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Market Commentary | The week that was

Updated: Jul 13, 2022

The rising tension between Russia and the Ukraine are dominating global headlines.

According to reports, 130,000 Russian troops have gathered along parts of the Ukrainian border and it seems an invasion is imminent. The conflict between the two countries is aggravated by Russian President Vladimir Putin’s demands that the North Atlantic Treaty Organization (NATO) stops its eastward expansion and denies the Ukraine membership of the organization.

Russia also wants NATO members to remove their troops in countries that have joined the organization after 1997 – a move that may cause Europe’s geopolitical tensions to rise to its highest level in decades.

Meanwhile, this ongoing tense situation has been driving global equity markets lower, while at the same time advancing oil prices to seven-year highs.

Locally, the SA equity market and the Rand are showing resilience, amidst rising US Treasury yields and prospects of quicker than expected rate hikes. The Rand is usually regarded as a gauge of risk sentiment – but seems to be bucking this trend so far in 2022.

Looking at the week ahead: January’s all-important headline Consumer Price Index (CPI) will be announced. Expectations are that SA’s CPI could tick down to 5.7% from the previous 5.9%. The announcement will also give an indication of possible future rate hikes, especially in the wake of last week’s announcement that the US CPI stands at 7.5%; higher than the expected 7.2%.

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