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Market Commentary | The week that was

SARB hiked rates by 50bps in 3-2 vote split: On Thursday (30 March) the South African Reserve Bank’s (SARB) Monetary Policy Committee Meeting (MPC) hiked the repurchase rate by 50 basis points. This resulted in an increase in the repo rate from 7.25% to 7.70%. The prime lending rate will now rise to 11.25% from 10.75%.

Treasury outlines employment losses and trade-offs to pay for the public sector agreement: In a statement, released on Friday (31 March), National Treasury announced that it will not increase government borrowing to pay for unbudgeted salary increases after unions, representing public sector workers, signed a two-year pay agreement with the government resulting in a 7.5% increase this year. Treasury has confirmed that government departments must find the additional R37.4 billion required to pay for the most recent public sector pay agreement by cutting programs, eliminating positions, and addressing excessive pay rises in public businesses that receive public funds.

SA opposition party re-elects Steenhuisen as leader: The Democratic Alliance, South Africa's largest opposition party, re-elected its leader, John Steenhuisen, for the next three years at the recent Democratic Alliance conference. Helen Zille will also continue serving as chairperson of the party’s federal council after being uncontested. The internal vote comes as South-Africa prepares itself for general elections next year. According to a Social Research Foundation poll, backing and support for the DA and the populist opposition group, the Economic Freedom Fighters, have decreased in recent months.

Markets: South African markets closed lower on Friday, with most of the losses occurring in mining sector stocks. Platinum miners, Anglo American Platinum, Northam Platinum and Impala Platinum dropped by 5.4%, 4.1% and 3.9%, respectively. The JSE All Share index declined by 0.8% to close at 76,100.17. South Africa’s rand was stable against the dollar over the weekend after trading at its strongest level in over a month on Friday. Oil prices increased on Monday after Saudi Arabia and other OPEC+ oil producers confirmed an unexpected round of output cuts, a possibly worrying sign for global inflation. This follows only days after a slowdown in US price data have reflected improved market optimism. On Monday (3 April), the rand was trading at R17.88/$, R19.30/€, and R21.95/£. Brent crude was trading at $83.62 a barrel.

Looking at the week ahead: Companies that will release results this week include MTN, Sanlam and Standard Bank. In the US, data will be released on Imports and Exports (Feb), Total Vehicle Sales (Mar), non-farm payrolls as well as Consumer Credit.

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