Global Economic Trends and Local Insights
Business activity in the US was stable in January, as increased demand for new orders was counterbalanced by a weaker labour market and persistent concerns about rising costs tied to import tariffs. At its January meeting, the US Federal Reserve (US Fed) left interest rates unchanged, noting that policy is significantly restrictive and data is mixed. China ended 2025 having met its economic growth target, despite ongoing trade frictions with the US. Meanwhile, the Bank of Japan (BoJ) raised its growth forecast for the fiscal year ending March 2026, while keeping interest rates on hold. The South African Reserve Bank (SARB) maintained interest rates at its January meeting, supported by improving inflation trends and signs of a strengthening domestic economy. The International Monetary Fund (IMF) lifted its 2026 growth forecast for South Africa.
Source: Graviton News
Macro Overview
Global overview
The year started positively for global equity investors when the MSCI World Index ended January 2026 up 2.24% month-on-month (m/m) in dollars. One-third of S&P 500 companies reported results in January, and three of the US mega-cap tech stocks saw their share prices fall significantly in the wake of their earnings announcements. Emerging market (EM) equities again significantly outperformed their developed market (DM) peers. The MSCI EM Index gained 8.86% m/m in dollars, largely attributed to the outperformance of semiconductor and mining companies. Geopolitical tensions between Europe and the US over the sovereignty of Greenland added to selling pressure on US government debt, contributing to US dollar weakness. The FTSE 100’s December gains continued into January, ending the month up 3.08% m/m from 2.19% m/m in pound terms. The S&P 500’s January gains were 1.44% m/m, compared with December’s 0.06% m/m, both in US dollars. Global bond gains continued into January at 0.94% m/m from December’s 0.26% m/m gains in US dollars. December’s global property negative figure of -1.03% m/m changed to a positive for January at 3.88% m/m in US dollars. The Euro Stoxx 50 Index gained 2.79% m/m in January from December’s 2.25% m/m gain in euros. The Dow Jones Index gained 1.80% m/m in December from December’s 0.92% m/m in US dollars, and the Nikkei’s December gains continued into January, ending at 5.93% m/m in yen terms.
Local overview
Momentum on the JSE continued in January, when the local bourse extended a run that has seen it rally 70% over the past two years. The FTSE/JSE Capped All Share index posted gains of 3.72% m/m in rand terms and 7.16% m/m in US dollar terms. Its performance continues to be dominated by precious metal miners. Gains in the Resources sector continued in January, at 12.49% m/m from December’s 5.72% m/m gains. Both Property and Financials continued their gains in January, at 0.98% m/m and 2.97% m/m respectively, in rand terms. The Industrials sector was negative in January, ending at -0.58% m/m from December’s 4.39% m/m gains. Cash was positive for the month at 0.57% m/m in rand terms and 3.91% in US dollar terms. The local bond market’s gains continued in January for short-, medium-, and long-term bonds. The FTSE/JSE All Bond Index ended January positively at 1.95% m/m in rand terms. Bonds of 1-3 years were positive at 0.74% m/m, along with bonds of 3-7 years at 1.00% m/m. Bonds of 7-12 years were positive at 1.76% m/m, and bonds of 12 years and above were the biggest gainer for the month at 2.85% m/m. In January, the rand dipped below R16/US$ for the first time in almost four years, before ending the month at R16.15/US$, leaving it 3.32% m/m stronger against a weak US dollar. The rand also strengthened against the euro by 2.00% m/m, and against the British pound by 1.27% m/m.