The Reserve Bank's Monetary Policy Committee (MPC) decision to keep the repo rate at 7.0% was unexpected, despite inflation rising from 4.5% in May 2026 to 5.0% in June. The MPC explained this by noting that economic growth remains under pressure, mentioning risks of slowing growth in its statement.
The Committee indicated that the forecast derived from the Quarterly Projection Model (QPM) suggests that the key interest rate will remain relatively stable for the remainder of the year. According to the model, rate cuts are expected later when inflation drops to 3%, and rates will adjust to a neutral level. Furthermore, the MPC asserted that the stronger rand since the beginning of the year helped reduce fuel prices in July, and food inflation remained moderate, increasing by only 1.4%, while further significant declines in fuel prices were anticipated.
The MPC's decision to maintain the repo rate unchanged appears contradictory, as the statement acknowledged that services inflation remains a complex issue, with most components exceeding the 3% mark, including housing, transport, and insurance. The MPC also noted that various core inflation indicators point to intensifying inflationary pressures. Moreover, the latest survey by the Bureau of Economic Research showed an increase in inflation expectations, with short-term expectations being higher than long-term ones. All groups surveyed within this bureau predicted higher inflation, with the largest increase recorded among trade unions.
Despite the MPC's choice to keep interest rates unchanged, financial markets demonstrated disagreement. Following the MPC announcement, the rand sharply depreciated against the US dollar, euro, and British pound, reaching R16.80 to the dollar on Thursday and trading at a weak R16.96 to the dollar on Friday, closing the week at R16.83 to the dollar. The oil price shock situation also continued last week: disruptions on three fronts in the Strait of Hormuz, Red Sea, and Black Sea pushed Brent crude oil prices above $100 per barrel on Thursday. Although prices slightly decreased to approximately $98 per barrel, leading to a modest recovery in stock markets and lower bond yields on Friday, global markets remained under pressure.
On the JSE, the All Share Index (ALSI) lost 1.8% on Friday following the MPC's decision and the sharp rise in oil prices. Although the price of gold recovered from $4,007 last Monday to $4,073 on Friday, and platinum and palladium also strengthened, most JSE indices ended the week lower. Ultimately, the ALSI was nearly flat, showing a gain of only 0.15%, while remaining 14.3% below the level recorded before the US attack on Iran. A similar trend is observed across most major global indices.
Although the initial recovery of petrol prices to 3.57 per liter and diesel to 5.10 per liter looked promising at the beginning of July, the sharp rise in oil prices from $76 to $96 per barrel over the last four weeks, combined with the rand weakening by more than 40 cents last week, ruled out any prospects of fuel price decreases in August. By last Thursday, the recovery in diesel prices had already shrunk to 110 cents per liter. Meanwhile, 95 ULP petrol still showed a recovery of 41 cents per liter, but prices for both fuels are expected to rise next month, with the increase in diesel likely being sharper.
This week, domestic and global financial markets will focus on the Federal Open Market Committee (FOMC) of the US Federal Reserve's interest rate decision, which is scheduled for Wednesday. The general consensus suggests that this benchmark rate will remain unchanged at 3.75%. If the FOMC decides to raise interest rates, the rand, bonds, and South African stocks are likely to come under significant pressure. The Bank of England (BoE) is expected to announce its interest rate decision on Thursday, with markets predicting it will also leave rates unchanged at 3.75%. On Thursday, the US will release personal income and expenditure data, and the Eurozone plans to publish its June unemployment rate on the same day. Locally, Statistics South Africa (Stats SA) will publish government budget balance and June Producer Price Index (PPI) data on Thursday. The South African Reserve Bank will publish South Africa's trade balance on Friday.
Global markets reacted to the resumption of negotiations between Iran and the United States, which suspended military actions following a significant diplomatic breakthrough last weekend.
Analysts suggest that the renewal of dialogue could help reduce tensions in the Middle East, leading to a positive response from investors. However, the initial reaction on Wall Street was mixed: the S&P 500 index closed almost unchanged on Friday, while the tech-focused NASDAQ fell by 1.7%.
Despite this, futures at the start of the week took on a positive tone, reflecting the general rise in sentiment caused by easing geopolitical tensions. In Asia, most markets opened with slight gains, supported by the diplomatic developments, and traders anticipate a busy week with corporate earnings reports.
Market observers note that particular attention is being paid to the upcoming Federal Reserve rate announcement, which should provide important insights into the future direction of monetary policy in the United States. Gold showed a noticeable increase, rising by 0.88% to $4,088 per ounce. This surge is attributed to the perceived stability that negotiations between Iran and the US might bring, prompting investors to seek refuge in precious metals.
