US President Donald Trump’s strong stance on import tariffs continued to exert a major influence on global market sentiment through February. In South Africa, the last-minute postponement of the National Budget Speech caused unease, capping a month of negative news. However, the backlash from currency and financial markets was relatively muted. In US dollars, the MSCI World Index fell 0.7% month-on-month, while in rands it was down 1.238%, reflecting a stronger rand/dollar exchange rate.

Trump kicked off February by announcing 25% tariffs on Mexican and Canadian imports and 10% on those from China. By mid-month, he had postponed their implementation until further studies were completed, which lifted market sentiment. He also initiated peace talks with Russia to achieve a settlement in the Russia/Ukraine war – without Ukraine’s participation – which raised hopes of a “peace dividend” for the Eurozone. The uncertainty surrounding Trump policies benefited gold prices, which hit an all-time high of $2 954.69/oz on 20 February.

The US reported headline and core CPI for January that was above expectations, at 3% year-on-year and 3.3% year-on-year respectively, while the unemployment rate was below expectations at 4%.

In South Africa, the JSE followed global market trends, with a 0.01% decline in the All-Share Index for the month. This was a relatively resilient outcome, given global and local economic news. These included a rift between the US and South Africa over the Expropriation Act, which could derail the benefits South Africa enjoys under AGOA. On 19 February, the Minister of Finance’s Budget presentation was postponed to 12 March 2025 as coalition partners failed to agree on a 2% hike in the VAT rate. Hard-pressed consumers faced a steep petrol price increase, putting upward pressure on inflation and deferring hopes of an interest rate cut in the near term. Statistics SA reported a further decline in mining and manufacturing output for December 2024.

Elsewhere, the Bank of England cut interest rates by 25 bps to 4.5% and halved its forecast of economic growth for 2025. Inflation in the UK reached 3% year-on-year in January from 2.5% in December. German voters went to the polls on 23 February to determine who will lead the lower house, the Bundestag, after the collapse of the three-party coalition last November. Another coalition government is the most likely outcome. China’s inflation rate for January rose to 0.5%, probably as a result of spending ahead of the Lunar New Year holiday. The Japanese economy grew by an annualised 2.8% in Q4 2024, ahead of expectations.

The table below highlights the year-to-date, one- and five-year returns of key asset classes and currency pairs of interest to South African investors in February.

Table 1: Total returns to 28 February 2025