South Africa wins R8 billion loan, and Berkshire Hathaway is buying stocks again

There is good news for interest rates and the rand as inflation in the United States is expected to moderate when data is released this week. 

American inflation for July is expected to rise by 0.1% month-on-month, an increase from the decline of 0.4% in June. 

However, the reading for July will include the impact of the renewed conflict in the Middle East and is likely to show that inflation did not rise significantly as a result of an oil price spike. 

Along with US jobs data last week that showed a weak labour market, this increases the chances of the Federal Reserve cutting interest rates at its next meeting.

This gives the Reserve Bank more room to cut rates should inflation cool in South Africa, and will boost the rand as lower rates weaken the dollar. 

Cooling inflation appears to be a global phenomenon. Chinese producer inflation declined for the first time since the war broke out in the Middle East. 

The producer price index rose 3.5% in July from a year earlier, slower than expected and compared with a gain of 4.1% in the previous month.

However, it is not all good news after the United Arab Emirates reported that Iran launched a missile attack on one of its ships on Saturday. 

This comes at a time when both Iran and the United States believe a deal is close. A separate deal between Iran and Oman is also close to being concluded. 

The deal between the countries that surround the Persian Gulf will free up shipping to flow out of the region, increasing oil supply. 

Important finance and investing news

US stocks on a record run: Strong earnings reports from US tech companies are pushing major indices to new highs. 440 S&P500 companies have reported second-quarter earnings so far, and 86% have beaten analyst expectations. [Wall Street Journal]

South African wins R8 billion loan: South Africa has secured a $500 million (R8 billion) loan from the Asian Infrastructure Investment Bank to improve municipal services. The loan will support the South Africa Metro Trading Services programme that seeks to improve the financial sustainability and performance of municipal services. [EWN] 

Berkshire Hathaway splashes the cash: Warren Buffett’s Berkshire Hathaway, under new CEO Greg Abel, was a net buyer of stocks in the second quarter. The company’s cash pile fell by 4% to $364.7 billion, the first decline in four years. It reported a doubling of its quarterly profit as investment income surged. [Wall Street Journal]

Private education is booming: Coronation has backed private education companies to continue their strong run of growth as state education continues to deteriorate. Both ADvTech and Stadio have seen their market capitalisation more than triple in the past five years. [BusinessDay]