South African equities opened lower on Wednesday, reflecting divided sector performance. Utilities, communications, and consumer non-durables led the outperformers, while health services, energy minerals, and process industries weighed on the JSE All Share Index.
Market sentiment was pressured by July inflation data, which showed an annual rate rising to 3.5%, in line with expectations, while month-on-month consumer prices jumped 0.9%, the largest increase since February, following a 0.3% rise in June.
Equities are also digesting the impact of the recently imposed 30% US tariff on South African goods, which has fuelled negative sentiment. Pretoria responded with a five-pillar strategy encompassing diplomacy, economic support, market diversification, trade defence, and domestic demand promotion.
While short-term pressures may challenge equities with high US exposure, particularly in agriculture, government support programs, and export pipelines to China, the EU, and AfCFTA markets could help stabilise the situation. Moreover, initiatives to improve local demand also provide a cushion for domestic-focused firms. While some export-linked equities face headwinds, the coordinated policy response lends selective support.
Looking ahead, South Africa takes a prominent role at the 9th Tokyo International Conference on African Development, starting today, with President Ramaphosa, key ministers, and 40 top companies in attendance.
The event aims to strengthen Africa-Japan trade, attract partnerships, and showcase South Africa’s investment opportunities. This high-profile engagement could support domestic equities, particularly in trade, infrastructure, technology, and consumer sectors, potentially attracting foreign investment.
By Daniel Wesonga, Senior Sales Manager at Pepperstone
