August Market Update: Precious Metals Drive a Strong Local Rally

As August draws to a close, financial markets have continued to navigate changing interest-rate expectations, elevated geopolitical risk and significant movements in commodity prices.

South African equities delivered a particularly strong month, supported by a sharp recovery in precious-metal shares, improving inflation data and a firmer rand. Global markets also made progress, although concerns around oil prices, inflation and the future direction of interest rates created renewed volatility towards month-end.

August once again demonstrated the value of maintaining a diversified portfolio and remaining focused on long-term financial objectives.

JSE Performance in August

The Johannesburg Stock Exchange delivered a strong performance during August. Based on closing levels through 28 August, the FTSE/JSE All Share Index gained approximately 6%, rising from 111,493 at the end of July to 118,173. FT market data

Precious-metal mining companies were the primary drivers of the advance. Gold and platinum shares rallied as commodity prices recovered, improving the earnings outlook for South African producers. The FTSE/JSE Precious Metals and Mining Total Return Index had gained approximately 38% by 27 August, with several major producers recording gains of more than 40% during the month. Moneyweb/Bloomberg

The rand also strengthened during August. The currency moved from approximately R16.46 to the US dollar at the beginning of the month to around R16.17 by 28 August, despite periods of global currency volatility. Exchange-rate history

Key Drivers of the Local Market

Precious Metals Rally

Gold was one of the strongest-performing global assets during August as investors sought protection against geopolitical uncertainty, inflation risk and volatility in international bond markets.

The rise in gold and platinum prices provided a significant boost to South African mining companies. Producers with established operations and relatively competitive cost structures benefited from the stronger commodity-price environment.

Inflation Eases

South African consumer inflation slowed to 4.3% in July from 5% in June. Food inflation moderated meaningfully, while lower fuel prices and softer municipal tariff increases also contributed to the improvement. Statistics South Africa

The lower inflation reading provided welcome relief for consumers and financial markets. However, oil-price volatility and persistent services inflation mean that the interest-rate outlook remains uncertain.

Rand Resilience

The rand’s appreciation provided another encouraging signal for local markets. A stronger currency can help reduce the cost of imported goods and limit inflationary pressure.

Currency movements remain sensitive to global risk appetite, commodity prices, US interest-rate expectations and domestic economic developments. Investors should therefore continue to expect periods of volatility.

South African Economic Snapshot

Inflation

The decline in headline inflation to 4.3% was one of the most positive domestic developments during August. Food and non-alcoholic beverage inflation slowed to 0.9%, its lowest level in more than 16 years.

This improvement should support household purchasing power, although consumers continue to face pressure from borrowing costs and elevated prices in certain service categories.

Interest Rates

The South African Reserve Bank maintained the policy rate at 7% at its July meeting. The next Monetary Policy Committee decision is scheduled for September.

The Reserve Bank continues to balance improving headline inflation against oil-price risks, services inflation and uncertainty in the global interest-rate environment. South African Reserve Bank

Employment and Consumer Conditions

The domestic employment picture remains challenging. South Africa’s official unemployment rate increased from 32.7% in the first quarter to 33.6% in the second quarter of 2026. Statistics South Africa

While easing inflation may provide some support to household finances, high unemployment and borrowing costs are likely to keep consumer spending cautious.

Sector Highlights

Resources

Resources were the standout performers during August, led by gold and platinum miners. Stronger precious-metal prices improved revenue and margin expectations, helping mining shares recover from earlier weakness.

The sector remains sensitive to commodity-price movements, operating costs, geopolitical developments and the strength of the rand.

Financials

Financial shares continued to benefit from resilient balance sheets and attractive dividend yields. Moderating inflation and a relatively stable currency supported sentiment, although the uncertain interest-rate outlook and subdued economic growth remained important considerations.

Industrials

Industrial shares delivered a more varied performance. Rand-sensitive businesses benefited from the stronger currency, while companies with global earnings remained influenced by international markets and movements in exchange rates.

Listed Property

Lower inflation supported the longer-term outlook for listed property, particularly where it improves the possibility of lower borrowing costs. However, the sector remains sensitive to interest rates, bond yields, occupancy levels and the strength of the domestic economy.

Global Market Overview

International equity markets were generally positive during August, although performance differed across regions.

In the United States, the S&P 500 gained approximately 3% and the technology-focused Nasdaq Composite advanced roughly 4% through 28 August. Artificial-intelligence investment and strong technology earnings continued to support the market, although renewed expectations of higher interest rates created volatility towards month-end. Associated Press

European markets recorded more modest gains, with the STOXX Europe 600 advancing by approximately 0.6%. Investors continued to assess inflation, economic growth and the future direction of European interest rates.

Asian markets were mixed. Japan’s Nikkei 225 gained approximately 3%, while Hong Kong’s Hang Seng Index declined by around 1.2%. China’s economic recovery remained uneven, with manufacturing activity continuing to place pressure on regional sentiment. Nikkei Indexes

What This Means for Investors

August reinforced several important investment principles:

• Diversification remains essential. Different markets, currencies and sectors continue to respond differently to economic and geopolitical developments.

• Commodity exposure can provide valuable diversification. Precious-metal shares made a significant contribution to South African market returns during August.

• Strong short-term performance should be viewed in context. Rapid sector gains can be followed by increased volatility, making disciplined portfolio construction important.

• Remain focused on long-term objectives. Market timing is extremely difficult, and investment decisions should remain aligned with an appropriate financial plan.

  
  

Looking Ahead

As we enter September, investors will be monitoring the South African Reserve Bank’s next interest-rate decision, global inflation trends, US monetary policy, oil prices and developments in the Middle East.

Commodity prices and the rand will remain particularly important for South African markets, while domestic growth, employment and consumer spending will influence the outlook for locally focused companies.

At ReWealth, we remain committed to helping our clients navigate changing market conditions with confidence. Through regular portfolio reviews, disciplined investment strategies and personalised financial advice, we continue to focus on helping our clients achieve their long-term financial goals.

If you have any questions about your portfolio or would like to review your financial plan, please don’t hesitate to contact your ReWealth financial advisor.

This article provides general information and does not constitute personalised financial advice.