Theresa May has written a letter to the British public pleading for their support for her Brexit deal, as leaders of the 27 remaining members of the European Union gather this weekend to ratify the UK’s withdrawal from the EU. Even if the EU agrees to the deal, it still needs to be passed by the UK Parliament, which may be much harder with critics saying the deal places Britain in a worse position than had it stayed in the EU.
Concern about the outlook of global growth and sustained pressure from the White House triggered another slide in the oil price, with prices falling below $60 dollars a barrel from a recent high of $86 in October this year.
Tensions remain high ahead of Sino-US trade talks scheduled on the sidelines at this week’s G20 summit in Buenos Aires. Hopes for a breakthrough in trade relations are looking less likely with the US recently reaffirming that China has not altered its unfair trade practices.
Global equities continued their decline over the week, continued weakness in tech stocks and fears of slowing growth contributed to the negative sentiment. Market volatility remains high and tends to rise during times of greater uncertainty.
Market Moves of the Week:
Locally, the All Share index ended the week -2.68% lower, with financials (-2.62%) and resources (-6.42%) coming under pressure. In fixed income, the yield on the benchmark 2026 government bond fell 0.5 basis points to 8.93%, extending Thursday’s rally.
South Africa’s rand weakened on Friday, giving back some gains after a hike in the official borrowing rate by the central bank helped the currency hit a three-month high. The rand ended the week at 13.85 per dollar, easing along with other emerging market currencies as investors worried about Sino-U.S. trade tensions ahead of a high-stakes meeting between the leaders of the two countries in the week ahead.
After the market close on Friday, S&P Global Ratings announced leaving South Africa’s foreign-currency and local-currency credit ratings unchanged, citing weak economic growth and a rising debt burden as reasons for keeping the country in “junk” status.
S&P downgraded South Africa last year following a sharp deterioration in the country’s public finances under former President Jacob Zuma. Commenting on ANC plans to change the constitution to allow for land expropriation without compensation, S&P said on Friday that it expected “the rule of law and enforcement of contracts will largely remain in place and will not significantly hamper investment levels in South Africa”.
It added that it could lower its ratings if it observed a continued fiscal deterioration, or if the rule of law or property rights were to weaken significantly. The ratings could be raised if economic growth or fiscal outcomes strengthened in a sustained manner.
Chart of the Week:
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