The FTSE/JSE All Share rose about 4.6% in August, which put it ahead of every other major equity market in the world. Underneath that number, industrials fell 5.8%, financials fell 1.7% and listed property fell 3.9%. Resources rose more than 25%, and gold miners on their own gained 38%. If you owned the index, you had an excellent month. If you owned a spread of good South African businesses that happen not to dig things out of the ground, you probably did not. This is the second month running in which the headline has told you almost nothing about what actually happened inside it.
The world’s best market, and most of it fell
August on the JSE was not a broad advance. It was one sector, and inside that sector mostly one metal.
The gold price rose 9.7% over the month, platinum 9.0%, rhodium 9.7% and palladium 6.3%. South African gold miners gained 38% and platinum miners 21.6%. The Resi-10 returned roughly 25%. Because resources carry a substantial weight in the local index, that was enough to lift the whole market into positive territory and to the top of the global table, even though the two larger parts of the JSE went backwards.
The individual names make the point more plainly than the sector numbers do. SPAR fell around 20% on the month. British American Tobacco fell about 11%, AB InBev about 10%, Naspers about 9% and Prosus about 6%. Against that, Shoprite rose about 7%, OUTsurance about 6% and ADvTECH about 5%. Outside mining, August was an ordinary to poor month for South African listed businesses.
A market that rises because one sector rises is not the same thing as a market that is doing well.
There is a practical consequence. A market capitalisation index is, by construction, a bet on whatever is currently biggest and moving fastest. In August that bet paid handsomely. It is worth remembering why anyone builds a portfolio differently: not because the index is wrong, but because a return produced by one sector can be removed by that same sector just as quickly.
Gold rose while the Fed turned hawkish
On 28 August, Federal Reserve Chair Kevin Warsh told the Jackson Hole symposium that recent US inflation data had not meaningfully improved and that rates may need to rise. Expectations of a hike picked up immediately.
That should have been a difficult month for gold. Gold pays no income, so the case for holding it weakens as the return on cash and bonds rises. Instead gold rose almost 10%. We do not think anyone can tell you with confidence why. The explanations on offer, among them central bank buying, currency debasement concerns, geopolitical hedging and plain momentum after a strong year, are plausible and largely untestable. What we would say is that a 38% monthly move in a basket of mining shares is a flow, not a re-rating of the underlying businesses. Flows reverse.
The inflation data itself is more interesting than the headline suggests. US consumer inflation was 3.4% in the year to July and 3.4% again in the year to August. Underneath, core inflation fell to 2.4%, the lowest since March 2021. The difference is almost entirely energy: petrol prices rose 3.9% month on month in August and were 27.4% higher than a year earlier, accounting for more than a third of the monthly increase in the all-items index. So the United States has an energy problem sitting on top of a core inflation rate that is close to target. The Fed chair is looking at the headline.
Europe has the same shape in sharper form. Eurozone annual inflation rose to 3.3% in August, its highest in about three years, driven by an energy component running above 14%, while services inflation eased to 3.0% and core to 2.4%.
Markets rose anyway. Developed market equities returned 2.6% and emerging markets 3.4% in dollars. The S&P 500 gained 2.7% and Japan’s TOPIX 3.9%. The Bloomberg Global Aggregate returned 0.5% in dollars. Oil stayed range-bound near $90 a barrel after July’s spike, with Brent up only 0.4%. The dollar weakened.
Prices cooled, and the economy cooled with them
South African inflation fell sharply. Headline CPI slowed to 4.3% in the year to July from 5.0% in June, with prices up just 0.2% over the month. Transport inflation dropped to 8.9% from 12.7% as petrol fell 7.1% and diesel 11.7% month on month, though both remain far higher than a year ago, petrol by 19.3% and diesel by 28.8%. Food and non-alcoholic beverage inflation came in at 0.9%, the lowest reading in more than sixteen years. Electricity inflation eased to 8.1% from 10.4%. Core inflation sat at 4.2%.
On its own that is good news, and for households it is real relief. The trouble is what arrived alongside it.
The economy contracted 0.2% in the second quarter, ending six consecutive quarters of growth. Mining fell 3.0%, trade 1.9%, and manufacturing declined for a third consecutive quarter with seven of its ten divisions negative. Transport and communication grew 0.9%, construction rose for a second quarter and agriculture for a seventh. Fixed investment fell again. Unemployment rose to 33.6% from 32.7%.
The forward-looking data has not improved. The Absa manufacturing PMI fell to 45.8 in August, its lowest level this year and a fourth consecutive decline. Business activity dropped to 40.2 and new sales orders to 40.3, both deeply contractionary. The one bright spot was expectations: the six-month outlook index jumped to 54.7 from 49.3. The broader S&P Global South Africa PMI, which covers the whole private sector rather than factories alone, edged up to 50.5 from 50.3, fractionally above the line that separates expansion from contraction.
Inflation falling because fuel got cheaper is relief. Inflation falling while factory orders collapse is something else.
For your interest
1. The economy contracted for the first time in a year and a half
- Statistics South Africa reported that GDP fell 0.2% in the second quarter of 2026, ending six consecutive quarters of growth. Mining was the largest drag at −3.0%, led by platinum group metals, manganese ore, gold and iron ore. Trade fell 1.9% and manufacturing declined for a third consecutive quarter.
