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Market Commentary | The week that was

Cape Town's tourism surge defies seasonal trends: In September, Cape Town, a key international hub during South Africa's Tourism Month, witnessed international arrivals surpassing pre-COVID-19 figures despite being the traditional low season. This "revenge travel" spike, with property investments in the tourism sector, is fueling job creation and economic growth.

The unexpected pause in rate hikes: Last week, central banks from the US, UK, Japan, Switzerland, and South Africa decided to maintain their current policy interest rates. The decision was unexpected in the UK and Switzerland, where financial experts anticipated a 0.25% increase from the Bank of England and the Swiss authorities. Similarly, the South African Reserve Bank's Monetary Policy Committee nearly opted for a 0.25% rise, with only one vote making the difference. The US Federal Reserve's committee anticipates one more rate hike this year, while the Fed, the Bank of England, and the South African Bank have concluded their rapid rate hike phases.

Bird flu outbreak and market dynamics shake poultry industry: Quantum Foods reported a R106 million loss due to the Highly Pathogenic Avian Influenza, resulting in the culling of 1.5 million birds. Quantum's share price recovered after an initial decline, trading 4% stronger by midday. While the bird flu impacted the northern regions, Quantum faced a R34 million loss from an outbreak in the Western Cape. Additionally, Quantum predicts a significant earnings decline for the year ending September 2023. Meanwhile, industry peer Astral Foods is also anticipating losses, partly due to load shedding and emphasizing the bird flu's potential market impact.

Markets: The South African Rand weakened due to a surge in US Treasury yields, trading at R19.01 against the dollar. US yields hit a 16-year high, affecting South African bonds. The Johannesburg Stock Exchange's Top 40 index dropped 1.35%.

Week Ahead: On Thursday, 28th September, South Africa will announce its Producer Price Index (PPI) inflation figures and release its quarterly employment statistics. The South African Reserve Bank (SARB) will present its quarterly bulletin, and the United States will announce its real GDP numbers. On Friday, 29th September, the Euro Zone will release its headline inflation data. Simultaneously, South Africa will disclose both its external trade balance and its budget balance.

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