Financial markets remain nervous: Crypto took a hiding

The equity, capital and foreign exchange markets traded nervously last week, after the big speculative sell-off of the previous Friday. Precious metals prices also remain under pressure but started to recover last Thursday, with the gold price trading again near the $5 000 per ounce level ($4 966 in late trading).

The All Share index (ALSI) moved nervously and uncertain in a narrow band of between 118 500 points and 120 057 over the week and ended at a mere 6 points up from the previous Friday when the index experienced a big drop of 4.15% or 5 000 points alone.

The uncertainty over the US newly appointed Federal chair Kevin Warsh and a global selloff of precious metals and commodities, kept markets in a crisis, due to ongoing geopolitical uncertainty. The JSE Precious and Mining index recovered by 4.7% last week. The ALSI is still 2.34% higher for the year-to-date.

The Rand exchange rate also saw some see-saw movements last week, between R5.97/$ and R16.32/$ but ended Friday evening much stronger at R16.03/$, gaining 17 cents against the Euro to close on R18.95/€ and with 26 cents against the pound to close Friday at R21.82/£. The foreign exchange markets now await the budget speech by the Minister of Finance on Wednesday, 25 February and are expected to move in a more narrow but stronger band.

Markets in the US on Wall Street experienced big volatility last week, after the big selloffs the previous Friday as tech stocks and cryptocurrencies experienced big losses. Bitcoin tumbled by more than $20 000 during the first four days last week and at one stage traded as low as   $63 000 on Thursday, after it recovered back to above $70 000.00 on Friday evening.

Falcon Wealth Planning founder Gabriel Shahin believes the US equity market is amid a “great recalibration”, where investors are going to move further out of growth stocks and into value. Over the coming months, his bet is on large-cap value names, which played out on Friday, with investors buying up shares in areas such as industrials and financials. The Dow Industrial index, after losing more than 1.0% the previous Friday, gaining more than 2.0% till last Wednesday, just to lose it all again on Thursday, just to shoot up by 2.7% again on Friday illustrates the uncertainty and nervousness in most of the developed market equity prices.

US non-farm payrolls and inflation rate releases delayed

The federal government shutdown at the end of last year, means the release of the US employment report for January 2026 has been delayed from 6th February to this coming Wednesday (11th February), and the inflation (CPI) release has been pushed back to Friday (13th February). The delayed US non-farm payrolls increased by only 50 000 in December. This reading came below the market expectation for an increase of 60,000. The US unemployment rate nevertheless declined to 4.4% in December from 4.6% in November and better than the 4.5% that was expected.

Growth in new jobs is now expected to have risen from 50k in December to 70k in January and the unemployment rate to have held at 4.4%. The CPI inflation data for December could be more market moving if there is any material change in the headline or core rates, after they held steady at 2.7% and 2.6%, respectively, in November. US retail sales for December will be released tomorrow.

Domestically, Statistics South Africa will release the manufacturing production data for December on Wednesday.

Chris Harmse is the consulting economist of Sequoia Capital Management and a senior lecturer at Stadio Higher Education.

*** The views expressed here do not necessarily represent those of Independent Media or IOL.

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