GLOBAL MARKETS
UNCERTAINTY DOMINATES GLOBAL MARKETS
Uncertainty once again dominated market performance this past week as investors internalized the weak US payroll numbers and the World Bank further downgraded their forecasts for global growth. In reaction, developed market bonds have found further support, with bond yields in the US, Germany, the UK and Japan all declining lower.
The US 10 year bond remains below 1.70% while the German Bund is at an all-time low of 0.02%. In Japan, the 10 year remains well in the negative at -0.15% .
According to the World Bank, global growth is now expected to be 2.4% for 2016, down from 2.9% previously. The Bank cited the main reasons for the revision due to weak growth in emerging and commodity exposed economies, low commodity prices and subdued global trade.
Copper has also fallen sharply on evidence of higher inventories, adding to concerns over global growth. Copper fell 3.8% over the week and is now down 4.1% year-to-date.
Brent crude on the other hand reached an 8 month high of USD 52/bbl with unplanned disruptions impacting supply. Amongst other factors, militant action against oil infrastructure in Nigeria and wild-fires in Canada are having the biggest effect.
In response to the weak employment numbers, Fed Chairperson Janet Yellen spoke at a conference in Philadelphia where she implied that the Fed would not raise rates in June, although a rate hike in July was not off the table. Overall, her message was positive, stating that she views the forces supporting employment growth and inflation to outweigh the forces hindering this.
She also cautioned against placing too much importance on a single month’s payroll report, implying that the Fed would continue with their strategy to gradually increase interest rates if the May number turned out to be an anomaly.
In her speech, Yellen also mentioned the challenges a Brexit may cause. The referendum is scheduled for 23 June and polls continue to indicate that the outcome is going to be tight. Leading up to the event volatility in the European markets is likely to remain.
With most markets ending the week in the negative, Europe was amongst the worst performers, the Euro Stoxx 50 Index closing -2.8% lower. EM’s outperformed DM’s, the MSCI EM and MSCI World indices up 0.9% and down -0.8% respectively.
DOMESTIC MARKETS
WORLD BANK LOWERS GROWTH EXPECTATION
In South Africa, markets started the week optimistically with the country having avoided a downgrade to junk status by rating agency S&P and risk-on trade from investors who believed rates would be lower for longer in the US.
However, following the poor global growth fore-casts from the World Bank along with other negative economic indicators, sentiment turned with most markets ending the week in the negative. After having reached an inter-week low of ZAR/USD 14.68, the Rand closed the week at ZAR/USD 15.24.
In addition to downgrading global growth, the World Bank reduced its forecasts for South Africa for 2016 to 0.6% from 1.4% previously.
Stats SA reinforced this view, releasing negative Q1 GDP figures which were significantly below expectations. Expectations were for a slight con-traction of -0.1% q/q but in the event, GDP came out at -1.2% q/q.
This equates to a -0.2% y/y decline. The fall in GDP was largely driven by mining, impacted by a large number of safety related stoppages as well as agriculture, the effects of the drought still evident.
Mining and manufacturing data for April was also released, both indicating the sectors remain under pressure. Mining production declined -6.9% y/y but this was better than expectations of -8.5% and substantially better than March’s number of -17.8% y/y. Manufacturing production also exceeded expectations at 2.9% y/y, well ahead of the -2% y/y the previous month.
On a more positive note, Fitch Ratings Agency left South Africa’s foreign currency credit rating unchanged at BBB-.
While a downgrade to junk status had not been expected, many had forecast the agency to downgrade the country’s outlook from “stable” to “negative.” S&P, who announced their credit rating for South Africa last week, have the country on a “negative” outlook.
Given the challenges of boosting growth and political tensions, the government is going to have to work hard to avoid a downgrade before the end of the year. However, it seems for now the agencies are giving SA the benefit of the doubt.
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Megan joined the Brenthurst Wealth team in March 2026 as an Administrative and Fiduciary Services Assistant at our Val de Vie Office in the Western Cape. Prior to joining Brenthurst, Megan gained three years of experience in the retail sector, where she developed management and client service skills.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Esmarelda Isaacs-Andreas joined the Brenthurst Wealth Stellenbosch office in October 2025, taking on the dual role of Receptionist and Fiduciary Administrator.
I obtained my National Diploma in Financial Information Systems from the Cape Peninsula University of Technology in 1999 and have worked in the wealth management industry since January 2000. Over the years, I have gained extensive experience in various roles, including Portfolio Manager Assistant, Planner Assistant, and Paraplanner.
Ashley joined Brenthurst Wealth in January 2025 as Office Administrative Assistant and Receptionist for the Stellenbosch Office.
René Heystek joined Brenthurst Wealth in November 2023, as receptionist and administrative assistant in the newly established George/Garden Route office.
Michelle Heystek has built a career in the financial services over the last two decades, after obtaining her B.Com degree in Financial Management in 2005. Once she joined Brenthurst in 2006, she continued her academic journey, obtaining her Certificate in Wealth Management from INSETA in 2007, followed by a Postgraduate Diploma in Financial Planning from the University of the Free State. In 2008, she earned the Certified Financial Planner (CFP®) designation.
Anelle joined Brenthurst Wealth as a Receptionist and Administrative Assistant to Brian Butchart in the Cape Town office in December 2023. She has a wealth of knowledge from working as a liaison between Financial Advisers and clients at TMA and Absa Investment Management Services (Aims) since 1998. She obtained her B. com degree from the University of Port Elizabeth in 1997.
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Sanet was appointed in April 2020, joining our Cape Town team as an Executive Administration Assistant to Renee Eagar. She has been in the financial services industry since 1990. Her previous experience includes positions at Sanlam, BJM and ABSA. She spent her last 12 years working at Alexander Forbes Private Client Wealth as a Senior Wealth Management Assistant. She has received numerous accolades over the years which include but not limited to, Alexander Forbes Client Service Excellence – Silver award in 2014,2015 and 2017. Sanet has also obtained her Certificate in Wealth Management (NQF 5) in 2012 and achieved “Best Student of the Year” from Moonstone.
Maria Smit is a Certified Financial Planner® with over 10 years of experience in the financial planning industry.
