Weekly market brief - 11 July 2025

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* Rand walks the tariff tightrope
* Tariff mayhem continues
* Central banks keep eyes open for tariff impacts
* EU and Trump to discuss terms
* Gold continues to find support
* Oil rebounds

Currency Outlook

  • South Africa’s economy continues to teeter on the edge of stagnation, with recent data painting a bleak picture of weak growth, declining business turnover, and widespread contractions across key industries.
  • In Statistics South Africa’s latest wrap of the economy for June, the most telling indicator was gross domestic product, which grew a mere 0.1% in the first three months of the year. Although agriculture was a shining star, it was not enough to counterbalance contractions in major sectors like mining and manufacturing, which dragged overall performance down.
  • Other industries such as transport, trade, and finance showed some growth on the production side, but it was not broad-based or strong enough to meaningfully shift the needle. On the expenditure side, consumer spending remained resilient, marking its fourth consecutive quarterly increase.
  • Exports also edged up, aided by a drawdown in inventories. However, these gains were offset by rising imports, declining government spending, and a sharp slowdown in infrastructure investment, all critical components for sustainable long-term growth.
  • An added blow to the economy was formal business turnover falling sharply. Data from Statistics South Africa’s Quarterly Financial Statistics survey shows that total turnover dropped by 4.7% in the first three months of the year compared with the final quarter of 2024. Six out of eight industry categories reported declines, with only personal services and construction showing any signs of life. This points to a subdued business environment, made worse by high input costs, power disruptions, and persistent logistical challenges.
  • The signs in the second quarter aren’t encouraging either. April’s performance indicators show year-on-year declines in nearly every major sector, including mining, manufacturing, construction, wholesale trade, motor trade, and road freight and passenger transport. Even electricity generation remained flat, underlining the stagnation in economic activity.
  • Commenting on manufacturing for May, which rose marginally by 0.5% year-on-year, Investec economist Lara Hodes, said five out of the ten manufacturing sub-sectors surveyed rose when compared to the same period last year, with the basic iron and steel, non-ferrous metal products, metal products and machinery category largely responsible for May’s modest increase.
  • “However, the recently announced 30% tariff on exported goods to the U.S. will adversely affect a number of domestic industries, including manufacturing, weighing on already lacklustre business confidence levels. In turn, impeding expansion and accordingly growth and employment creation,” said Hodes.
  • While households continue to prop up the economy through spending, the underlying picture remains deeply troubling. Weak investment, a battered industrial base, and faltering business confidence suggest that South Africa’s economic woes are far from over. (Source: IOL article dated 11.07.2025)
  • The rand has been trading around the R17.80-level for the past few days. A close below R17.80/USD could indicate further strength to R17.60/USD and below, while a close above R17.80/USD might pave the way to R18.00/USD.

Local Data

  • Production rose by 0.5 in May 2025 in comparison to May 2024, the main positive contributors being basic iron and steel, metals and machinery. The main negative contributors were motor vehicles, parts and accessories.
  • The annual national property price inflation declined to 5.2% in February 2025 from the revised 5.3% in January 2025.
  • SARB’s gross reserves rose from $68.12 billion in May to $68.42 billion in June

Interest Rate Outlook

  • The SARB cut the repurchase rate by 25 basis points to 7.25% on 29 May, with the prime lending rate decreasing to 10.75%.
  • The next rate decision of the Monetary Policy Committee will be announced on 31 July 2025.

International News

  • US
    • The 90-day delay in President Trump’s reciprocal tariffs expired on Wednesday; a new deadline of 1 August is now in place.
    • U.S. jobless claims came in at 227,000 last week versus 232,000 for the previous week.
    • The U.S. NFIB small business optimism index registered in line with expectations in June, coming in at 98.6, from 98.8 in May.
    • The U.S. FOMC meeting minutes of the 17-18 June meeting were released on Wednesday.
  • Euro zone
    • Eurozone Sentix investor confidence index improved in July, to 4.5 (the highest since June 2024), from 0.2 in June.
    • Eurozone retail sales increased more-than-expected in May, by 1.8% y/y, after having increased by up upwardly revised 2.7% y/y in April.
    • The EU noted that it is planning to sign a temporary trade deal with the U.S. this week.
  • United Kingdom
    • BOE Governor Andrew Bailey noted that risks to the global outlook remain high.
    • UK house prices, according to Halifax, were unchanged in June, after having declined by 0.3% m/m in May.
    • UK PPI came in at 0.5% y/y in April, matching March’s increase.
  • China
    • The Consumer Price Index (CPI), which is considered the main gauge of inflation rose, by 0.1% y/y in June.
    • The Produce Price Index (PPI), which tracks price changes at the factory gate, declined by 3.6% y/y in June.
  • Australia
    • Australia’s Monetary Policy Board decided to leave the policy rate unchanged at 3.85%, adding that they require more information to assess if their inflation stays on track to reach 2.5% on a sustainable basis.
    • The RBA’s next meeting is scheduled for 12 August 2025.
  • Japan
    • Leading indicators: there was an increase from 104.2 in April to 105.3 in May, mainly driven by the surge in annual household spending.
    • Wholesale inflation slowed to 2.9% y/y in June from 3.3% y/y in May.

Precious Metals

  • Gold fell to $3,282/oz earlier this week on a stronger dollar and higher U.S. treasury yields.
  • Holdings in the SPDR Gold Trust fell 0.12% over the last week to 30.43moz ounces.

Base Metals

  • 3m LME copper fell to near a three-week low of $9,533/t on Wednesday amid U.S. President Donald Trump's plans to start imposing a 50% copper import tariff on August 1.
  • In contrast, the most active COMEX copper futures contract HGc3 rose to a record high of $5.89/Lbs this week, and its premium against the LME copper rose to 26% on Wednesday.

Oil

  • Brent rose above $70/bbl earlier this week on supply concerns in the Middle East.
  • There is doubt the recent increase in production quotas announced by OPEC+ will result in an actual increase in production, as some members are already exceeding their quotas, said Tony Sycamore, an analyst at IG.