Markets steady into the new week as gold surges and Wall Street eyes Jackson Hole

Global markets opened the week on a cautious note on Monday, with gold extending its rally to fresh three-month highs and US equity futures under pressure as investors weighed rising Treasury yields, renewed Iran-related tensions and the approach of this week's Jackson Hole symposium in the US.

Local markets

The JSE closed out last week on a softer note, with the All Share index slipping 0.34% on Friday to end at 111,493 points. The index nonetheless finished the week 1.92% higher overall, supported by broad gains across resources shares. Gold miners have led sector performance in recent sessions, moving into overbought territory on some measures, while banks, insurers, telecoms and technology counters have slid into oversold conditions – pointing to a market rotating sharply out of rate-sensitive sectors and into precious metals.

The rand held firm, trading at around R16.00 to the dollar on Monday, close to its strongest level since late February. The currency has strengthened by more than 2% over the past month, helped by a softer dollar and South Africa's easing inflation picture – annual inflation slowed to 4.3% in July from 5% in June, though core inflation ticked up to a two-year high of 4.2%. The Reserve Bank, which held its repo rate at 7% last month, is widely expected to keep rates on hold at its next meeting on 23 September, though a 25-basis-point hike remains on the table.

Global markets

Gold pushed above $4,630 an ounce on Monday, extending last week's gains to their highest level since mid-May, as renewed concern over US fiscal sustainability weighed on the dollar and bond yields. The rally follows an unexpected increase in the US Treasury's planned buybacks of longer-dated debt, which analysts say has revived the so-called “debasement trade” – with investors turning to gold as a hedge against rising government borrowing.

US stock futures fell in early Monday trade, with the Dow, S&P 500 and Nasdaq all pointing lower after a bruising week that saw all three benchmarks lose between 1% and 2%. The 30-year Treasury yield touched a 20-year high and the 10-year hit a 20-month high, adding pressure on equities. Sentiment was further dented by reports that Washington is preparing fresh sanctions on Iran, along with Canada's threatened retaliatory tariffs after trade talks between the two countries collapsed.

Attention now turns to Friday's July personal consumption expenditures inflation data and, more significantly, the Jackson Hole Economic Policy Symposium running from 27 to 29 August, where Kevin Warsh will deliver his first keynote address as Federal Reserve chair. Markets have largely priced in a neutral tone, with September rate-hike odds sitting at roughly one in three, though Warsh's relative unfamiliarity as a communicator means his remarks carry unusually high potential to move markets.