South African Assets Shine Amid Global Turmoil and Trump’s Tariff Storm

In a month marked by escalating global trade tensions, South African investors received a welcome dose of relief: local assets have held firm—and even flourished—despite global market volatility triggered by U.S. President Donald Trump’s sweeping tariff actions.

While Trump’s abrupt announcement of “Liberation Day” tariffs on April 2 rattled global financial markets, South African equities powered ahead. The FTSE/JSE All Share Index surged past the 90,000 mark, reaching a record high and delivering over 20% in annual returns.

Global Shockwaves, Local Strength

Old Mutual Wealth investment strategist Izak Odendaal said the sharp increase in U.S. tariffs on Chinese imports—up to 145%—and China’s retaliatory 125% tariffs on U.S. goods have heightened fears of a full-blown trade war.

Despite the drama, Odendaal believes the markets have already priced in Trump’s unpredictability.

“This suggests that markets have sniffed out that Trump does not have the stomach for an extended trade war,” said Odendaal. “He’s already made concessions, and investors expect more deals than fights going forward.”

Global equities have recovered much of their early-April losses. Measured in dollars, they even ended April in positive territory, although the U.S. S&P 500 is still down 4% for the year.

South Africa’s performance stands in stark contrast. Despite external shocks, local equities have rebounded strongly. However, the same can’t be said for the bond market.

Bond Market Caution and Budget Uncertainty

Instead of providing the usual safe-haven rally, U.S. government bonds dropped following the tariff shock, pushing the 10-year Treasury yield up to 4.5%.

South African bonds also experienced wild swings. Global factors aside, local concerns over fiscal policy under the Government of National Unity added pressure. Investors are closely watching the upcoming 21 May budget session—particularly with Finance Minister Enoch Godongwana under pressure to balance spending without a VAT increase, amid weaker-than-expected growth.

Rand, Dollar, and Commodities Tell Their Own Story

The rand, ever sensitive to global risk sentiment, followed a predictable path: it slid from R18.32 to over R19.90 against the dollar before regaining most of its ground.

“The rand typically sells off when global investors are jittery and then stabilises and strengthens,” Odendaal explained. “This time, it just happened faster than usual.”

What came as a surprise was the dollar’s reaction. Rather than acting as a safe haven, the greenback weakened. This anomaly points to broader market fears that U.S. economic growth could falter—possibly leading the Federal Reserve to consider rate cuts.

Meanwhile, commodity markets are flashing mixed signals. Gold prices are up 22% since the start of 2025, reflecting investor anxiety. On the flip side, oil prices have dropped 16%, suggesting softening global demand but also providing potential inflation relief.

Good News for Consumers Too

Lower oil prices and moderating inflation are already trickling down to consumers. Despite a weaker average rand in April, South Africans are seeing a modest reprieve at the pumps this week, with petrol prices dropping by 22 cents per litre.

What This Means for Investors

For now, South African assets appear to be weathering the global storm with surprising resilience. While caution is still warranted—particularly with budget uncertainty and global trade dynamics in flux—investors in local equities have reason to stay optimistic.

“Even in a storm, some ships stay afloat—and right now, South African assets are doing just that,” said Odendaal.

{Source: BusinessTech}

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