RFA Breakfast Paper - June 23, 2026
South Africa’s Leading Indicator Contracts, Signaling Softer Growth Ahead
The composite leading business cycle indicator in South Africa fell 1.8% month-on-month in April 2026, reversing a downwardly revised 1.5% increase in March and marking the first contraction since September 2025. The decline points to a weakening outlook for economic activity over the coming months. The largest negative contributions came from a slowdown in the six-month smoothed growth rate of real M1 money supply and a decline in the number of residential building plans approved, both of which are typically viewed as early indicators of future economic momentum. The deterioration was broad-based, with 8 of the 10 components of the index recording declines. These negative contributions outweighed improvements in domestic manufacturing orders and gains in the leading indicator for South Africa’s major trading partners, which provided some support. Meanwhile, the composite coincident business cycle indicator, which reflects current economic conditions, was unchanged in March 2026. An increase in the real value of wholesale, retail, and motor trade sales was offset by weaker industrial production, resulting in a flat overall reading.
U.S. Markets Retreat as Technology Stocks Lead Broad Pullback
U.S. equities closed lower on Tuesday as a selloff in technology stocks weighed on investor sentiment. The S&P 500 declined 1.4%, while the Nasdaq fell 2.2%, with semiconductor stocks leading the losses after dropping roughly 6% during the session. The Dow Jones Industrial Average held up better and finished near flat, supported by its lower exposure to the technology sector. The weakness was also evident in overseas markets, particularly in Asia, where semiconductor-related stocks came under pressure. Following the strong rebound from March lows, the latest pullback appears to reflect profit-taking rather than a deterioration in broader market fundamentals. Treasury yields were largely unchanged, with the 10-year Treasury yield closing around 4.50% and the 2-year yield near 4.19%, indicating limited changes in interest-rate expectations. Meanwhile, oil prices continued to trend lower, with WTI crude settling near $73 per barrel, helping to ease inflation concerns. The U.S. dollar also extended its recent gains against major developed-market currencies as investors continued to favor U.S. assets amid expectations that the Federal Reserve will maintain a relatively hawkish policy stance.
NGX Extends Gains as Renewed Buying Interest Supports Market Recovery
The Nigerian equity market closed higher on Tuesday as sustained buying interest in medium and large-cap stocks extended the market’s recent recovery. The NGX All-Share Index gained 2,524.00 points, or 1.06%, to close at 240,743.19, while market capitalization rose by ₦1.64 trillion to ₦154.48 trillion. Investor sentiment remained positive throughout the session, supported by bargain hunting activities and strong demand for select bellwether stocks. Airtel Africa accounted for a significant portion of the market's advance, while the difference between the growth rates of the NGX-ASI and market capitalization reflected the impact of the additional listing of shares arising from Ellah Lakes Plc’s debt-to-equity conversion. Market activity also improved, reflecting stronger investor participation. Total trading volume increased by 18.72% to 564.91 million units, while the value of transactions rose by 7.82% to ₦39.35 billion across 49,230 deals. The rise in both turnover and market performance suggests that investors are gradually returning to the market, taking advantage of recent price weakness to accumulate positions in fundamentally attractive stocks.
