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Market Commentary | The week that was

Finance Minister Enoch Godongwana’s 2022 Medium–Term Budget Policy Statement (MTBPS) has seen the anticipated improvement in government’s debt to Gross Domestic Product (GDP) and fiscal deficit forecasts. Over the medium-term, gross debt is forecasted to peak at 71.4% of GDP in 2022/23, much sooner than the initially expected peak of 75.1% of GDP in 2024/25.

Meanwhile, the Department of Mineral Resources and Energy announced an increase of 51 cents per litre in the price of both petrol grades - 93 and 95 octane - on Wednesday, 2 November. The price of diesel will rise by approximately R1.43 per litre. Peter Morgan, director of the Liquid Fuels Wholesalers Association, raised his concern about the diesel price trajectory and the increase in the price of petrol. The latest price hikes will increase the pressure on mining and agriculture enterprises, as fuel expenses represent 13% of their input costs – with trucking being hit even harder. Analysts anticipate the increases to lead to inflationary pressures on household necessities.

Despite the US Embassy’s warning last week, no terrorist attack occurred at their Sandton-based embassy. At a meeting, including members of South Africa’s State Security Agency (SSA) and US Central Intelligence Agency (CIA), the lack of transparency and communication between the parties caused tension as they clashed over the shortage of info regarding the terrorist threat.

News from Eskom is that the power utility has announced stage 2 load shedding to be implemented this week.

South Africa’s rand weakened on Friday as the dollar regained value ahead of the US Federal Reserve’s (FED) policy decision on interest rates next week. Overall, the Top-40 and broader All-Share Indices decreased by 1.29% and 1.1%, respectively.

Looking at the week ahead; Key local economic data releases including trade balance and PMI; Naamsa Vehicle sales, money supply and private sector credit data releases; Federal Reserve’s November meeting beginning Tuesday (focus here); UK Central Bank meeting on Thursday to decide its benchmark lending rate.

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