Conversely, oil prices dropped sharply, falling nearly 5% to $92 per barrel, as market sentiment shifts amid expectations of reduced escalation in the Middle East region. As for the South African Rand, it demonstrated resilience against the changing global landscape, strengthening by 0.61% against the US dollar to reach R16.72. The Rand also rose against the euro and the British pound, trading at R19.07/€ and R22.32/£ respectively, indicating a positive reaction to global economic prospects.
The acceptance of additional applications for mortgage subsidies has begun in Uzbekistan. The Ministry of Economy and Finance announced that the application period will start on July 27 at 15:00.
Applications are accepted based on previously submitted but unused subsidy notifications. To be evaluated, applicants must meet social criteria by scoring at least 30 points. Additionally, there are extra conditions: the applicant and their spouse must not reside in owned housing territory in Uzbekistan, and the family's average monthly income must comply with established social norms.
Furthermore, it is necessary to fulfill internal requirements of at least one commercial bank participating in the lending program. It should be noted that state funds do not cover the full cost of housing but are directed towards partially covering the initial down payment and interest payments on the mortgage.
An application can be submitted through the portal my.gov.uz, the MyGov mobile application, or at public service centers. On the my.gov.uz portal, this public service is provided free of charge. Employees of military formations submit the application directly to the Public Service Center.
Before submitting an application, you must allow the use of personal data for assessing credit history in banks participating in the OneID system. It is also checked whether temporary restrictions have been placed on the citizen's credit history. Otherwise, the bank will not be able to review the credit history, which may lead to the rejection of the application.
Receiving a positive notification of subsidy receipt does not automatically mean the allocation of a mortgage loan; the commercial bank conducts a separate assessment of the applicant's solvency and credit history.
The correction in semiconductor stocks and concerns surrounding artificial intelligence (AI) trading may boost renewed interest from Foreign Portfolio Investors (FPIs) in Indian equities.
After Jefferies termed this phenomenon 'AI reverse trading' in 2025, it might be time for India amid a shift in global sentiment towards AI-related stocks. The tech-heavy Nasdaq index fell by nearly 7 percent in a month. More indicative is the Philadelphia Semiconductor Index, which includes companies like Nvidia, Intel, AMD, Micron, Broadcom, and Qualcomm, and dropped by approximately 24 percent from its late June peak, marking the worst week since March 2025 and technically aligning with a bear market.
Other Asian markets, including South Korea and Japan, also experienced declines: 19 percent and 7 percent, respectively, after leading last year due to the AI-driven rally.
However, analysts believe this is more of a valuation correction and position reallocation rather than a profit decline issue. Venkatesh Balasubramanian, Managing Director and Head of Research at JM Financial Institutional Securities, noted that the discount rate has changed: tighter Fed policy has pushed the yield on 10-year bonds up to about 4.5 percent, compressing multiples for high-growth companies regardless of sustained underlying demand.
Balasubramanian clarified that this can be viewed as capital outflow from overheated, high-multiple positions, not the collapse of the AI investment thesis itself, but warned that a V-shaped recovery is unlikely due to investors' overly stretched positioning.
The correction in the chip sector and anxieties around AI trading could reactivate FPI interest in the Indian market. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, suggested that the diversity of available stocks in the Indian market is rare among emerging markets (EM). He believes that at some point, FPIs will be forced to acknowledge this and move away from markets dominated by one or two stocks, such as Taiwan and South Korea.
Money has started flowing from other emerging markets into India; NSDL data shows that financial institutions net purchased Indian stocks worth ₹14,946 crore in July alone. This is the first such instance since February, when they invested ₹22,615 crore.
Nevertheless, since oil prices remain at an uncomfortable level of $95–$100 per barrel, the inflow of funds is likely to be delayed. Divyam Sharma, Co-founder and CEO of Green Portfolio, stated that India will benefit from this reallocation because an economy with domestic demand growing at such a pace is precisely what global money should aim for next. However, he did not guarantee that this would be a pure tailwind.
He pointed to issues related to high valuations and external risks such as oil. Sharma added that significant investments in growth history are probable, but the scale and timing depend on oil price behavior and associated costs. Balasubramanian supported this view, noting that India could become a relative beneficiary of capital outflow from overextended global tech positions. Although foreign investors became net buyers in July after four months of selling, he emphasized that this cannot be called an unambiguous tailwind, but rather a real mutual influence between rotation-driven inflows and oil-related outflow risk.
Data for the first 15 days of July indicates that consumer services, metals and mining, and healthcare remained the main FPI purchases in equity investments, with net inflows of ₹7,361 crore, ₹5,993 crore, and ₹4,101 crore, respectively.
Against this backdrop, Sharma believes the focus should be on sectors with domestic and structural growth. He sees the automotive industry as a key beneficiary, as it is directly linked to consumption and premiumization. Other sectors where, according to his forecast, fund inflows will start gaining momentum include defense, representing a long-term process of localization and orders, relatively isolated from global risk fluctuations, as well as energy in general, including the development of capital expenditure in this area.
