By Daniel Wesonga

South African equities hovered near their recent high, with the JSE FTSE Top 40 Index closing at 82,538 points on Thursday, ending the day flat as market participants reassessed market conditions. Global uncertainty regarding U.S. tariffs, including on foreign-made vehicles and auto parts, has led investors to adopt a cautious stance.

With tariffs set to take effect on April 3, concerns over global trade tensions, potential growth disruptions, and inflationary pressures have weighed on market sentiment. For South African equities, this uncertainty puts a lid on potential gains, particularly within export-driven sectors vulnerable to global trade shifts. The outlook remains subdued, with the market unlikely to break out of its current range until a clearer global economic direction emerges.

On the domestic front, South African Producer Price Inflation (PPI) moderated slightly to 1% year-on-year in February, down from 1.1% in January. A rebound in inflation could affect the economy and the stock market. Additionally, a shift in the South African Reserve Bank’s inflation targeting framework could introduce some risks for the equity market. A move towards a lower inflation target might lead to a higher interest rate environment in the short term, dampening market sentiment.

Wesonga is Senior Sales Manager at Pepperstone