Johannesburg — South African markets are set for a closely watched session on Monday, with investors monitoring domestic bond activity, currency movements and global developments in oil, gold and U.S. interest rates.

The rand weakened on Friday as investors assessed the South African Reserve Bank’s latest interest-rate decision and growing expectations that the U.S. Federal Reserve could keep borrowing costs elevated.

Economic Events

Key scheduled events for South African markets on Monday include:

– Foreign investors' trading in South African bonds and equities

– Treasury bill auction

Global Markets

Global share markets were mostly lower as oil prices rose again amid uncertainty over prospects for a truce between the United States and Iran.

Higher oil prices have added to concerns about inflation and kept pressure on global bond markets ahead of a week packed with economic data and central-bank signals.

Gold

Gold prices fell by more than 2%, pressured by rising oil prices and renewed concerns about inflation.

The increase in energy prices has strengthened expectations that the Federal Reserve may need to maintain tighter monetary policy for longer, adding pressure to gold and other interest-rate-sensitive assets.

South African Markets

The rand softened on Friday as investors digested the South African Reserve Bank's decision to raise its key interest rate by 25 basis points to 7.25%.

The central bank said the conflict involving Iran had triggered significant price shocks and that tighter monetary policy was needed to prevent inflationary pressures from becoming entrenched.

South Africa's exposure to global energy prices remains significant because the country is a net fuel importer. The rand is also sensitive to movements in the U.S. dollar and global investor appetite for emerging-market assets.

Investors will also be watching South African government bonds. The benchmark 2035 bond yield was unchanged at 8.72% in early trading on Friday.

Wall Street

Wall Street ended higher on Friday, supported by Microsoft and other artificial-intelligence-related technology stocks.

However, elevated oil prices and a recent rise in U.S. Treasury yields continued to keep investors cautious.

South African Press

Business Day

– Visas and infrastructure hurdles on the agenda at France-South Africa investment forum.

Source: Reuters
Reporter: Nilutpal Timsina