Central banks of England and Switzerland, among others, also extended a hawkish stance following the United States Fed’s record 75 basis points hike, which sent shock waves through markets. Prevailing geopolitical tensions in Eastern Europe also lent further volatility to markets as western nations pressed on with further sanctions against Russia. Some relief following easing lockdown controls from China’s zero-covid measures remained a highlight, which have had a dampening impact not only on economic readings but also on corporate earnings.
Equities on Wall Street remained better for sale for most of the month amid recessionary fears spurred by aggressive interest rate hikes, although a rebound was spurred by bargain hunting and headlines about the possible softening of regulatory scrutiny on Chinese tech. While the rate hike trajectory remains assertive, policymakers affirmed that the US economy would be strong enough to withstand further tightening measures.
The local bourse tracked the swings in global markets with a rebound from the month’s lows amid improved risk-sentiment towards the latter part of the month. Emerging market currencies faltered against dollar strength, with the local unit trading above the critical R16 to the dollar mark. Sentiment was also driven by the mixed bag of economic indicators, including a higher GDP print supported by easing of Covid-19 restrictions as well as an improved unemployment rate. This was, however, offset by accelerating consumer prices above the South African Reserve Bank’s (SARB) target range. The reimposition of load-shedding remains a headline risk for domestic growth, with the introduction of stage six power cuts further dimming the economic outlook.
Oil prices have also kept traders on their toes ahead of the Organisation of the Petroleum Exporting Countries (OPEC+) meetings towards the end of the month, with expectations that the oil cartel will stick to its planned output boost for the next three months until September. However, recent reports that Saudi Arabia and the United Arab Emirates are already near maximum production capacity suggest that further supply increases may therefore be unable to relieve mounting pressure on the global economy.