Daily Market Report – 28 Aug 2025

Sakeliga Challenges NHI in Court Over Costs and Viability

Civil society group Sakeliga has launched legal action against the National Health Insurance (NHI) Act, calling it unconstitutional and fiscally unviable. The lobby argues that implementing the NHI would cost an additional R500bn annually, requiring a 30% income tax hike – a burden the economy cannot carry.

Backed by PriceMetrics research, Sakeliga said South Africa lacks the fiscal, human, and governance resources to sustain a single-payer system. With GDP per capita just 17% of comparable economies, the group claims the NHI would collapse existing healthcare services and violate Section 27 of the Constitution. The move follows similar challenges by Solidarity and other organisations.

Rand Holds Steady as Dollar Weakens on Fed Policy Speculation

The rand traded at R17.6650/$ on Wednesday, benefiting from broad dollar weakness after New York Fed President John Williams suggested a September rate cut is “live.” Markets now price in an 84% chance of a cut, with 55bps of easing expected by year-end.

President Trump’s campaign to replace Fed Governor Lisa Cook with a dovish appointee has further pressured the greenback. Despite French political instability, the euro firmed, while the rand gained ground on a trade-weighted basis. Analysts see the ZAR rangebound between R17.48–R17.76/$ ahead of upcoming PCE inflation and payrolls data.

Bonds in Holding Pattern Ahead of PPI

South African bonds remain stable as investors await today’s July PPI release, expected to rise to 1.5% y/y from 0.6% in June. Analysts warn that higher food and fuel prices may reinforce inflationary pressures and complicate SARB’s scope for further rate cuts.

The FRA curve reflects caution: the 3X6 vs JIBAR spread widened to 22bp, while the 6X9 reflects 28bp of cuts priced in – down from earlier expectations of two rate cuts this year. Globally, US Treasuries extended gains, with two- to five-year yields hitting three-month lows on expectations of Fed easing.

Oil Slips on Oversupply Fears, Wheat Prices Fall

Oil prices dropped, with Brent slipping below $68, as traders weighed oversupply risks. Despite Washington’s pressure, India has continued importing Russian crude, raising concerns that global output will outpace demand. Citi forecasts Brent at $66 this quarter and $63 in Q4.

In agricultural markets, wheat futures fell 0.8% as forecasts for bumper Russian and global harvests outweighed stronger US export demand. Analysts warned ample supply would limit any near-term price rally.

Gold Holds Near $3,392, Fed Risks Dominate Metals Trade

Gold steadied at $3,391/oz, supported by safe-haven demand amid Trump’s efforts to remove Fed Governor Lisa Cook. Investors fear her ouster would undermine Fed independence and fast-track rate cuts.

Base metals, however, softened: copper slipped 0.4% to $9,794/ton and aluminium dropped 0.8% as the stronger dollar dampened demand. Chinese data showed industrial profits fell 1.5% y/y in July, the mildest decline since May, with some support from high-tech manufacturing.

EU Rushes Trade Deal to Head Off Trump’s Tariffs

The EU is fast-tracking legislation to scrap tariffs on US industrial goods in a bid to avoid higher American duties on European car exports. If passed by month-end, the reduction of US car tariffs to 15% will be backdated to 1 August, safeguarding Germany’s $34.9bn auto exports.

Meanwhile, Mexico announced plans to hike tariffs on Chinese goods, including cars and textiles, as part of its 2026 budget. The move aligns with Washington’s push for a “Fortress North America” trade strategy while bolstering state revenues to tackle Mexico’s fiscal deficit.

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