South African financial markets record new record highs

EQUITIES on the JSE, precious metal prices and Rand on Friday ended stronger for the third consecutive week. Despite the higher-than-expected US inflation rate for August that was released on Thursday, sentiment on global markets remains that the Federal Reserve will decrease its Bank rate this Wednesday September 17.

- CHRIS HARMSE

The US core inflation did increase from 2.7% in July to 2.9% August as was expected by markets, but is now significantly higher than the 2.0% inflation target of the Fed.

Prices increased were felt mostly for food (3.2% vs 2.9% in July), used cars and trucks experienced a sharp annual increase of 6.0% against the 4.6% in July and the yearly acceleration for new vehicles was 0.7% against 0.4% the previous month.

Evidence suggests that the higher tariffs that were introduced by the Trump administration at the beginning of last month contributes to these sharp increases.

In reaction to the sharp increases in both the US inflation rate and its unemployment rate, the US dollar continues to depreciate. Together with the strong demand for gold as haven, the gold price ended Friday at a new record high of $3 651, almost $300 over the last month and $1 010 since the beginning of the year.