military contingent is deployed, though there are still accounts of sporadic looting. Arguably, most of the damage is concentrated in KZN and Gauteng, but these provinces are among the most populous and remain critical economic hubs.

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The mind-numbingly cold weather has done little to deter the recent unrest which has resulted in more than R200bn in losses. Still paralysed by shock, we haven’t begun to fully appreciate the extent of the socioeconomic damage inflicted over the last few days.

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