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WATCH: May 2020 economic update

The S&P 500, FTSE 100, and Hang Seng fell in May, while the Alsi increased by 2.11%.

  • June 1 saw South Africans move to a level 3 lockdown, despite the increasing rate of infections. I think we would all agree that economic activity needs to resume.
  • The rand against the dollar ended the month an estimated 5.25% stronger than what it was at the start of May. The rand did recover nicely from the record low levels hit in April despite the South African Reserve Bank slashing interest rates by a further 50bps.
  • The US passed 100 000 Covid-19 deaths, this is the highest official death toll in the world as it continues to reopen its economy.
  • There has been some continued tension building between China and US as President Donald Trump ordered the country’s federal pension fund ($600bn) not to invest in Chinese stocks as they foresee the risk of future sanctions because of the pandemic.
  • It is not only in the US where tensions with China are rising. Australia and the European Union have submitted a resolution to the World Health Assembly to request an independent inquiry into the origins of Covid-19. This has resulted in China suspending some imports from Australia.
  • In just two weeks, China has tested 11m people in Wuhan for the coronavirus. China poured in resources to avoid another outbreak of infections.
  • The oil price has increased over the past few weeks, but this was expected as Opec is set to meet in mid-June to discuss supply. Saudi Arabia and other Opec producers are considering extending record-high output cuts to the end of 2020, however, Russia is wanting to increase production given their economic struggles.
  • The petrol price in now set for around an R1.18/litre hike in June.
  • Financial indicators:
    • The Alsi increased by 2.11% in May, but we are down for the year by 5.5%.
    • The S&P 500 was down over 2% for May but is up for the year by 17.55%.
    • The FTSE 100 was down 2.41% for May and just over 3% down for the year
    • The Hang Seng (China) was down for May over 11% and up for the year by 3.2%.

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Michael Haldane

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