Lessons from April's Global Rebound

Markets bounced back, tariffs took a breather, and investors leaned into local and balanced funds. Here's what the data tells us. 

Markets Rebound, Gold Continues to Shine Amid Temporary Tariff Respite
Even short-lived market rallies carry big lessons, especially when paired with surprise policy changes and global tension. Here's what April revealed about investor behaviour that still matters today.

Weekly Market Recap: April 20 – April 27, 2025
Markets continued to express positivity with many of the major indexes comfortably in the green. The SWIX index advanced +1.2%. Global markets were also in the green, with the MSCI World +3.5% (ZAR), the S&P 500 +3.9% (ZAR), and the NASDAQ +6.0% (ZAR).

Zooming Out: Major Economic Developments
South Africa saw a notable political and fiscal shift this week as the National Treasury officially scrapped the proposed VAT increase, reversing a decision that had strained the ruling coalition The increase, which was set to raise the rate to 15.5% on May 1, was scrapped following intense negotiations among coalition partners and parliamentary committees, helping to ease tensions between the ANC and the DA. The decision surprised markets, especially given Finance Minister Enoch Godongwana’s recent insistence on the hike’s necessity but was broadly welcomed as a sentiment-stabilizing move.

Globally, trade uncertainty remained elevated. While U.S. tariffs on Chinese imports held at a punishing 145%, Treasury Secretary Scott Bessent signaled in a closed-door meeting that the current tariff levels were unsustainable, remarks interpreted by investors as potential groundwork for a deal.

Meanwhile, gold retreated from a record high above $3,500/oz as the dollar rebounded. Fed-related uncertainty persisted, with President Trump reiterating public pressure on Jerome Powell to lower interest rates, while also stating he had "no intention of firing him." Despite the unsettled environment, there were tentative signs of cautious optimism that tensions—both at home and abroad—may finally be beginning to ease.

What Are Investors Doing?
Unit trust flows were positive this week, with investors selectively allocating capital to specific strategies, perhaps as a measured response to ongoing geopolitical and market turbulence

Two themes stood out in investor behaviour:

1. A Strong Allocation Toward Local Multi-Asset Strategies
   South African multi-asset portfolios attracted approximately R4.7 million in net inflows this week. These strategies, which combine equities, bonds, and cash across both domestic and international markets, are appealing to investors looking for balanced exposure.
   
   
2. Strong Demand for SA Interest Bearing Funds
   South African interest-bearing funds recorded net inflows of approximately R1.3 million, suggesting positive investor sentiment towards the local fixed-income market. While market volatility and global uncertainty persist, some investors appear to be selectively allocating to domestic interest-bearing instruments in search of yield and relative capital stability.

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