Market Watch for October 2023

Geopolitical Tensions and Fluctuating Oil Prices.

    Our Market Watch for October shows that October was a challenging month for global markets as geopolitical tensions and fluctuating oil prices weighed on risk assets. Emerging markets lagged their developed market counterparts, but South African investors were somewhat protected by the strength of the rand against the US dollar.

    Geopolitical Tensions

    The outbreak of war in Israel and Gaza overshadowed headlines in October, intensifying longstanding issues in the Middle East. These fluctuating dynamics influenced oil prices, which, after a decline from their September peak, rebounded due to evident concerns about the disruption of the oil supply.

    Persistent Hawkish Sentiment from Central Bankers

    Investors grappled with persistent hawkish sentiment from central bankers, who signaled their commitment to raising interest rates in an effort to combat inflation. This weighed on risk assets, as higher interest rates make borrowing more expensive and can slow economic growth.

    Varied Corporate Earnings Reporting Season

    The corporate earnings reporting season was mixed, with US companies generally exceeding expectations while their European counterparts fell short. This contributed to the underperformance of emerging markets, as investors favored companies with strong earnings growth.

    South African Market Performance

    The South African stock market fell by just over 10% in October, but this was better than the performance of global markets. The strength of the rand against the US dollar helped to protect local investors from some of the losses seen in other markets.

    Pick n Pay Stores’ Interim Loss

    Pick n Pay Stores was October’s worst-performing share, losing a whopping 33% after it released an interim loss. The company also did not declare a dividend, which further disappointed investors.

    Impala Platinum and MTN Group’s Declines

    Impala Platinum and MTN Group also recorded significant declines in October, falling by 21.4% and 19.4%, respectively. These declines were attributed to a variety of factors, including weak earnings reports and concerns about the global economy.

    Sibanye Stillwater’s Share Price Slump

    Sibanye Stillwater’s share price slumped by 18% after Morgan Stanley downgraded the counter. The downgrade was based on concerns about the sharp drop in platinum group metal (PGM) prices and the potential impact on cash flows.

    Textainer Group’s Share Price Surge

    Textainer Group was October’s best-performing share, jumping by 29% in the month. The company’s share price surged after announcing that it would delist from the JSE and be acquired by alternative investment firm Stonepeak for US$7.4 billion.

    Gold Mining Counters’ Gains

    The strength of the gold price buoyed the gold mining counters on the JSE, with Harmony and Gold Fields gaining 22% and 21%, respectively. Global geopolitical tensions, led by a flareup in the conflict in the Middle East region, have supported the gold price gains.

    October was a challenging month for global markets, but South African investors were somewhat protected by the strength of the rand against the US dollar. Investors should continue to monitor geopolitical tensions and the global economy as they make investment decisions.

    To find out more about the current market situation, read the Market Watch for October 2023 below:

    Missed last month and need to catch up? Read the September market watch here.