South Africa’s Minister of Finance finally tabled a budget on 12 March. It contained proposals for two VAT hikes (total of 1%) over each of the next two years in order to cover the revenue shortfall. At the time of writing the Government of National Unity (GNU) did not agree on the implementation of the budget and the ANC had to garner votes from Action SA and others to push it through parliament. This state of affairs created a few cracks in the GNU which were detrimental to both the rand and bond yields. It also doesn’t help that South Africa’s current diplomatic stance towards the United States is not entirely welcomed by their counterparts across the Atlantic.

Early in April, US President Donald Trump announced a sweeping new set of tariffs, arguing that they would allow the United States to economically flourish. These new import taxes, which Trump imposed via executive order, have sent economic shockwaves around the world and have caused heightened volatility in investment markets. The US president argues they are necessary to address trading imbalances and to protect American jobs and manufacturing.

From their latest meeting minutes, the US Federal Reserve’s Federal Open Market Committee (FOMC) has discussed maintaining a cautious approach to rate adjustments, considering inflation trends and economic growth. The FOMC members further noted strong labour market performance but acknowledged concerns about persistent inflationary pressures.

President Trump dominated news flow on many global matters – including finding a resolution to the conflict in Ukraine. The Trump administration has taken a mixed approach to the Ukraine-Russia conflict. While President Trump has publicly expressed confidence in Russian President Vladimir Putin, there have been efforts to broker peace, though with limited success. Recent talks aimed at a ceasefire ended without a formal agreement, and Russia continued its military actions against Ukraine

Marine Le Pen, the leader of France's far-right National Rally party, is facing a significant political and legal crisis. Recently, she was found guilty of embezzling European Union funds, resulting in a five-year ban from running for public office and a four-year prison sentence, with two years suspended. This ruling has thrown her political future into disarray, as she was a frontrunner for the 2027 French presidential election.

Finally, the Federal Reserve kept interest rates unchanged, signaling caution amid economic uncertainty. The European Central Bank cut rates by 25bps, marking a shift toward a less restrictive monetary policy. The South African Reserve Bank’s Monetary Policy Committee kept the repo rate unchanged at 7.5%, in line with the consensus forecast and market pricing. The decision was close, with two of the six committee members preferring a repo rate cut.

Developed markets saw a sell-off (MSCI World Index: -4.2%), while emerging markets gained (MSCI Emerging Markets Index: +2.4%), as China’s economy showed signs of recovery and reacted positively to government stimulus measures, leading to the MSCI China posting gains of +3.1% for the month.

The S&P 500 dropped 6.2%, reflecting investor concerns over tariffs and economic growth. Consumer confidence hit a four-year low due to inflation worries. The Euro Stoxx 600 Index declined 2.3%, impacted by US tariff hikes and economic uncertainty.

In South Africa, the JSE All Share Index rose 4.0%, driven by strong performance in mining stocks – partly due to rising gold prices (as the precious metal hit a new all-time high), gaining a little over 9% in March, taking the one year return to just shy of 40%.

SA bond yields rose for the fourth consecutive month in March, with longer dated bonds coming under the most pressure in response to the budget. This suggests further delays in fiscal consolidation, leading to a sharp increase in South Africa’s country risk premium.

The rand strengthened slightly against the US dollar. The oil price increased by 5.1% but is still 11% lower than 12 months ago.