South African (SA) markets started September on a strong footing, with the Capped SWIX Index up over 6% by mid-month and the rand strengthening by 4% over the same period as receding global recession fears and increasing optimism for a resolution to trade wars buoyed global sentiment. However, geopolitical risk conspired to reverse those gains by month-end with the Capped SWIX Index ending September up only 0.7% and the rand just 0.3% stronger.
Gold shares, which were up 28% in aggregate in August, had given back most of those gains by mid-September, although these shares recovered some of their losses in the second half of the month the sector still ended September 14% lower. SA banks, insurers and retailers closed the month up around 5% in aggregate and were responsible for most of the index performance last month, with Capitec (+17%), Momentum Metropolitan (+15%) and Shoprite (+10%) leading the way. The spike in oil prices related to the drone attack on Saudi oilfields briefly lifted beleaguered Sasol’s share price, but that was short-lived and, as oil prices settled, Sasol continued its decline, ending the month down 12%. During September the much-anticipated spin-off of the Prosus listing by JSE-heavyweight, Naspers initially created some excitement, with the share up 8% into the mid-month event, but that also faded into month-end with the combined Naspers/Prosus performance a slight drag on the index for the full month.
SA benchmark government bonds (due in 2026) ended the month with yields slightly higher (+0.16% to 8.31%), following the trend of higher global bond yields. The SA Reserve Bank (SARB) kept rates unchanged at its September meeting, much in-line with expectations and despite lacklustre growth expectations. SARB Governor Lesetja Kganyago suggested that the SARB’s models don’t forecast the need for another cut this year and forward-rate agreements fell as traders became less optimistic about more rate cuts, despite the SARB’s statement appearing more dovish than the previous one.