Financial markets experienced strong performance in June driven by a potential positive resolution of trade negotiations and economic support from the dovish signals from the FED’s office. The US 10-year bond is trading below 2% for the first time in 3 years after lower growth and inflation figures have surfaced. Emerging markets had a strong month as the dollar depreciated slightly. Locally, the Rand had its strongest month since January this year as investors awaited economic developments discussed at the G20 Summit. Local bonds rallied as disappointing GDP growth figures will likely put pressure on the SARB to cut rates in the short to mid-term. The South African equity market recovered somewhat after a weak month in May, with most of the positive contribution coming from the mining sector.
The JSE All Share Index (up 4.8%) was able to recover in June after poor performance in May to end the second quarter of 2019 up 3.9% from previous quarter end.
Small-cap shares (-0.2%) had a negative month but managed to return 1.8% for quarter two while Mid-cap shares (up 1.5% for quarter two) and Large-cap shares (up 4.6% for quarter two) managed to end the quarter positively. Industrial (4.0%) and Financials stocks (5.4%) had strong quarters while Resource stocks (2.4%) lagged slightly (despite returning 10.2% in June).
The MSCI World Index ended the quarter up 4.2% in US Dollar terms while the MSCI Emerging Markets Index ended lagged quite considerably (and merely return 0.7% in US Dollar terms for the quarter).
South African listed property (4.5%) had a positive second quarter (as it continued to recover some of its 2019 losses) while the SA REITs (3.5%) lagged the broader property index slightly.
The Rand appreciated against most major currencies over the quarter, it appreciated 2.2% against the Dollar, 4.5% against the Pound Sterling and -0.8% against the Euro.
The US Dollar Gold price increased by 9.0% over the quarter as investors continued to seek a “safe-haven” amidst ongoing uncertainty. The US Dollar Platinum price ended the quarter down 1.6% while the Brent Crude Oil Price decreased 2.7% US Dollar terms in quarter two.