- The quarter covers April to June, which includes the worst of the oil shock. Agriculture rose for a seventh consecutive quarter and construction for a second, but fixed investment fell again and imports grew 4.9%.
Source: Statistics South Africa, GDP Q2 2026, released 8 September 2026.
2. Food inflation is the lowest it has been since 2010
- Food and non-alcoholic beverage inflation slowed to 0.9% in the year to July, the lowest print in more than sixteen years. Meat inflation fell to 1.5% from 5.1% and cereal products were 2.0% cheaper than a year earlier.
- Municipal tariff increases also came in softer than last year: electricity 8.1% against 10.4%, water 10.2% against 12.1% and refuse removal 4.7% against 6.6%.
Source: Statistics South Africa, Consumer Price Index July 2026, released 19 August 2026.
3. Eskom passed 455 days without load shedding
- In its 14 August system update, Eskom confirmed 455 consecutive days without load shedding since 16 May 2025 and a financial year-to-date energy availability factor of 67.55%, the highest since October 2020.
- Diesel spend for the year to date was R989.88 million, an 83.2% reduction on the R5.89 billion spent a year earlier. The Eastern Cape became the seventh province removed from the load reduction schedule, with about 1.2 million customers taken off it.
Source: Eskom media statement, 14 August 2026.
4. Two PMIs, two different stories
- The Absa manufacturing PMI fell to 45.8 in August from 46.8, its fourth consecutive decline and the lowest reading of 2026. Business activity fell to 40.2 and new sales orders to 40.3, while expected business conditions six months out rose sharply to 54.7.
- The S&P Global South Africa PMI, which measures the whole private sector, rose to 50.5 from 50.3. Factories are struggling; the rest of the economy is roughly flat.
Sources: Absa / BER Purchasing Managers’ Index, released 1 September 2026; S&P Global South Africa PMI, released September 2026.
What we are watching
The first is the Monetary Policy Committee meeting on 23 September. The Bank has been explicit that it is steering towards 3% inflation over time, and the July print at 4.3% moves in that direction. But the growth picture has deteriorated meaningfully since the July meeting, and the Bank now has to weigh an inflation rate that is falling for good reasons against an economy that contracted in the second quarter. The August CPI release lands shortly before the meeting.
The second is whether the precious metals trade is insurance or a crowd. A 38% month in gold miners is not the market revaluing a set of businesses. It is money moving. That does not make it wrong, and gold has done its job in a difficult year, but a position that has run this hard this fast deserves to be sized deliberately rather than allowed to grow by default.
The third is the rand, which strengthened about 2.6% against the dollar in August, 1.6% against the euro and 1.8% against the pound. That is a good month for anyone importing, travelling or paying offshore school fees, and a drag on the rand value of offshore holdings. Currency is a second decision sitting on top of every offshore allocation, and it works in both directions, usually when you have stopped thinking about it.
None of this changes how we build portfolios. A month in which the local index rose 4.6% while two thirds of it fell, and in which the world’s most important central banker warned on inflation while equities and gold both rallied, is the ordinary state of markets rather than an unusual one. Diversification looks unnecessary in every month where one thing works, which is precisely the month in which it is doing its job.
Market overview
Global overview
Global equities advanced. Developed market shares returned 2.6% in US dollars and emerging markets 3.4%. The S&P 500 gained 2.7% and the Nasdaq about 3.6%, while Japan’s TOPIX rose 3.9% and the Nikkei 3.0%. Europe was mixed: the EURO STOXX 50 rose 1.0% and the DAX 2.5%, but the CAC fell 2.1% and the FTSE 100 slipped 0.4%. In Asia the Shanghai Composite gained 4.0% while the Hang Seng fell 1.2%. Global bonds returned 0.5% in US dollars, with US government bonds up 0.3% in local terms and European government bonds negative as yields rose. Oil was range-bound near $90 a barrel, with Brent up 0.4% after July’s spike. Gold rose 9.7%. The US dollar weakened over the month.
Local overview
South African equities rose, but almost entirely on resources. The FTSE/JSE All Share returned about 4.6% in rand, the strongest of the major equity markets during the month. The Resi-10 gained roughly 25%, with gold miners up 38% and platinum miners up 21.6% on a 9.7% rise in the gold price and a 9.0% rise in platinum. The Fini-15 fell 1.7% and the Indi-25 fell 5.8%. SA listed property returned −3.9%. The All Bond Index returned about 0.7% and cash about 0.6%, with the ten-year government yield steady around 8.75%. The rand gained about 2.6% against the dollar, 1.6% against the euro and 1.8% against the pound, making it one of the best-performing major currencies of the month.
Figures in this overview are drawn from public sources including J.P. Morgan Asset Management, Anchor Capital, Graviton Financial Partners, Statistics South Africa, the South African Reserve Bank, Eskom, the Absa/BER Purchasing Managers’ Index, S&P Global, Eurostat and the US Bureau of Labor Statistics. Past performance is not a guide to future returns. This is general market commentary and not advice; it does not take your circumstances into account.
