Daniel Wesonga

South African stocks could remain on a slight upside course, following a measured advance in the JSE FTSE Top 40 Index on Wednesday, which rose 0.13% to close at 86,246.13. Despite the modest gain, market breadth indicated a potential shift toward profit-taking, with only four of the twenty sectors closing higher.

Commercial services led the gains, climbing 3.78%, followed by communications (+1.34%), producer manufacturing (+0.85%), and financials (+0.62%). Meanwhile, sharp losses in energy minerals (-10.60%), electronic technology (-3.34%), industrial services (-2.11%), and health technology (-1.98%) weighed on overall sentiment. Among major constituents, Firstrand, Capitec Bank, and Standard Bank posted gains, while Naspers, Vodacom, and BID Corporation declined.

The equity market’s steadiness occurs against a backdrop of mounting macroeconomic pressures. Recent forecasts indicate a significant downgrade in GDP growth prospects for 2025, reflecting heightened global trade tensions and domestic headwinds such as fiscal pressures and ongoing electricity supply constraints. These factors could dampen investor confidence.

Meanwhile, disinflationary trends and expectations of monetary easing could provide some relief. Headline inflation reached 2.8% in April, providing the South African Reserve Bank with room to consider further rate cuts. Market participants could strongly react to the PPI data release and the central bank’s decision today.

Friday’s release of the latest trade data could be closely monitored for clues on export performance and external demand strength. A solid trade report could strengthen confidence in resource-linked and export-oriented equities, offering support to the market. Conversely, a softer outcome may reinforce concerns over global trade disruptions and temper risk appetite.

Wesonga is Senior Sales Manager at Pepperstone