Download Weekly Note - 01 December 2025
Local Market Update:
South African newsflow remained modest, with markets reacting mainly to global developments. The SARB’s Financial Stability Review reaffirmed system resilience, supported by lower inflation, improved governance at major banks and reduced fiscal risk premia. However, forward indicators weakened: the composite leading index fell 1.2% m/m in September, dragged by softer manufacturing demand, declining job adverts and weaker vehicle sales. October PPI re-accelerated, reinforcing uncertainty around the SARB’s first potential rate cut in 2025. With no major corporate results released, domestic equity and bond performance tracked shifts in global risk appetite, commodities and US yield expectations.
European Market Update:
European assets traded cautiously as investors balanced improving global risk appetite with ongoing regional weakness. The ECB warned that euro-zone banks with sizeable USD funding exposures may face liquidity strain if dollar funding tightens, prompting calls for higher buffers. Equity gains were modest, led by financials and select industrials, while German and Italian manufacturing PMIs remained in contraction. Export-facing sectors continued to struggle under weaker Chinese demand and volatile energy prices. Flow data showed a rotation toward emerging-market and commodity-linked assets, reflecting subdued European growth prospects and limited near-term policy catalysts.
US Market Update:
US markets rallied as softer retail sales, PPI and housing indicators reinforced expectations of a December Federal Reserve rate cut. The S&P 500 posted consecutive gains, supported by falling Treasury yields and dovish commentary from regional Fed presidents. Tech leadership persisted, with large-cap AI, semiconductor and cloud-platform names approaching record valuations. However, weaker goods demand and cooling labour-market momentum raised questions about the durability of late-cycle growth. Rate-cut repricing drove a broad shift back into risk assets globally, positioning the US yield curve and Fed communication as the primary drivers of cross-asset flows.
Asia Market Update:
Asian markets were mixed as regional fundamentals diverged from supportive global risk sentiment. Japan was a key focal point after BoJ Governor Ueda signalled conditions for policy normalisation, lifting the yen and weighing on the Nikkei. Earlier in the week, Fed-driven optimism encouraged renewed foreign inflows into South Korea, Taiwan and India. However, export data from China, South Korea and Thailand continued to highlight weak global goods demand and ongoing inventory reductions. Commodity-linked markets such as Indonesia remained volatile, reacting to swings in oil and industrial metals. Overall positioning favoured liquid, higher-yielding Asian assets.
Currency Market Update:
Currency markets moved sharply as global rate expectations shifted toward near-term US easing. The dollar index posted its weakest week in four months, driving broad EM currency strength. The rand firmed, supported by improved global risk appetite and reduced US yield differentials, though domestic fundamentals remain fragile. The yen surged after BoJ policymakers signalled conditions for a potential hike, marking a rare hawkish turn and increasing G10 volatility. With cross-border flows accelerating, FX performance is increasingly dictated by policy divergence, external-balance profiles and sensitivity to global commodity and rate cycles.
Commodity Market Update:
Commodity markets reflected a complex interplay of supply decisions and shifting macro expectations. Oil stabilised after OPEC+ held output steady for Q1 2026, lifting Brent and WTI by more than 1.5% late in the week. Geopolitical risks, including Russia-Ukraine talks and Middle-East tensions, kept volatility elevated. Gold extended gains as US yields fell, with ETF inflows accelerating. Industrial metals softened: copper pricing reflected persistent global manufacturing weakness and widening supply-demand imbalances. Overall, the sector leaned cautiously constructive, reflecting improved sentiment toward precious metals but lingering uncertainty across energy and base-metal markets.