After the turbulence of recent weeks, markets greeted today with relative calm, offering investors a chance to shift their attention back to fundamentals. While these may lack the immediate impact of recent headlines, they remain crucial for spotting longer-term trends. Today’s local mining production data takes centre stage in this context, with particular focus on gold output. As gold prices climb to new highs, investors are keen to see if miners are capitalizing on elevated prices by boosting production or channelling funds into tougher-to-reach deposits.

For perspective, mining output shrank for a third consecutive month in January, dropping -2.7% y/y, slightly worse than December’s -2.4%. Despite soaring prices for precious metals, the sector’s persistent underperformance highlights South Africa’s broader deindustrialization trend. There’s little to suggest the next report will show significant improvement. Chronic underinvestment in fixed capital continues to hamper production, reflecting South Africa’s challenging and costly mining environment, even with its vast mineral wealth.

Global trade uncertainties, fuelled by President Trump’s evolving tariff policies, further weigh on the sector. A slowdown in Chinese growth could dampen demand for South African commodities, adding pressure. However, one upside to US trade actions is the push by some central banks to diversify reserves, selling US Treasuries and buying gold. This has bolstered gold prices, creating a supportive environment for the sector. If sustained, it could encourage private firms to ramp up investment. Still, unlocking meaningful capital flows into South African mining will hinge on a clearer regulatory framework and greater political stability.

ZAR Markets

The rand led emerging-market currency gains at the start of the week as signs the GNU will remain intact kept its recovery rally alive. The USD-ZAR has retreated from a high of 19.9300 reached last Wednesday back to levels of 18.8600 this morning, and all signs are that the move has further to run as the USD remains under pressure more broadly. The rand’s recovery shows just how much risk was being priced into the currency as the GNU viability was brought into question by the still-ongoing TAX dispute between its biggest parties, and also reflects the level of optimism that generally surrounds the GNU. Therefore, should GNU-related news remain positive in the coming days, the USD-ZAR could retrace its early-April move to levels around 18.7400 before running into technical support, followed by a potential continuation all the way back towards the 18 handle.

Global FX Markets

The dollar index, tracking the currency against six peers, stood at 99.641, near last week’s three-year low, and is down over 4% this month, its worst slide since November 2022. Yen is holding around 143.00, euro around EUR/USD1.1355 Sterling at GBP/USD1.3215, the Australian dollar climbed 0.66% to AUD/USD0.6369, and the New Zealand dollar jumped 0.88% to NZD/USD0.5926, hitting a four-and-a-half-month high at the time of writing. Shifting tariff news dominated markets, with the U.S. briefly sparing smartphones and electronics from China duties, though President Trump’s comments hinted at a temporary reprieve. His on-again, off-again tariff moves have fuelled confusion, heightening uncertainty for global investors and policymakers. Fed Governor Christopher Waller suggested tariffs could prompt rate cuts to avert a recession, even with persistent inflation. Traders expect 86 basis points of Fed cuts this year, per LSEG data.