By Daniel Wesonga

South African equities are showing signs of stabilization, with the JSE FTSE Top 40 index recovering above the key support level of 80,000 points, opening the possibility of a retest of recent highs. Despite inflation rising for the third consecutive month to 3.2% in January, it remains well below the South African Reserve Bank’s 4.5% target. The core inflation rate, however, eased to 3.5%, indicating underlying economic stability. While inflationary pressures could affect consumer spending, the market’s resilience suggests a lower risk of a hawkish stance, providing moderate support for equities in the near term.

Sector performance was mixed, with 11 out of 20 sectors closing lower. Consumer non-durables, consumer durables, and technology services outperformed, while electronic technology, utilities, and health technology lagged. Naspers Ltd gained 1.77%, and financial stocks like Firstrand Ltd, Capitec Bank Holdings, and Standard Bank Group showed strength, advancing 1.15%, 1.71%, and 2.47%, respectively.

Meanwhile, the potential introduction of U.S. tariffs on steel and aluminum poses risks to South Africa’s economy, potentially increasing costs and leading to job losses. This could disrupt export-dependent industries and weigh on the equity market.

Wesonga is Senior Sales Manager at Pepperstone