Markets In Focus: July 2024 market snapshot

The UK held its general election on 4 July, while the final round of legislative elections in France concluded on 7 July. The US presidential campaign has been gaining momentum ahead of election day, set for 5 November.

Despite a gradual easing of global inflation, inflation in most economies has yet to stabilise in line with targets. In June, consumer price inflation was 3% in the US and 2.5% in the Eurozone – both still above their central banks’ 2% targets.

In South Africa, the Reserve Bank’s Monetary Policy Committee (MPC) decided to keep the repo rate unchanged at 8.25%, with four members preferring an unchanged stance and two favouring a 25-basis point cut. The committee agreed that maintaining the current stance is appropriate given the ongoing inflation risks. Governor Lesetja Kganyago noted a slight contraction of 0.1% in the economy in Q1 and the growth estimate for Q2 has been revised to 0.6%. Over the medium term, faster growth is expected, supported by a more reliable electricity supply and improved logistics.

UK inflation rose to 2.2% in July, slightly below expectations but above the Bank of England’s (BoE) 2% target. The Labour Party won control of the House of Commons from the Conservative Party in the election, marking a political shift.

In the US, the Federal Open Market Committee (FOMC) maintained the target range for the federal funds rate at 5.25%-5.5%. The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%. The unemployment rate has increased but remains low.

In Asia, the Bank of Japan (BoJ) raised interest rates to levels unseen in 15 years and unveiled a detailed plan to slow its massive bond-buying, taking another step towards phasing out a decade of huge stimulus.

As of 31 July 2024, South African investors earned the highest one-year returns from property, with the South African Property Index (SAPY) delivering 28.84%. This performance exceeded the 21.05% return from the MSCI World Net Index (ZAR).

Table 1: Total returns to 31 July 2024