It was a mixed performance on global markets in March with US and Asian markets coming under pressure, while European equities performed better. In the US, the Dow Jones Industrial Average (DJIA) recorded its longest losing streak since 2011, as investor concerns that US President Donald Trump’s agenda would no longer be a fait accompli, weighed on sentiment. Trump’s failure to repeal the Affordable Care Act (Obamacare), spooked investors and concern mounted that his promises of sweeping tax reform, regulatory relief and robust infrastructure spending could be delayed or even derailed. The enormous gains markets have made since Trump’s election in November also meant that a pullback might have been somewhat overdue.

Locally, political events once again took centre stage following President Jacob Zuma’s firing of respected Finance Minister Pravin Gordhan and his deputy in a cabinet reshuffle. This came after Zuma unexpectedly called the pair back from an international investor roadshow and resulted in SA equities (especially banking counters) and the rand (-2.2% MoM) coming under severe pressure last week. The move also sparked a sooner-than-expected rating downgrade yesterday when S&P Global moved to downgrade SA to a subinvestment grade rating.

Nevertheless, despite the political noise, after stumbling in February, the FTSE JSE All Share Index still managed to close the month in the black rising 1.8% MoM (YTD it is up 2.8%), buoyed by the performance of rand-hedge counters which make up the bulk of the JSE. The falling rand boosting rand hedges and industrials saw the Indi-25 rocketing 4.0% for the month (YTD the index has now risen by 6.3%), while the Resi-20 rose 2.1% (+0.7% YTD) as a softer rand boosted the local price of bullion. However, financial shares came under pressure following last week’s political developments and concerns around rising interest rates and ratings downgrades, with the Fini-15 dropping by 2.2% MoM (1Q17/YTD the index is down 3.3%).

On the SA economic data front, following disappointing January trade data (a R5.4bn deficit), the February trade balance came in better than expected with a R5.2bn surplus on the back of a 9.4% MoM rise in exports, while imports dropped 9.7%. At its meeting last week, the Monetary Policy Committee (MPC) of the SA Reserve Bank (SARB) also kept the repo rate on hold at 7%. Meanwhile, private sector credit extension (PSCE) growth slowed slightly (to 5.3% YoY in February from 5.5% in January), while February inflation (CPI) retreated to 6.3% YoY from 6.6% in January.

Among commodities, Brent crude came under pressure, retreating by 5.3% MoM (down c. 6% in 1Q17) to just over $53/bbl amid continued concerns around surging US shale production which soared despite the cheaper oil prices, impeding oil’s price recovery. The gold price added 0.1% for the month, to settle at $1,249.20/oz (for 1Q17 the price of the yellow metal is up 8.9%). Platinum came under pressure ending the month 7.0% down, while iron ore lost c. 12% MoM amid rising supplies and, according to a Financial Times report, banks in Beijing having raised their baseline home-loan interest rate after the country’s central bank ordered commercial banks to rein in property lending growth.

Despite a volatile year, most major global markets ended 2016 in positive territory. Shock event outcomes in the UK (the Brexit vote), the US presidential election and Italy (where a large majority of voters rejected prime minister Matteo Renzi’s constitutional reform plans) saw initial negative impacts on these (and world) markets.

However, a few days following Trump’s election the three major US indices (the Dow Jones Industrial [DJI], S&P 500 Index and the NASDAQ) recorded a series of new, all-time closing highs, on the back of renewed market optimism around the Trump administration and its agenda of fiscal stimulus in the form of infrastructure spending, tax cuts and regulation rollbacks.

The market is seemingly pricing in a lot of growth expectations due to these expected policies and YoY the DJI, S&P 500 and NASDAQ closed 13.4%, 9.5% and 7.5% higher, respectively; while in December these same indices recorded MoM gains of 3.3%, 1.8% and 1.1%, respectively. In terms of commodities, oil prices (which reached 13-year lows in January 2016) rose significantly to end December 12.6% higher MoM (+52.4% YoY) as an agreement by major producers to cut output took effect and buoyed oil prices.

The Organisation of Petroleum Exporting Countries (OPEC), led by Saudi Arabia and non-OPEC producers such as Russia, agreed in late-2016 to cut output in a bid to shore up prices which had been weighed down by an oversupply since mid-2014. Gold, however, had another difficult month in December, dropping by a further 2.3% MoM (in November the gold price lost 7.8% MoM), impacted by the US Federal Reserve’s (Fed’s) early December rate hike. YoY, the yellow metal nevertheless is still up 8.0%. The platinum price rose c. 2% YoY and is down 0.8% MoM. 2016 was a turbulent year on the JSE which saw a resurgence in the resources sector as commodity counters were bolstered by relatively steady local labour conditions throughout the year, while also reaping the benefits of investors retreating to so-called safe-haven assets (such as gold) in the wake of Brexit and Trump’s win in the US Presidential election.

On the JSE, the FTSE JSE All Share Index closed 0.1% down YoY but ended December slightly higher (+0.9%) on a MoM basis. Financial shares were the star performers in December with the FINI 15 closing the month 3.1% higher although the index was still down 1.0% YoY. For 2016, the RESI-10 Index was the winner closing the year 26.4% higher YoY (although it was down 3.7% MoM). The Indi-25, which includes a num-ber of dual-listed UK shares and other rand hedges, recorded a turnaround in December after a three-month losing streak, rising by 1.8% MoM (YoY the index is down 10.4%).