Carla da Waal

Markets kicked off 2025 at levels of ‘maximum uncertainty’ ,even in the words of the IMF. Sentiment soon turned negative as a January rally gave way to renewed volatility as markets were spooked by the news of DeepSeek and threats of US tariffs reignited trade tensions.

Monetary policy remained a central theme, with the Federal Reserve holding rates steady and the European Central Bank continuing to ease. Locally, the SAR B's rate cut had little impact, while South African bonds and the rand recovered despite political uncertainty around the government of national unity amidst an unprecedented delay in delivering the national budget speech.

Emerging markets, particularly China, found support from Al-driven optimism, while commodities saw mixed returns, with gold briefly reaching record highs.

Since the inauguration of Donald Trump, trade and fiscal policy uncertainty has increased dramatically. Trade tariffs on trade-surplus countries to the US has started and are expected to pick up over the next few months, and hostilities between the US and South Africa have intensified. Although we prefer to look through the noise and take a longer-term view, such events lead to increased uncertainties that will lead to more market volatility. The prudent approach is to remain close to our strategic asset allocation benchmarks. We have also retained our slight defensive tilt, as volatile markets could provide investment opportunities.

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