Bad news for South Africans making more than R50,000, and US debt hits $40 trillion

The rand strengthened on Wednesday, 19 August, on the back of a weaker dollar and softer-than-expected inflation data.

Statistics South Africa reported that CPI inflation slowed to 4.3% in July, down from 5% in June.

While upside risks to the inflation outlook persist amid the ongoing war in the Middle East, this news saw the rand strengthen to R16.15 against the US dollar.

The news also benefited the JSE, with the All Share Index up 2.41% and the Top 40 Index up 2.68%.

Some of the biggest gainers on the exchange were miners DRDGold and Impala Platinum, whose stocks rose 12.24% and 9.31%, respectively.

Citadel Global managing director Bianca Botes said Wall Street closed little changed on Wednesday, having steadied after Monday’s tech shakeout.

The Nasdaq 100 slipped 0.22%, while the S&P 500 firmed 0.21%, and the Dow added 0.12%.

She said the larger story this week is the July Federal Open Market Committee minutes, which showed officials still see scope for a rate hike if inflation proves sticky.

This powered a sharp risk rebound across Asia. The KOSPI shot up by 5.97%, nearly reversing Wednesday’s chip-driven rout as SK Hynix and Samsung recovered, while the Nikkei is up 1.05%.

The broader MSCI Asia Pacific Index, excluding Japan, is trading higher, feeding off the calmer Fed message and a steadier lead from Wall Street.

In the commodities market, the Brent crude oil price lifted 1.85%, now standing at $91.77 per barrel, hitting a three-week high.

This was due to further escalating tensions in the Middle East, led by the United Arab Emirates’ suspension of financial ties with Iran after nearby missile attacks.

Gold is holding its ground around $4,493/ounce, though it eased 0.67%, as safe-haven demand unwinds and the soft dollar keeps the metal well underpinned.

On Thursday morning, the rand was trading at R16.11 against the US dollar, R18.81 against the euro, and R21.92 against the British pound.

Important finance and investing news

Rich South Africans piling on the debt: Many South Africans earning more than R50,000 a month now need 103% of their take-home pay to service debt, according to DebtBusters’ second-quarter Debt Index. These individuals, considered ‘rich’ in South Africa, now have more debt relative to their income than ever before. [EWN]

America’s trader-in-chief: US Treasury Secretary Scott Bessent announced that it would significantly step up purchases of government bonds as part of its existing buyback program. This came in response to a rise in long-term interest rates, which threatened to significantly increase the US government’s cost of borrowing. [Wall Street Journal] 

A cure for cancer: An experimental vaccine prevented the return and spread of cancer in high-risk melanoma patients, Moderna and Merck announced. Intismeran is a genetically personalised vaccine that instructs the patient’s immune system to attack tumours. Moderna’s shares surged more than 175%, the highest single-day rise in the history of any S&P500 stock. [Semafor] 

Family deals: CMH executives are set to make R745 million in a deal that will see the company buy 13 properties it already rents from these individuals. The properties are owned by companies linked to CEO Jebb McIntosh, CFO Stuart Jackson, and First Car CEO Bruce Barrit. [BusinessDay]

US debt hits $40 trillion: Total US debt crossed the $40 trillion mark for the first time, raising fresh warnings that a fiscal crisis is brewing as government spending surges. The debt burden has more than doubled in less than a decade and is now above 100% of GDP. [Reuters]