PDSNET Market Snapshot

It has become difficult to keep up with all the news coming out of America. Trump’s erratic behaviour is combining with other factors to make the systematic risk picture complicated and unpredictable. On the one hand, there have been some excellent results coming out of the S&P500 companies riding the wave of AI.

AI Boom Lifts S&P 500 Earnings 32% as 86% of Companies Beat Estimates | Business | CryptoRank.io

Wall Street investors now expect that the earnings of the S&P500 companies will be roughly 32% higher than they were a year ago as second quarter earnings dramatically exceed analysts’ expectations. 86% of S&P500 companies have now reported earnings above forecast. Alphabet reported second-quarter earnings that included a $98 billion gain, while Amazon recorded $53.4 billion in non-operating pre-tax income, primarily related to its Anthropic investments. Nvidia’s revenue in the second quarter was $96,2bn – more than double the same quarter last year.  

On the negative side, the price of North Sea Brent oil spiked up to nearly $110 per barrel last week, but has now fallen back to just below $100. This decline to $100 comes because of new hopes for peace negotiations such as planned meetings between Gulf and Iranian foreign ministers. These hopes helped ease immediate fears of a total, prolonged blockage of the Strait of Hormuz. At the same time, oil producers in the Persian Gulf shifted shipments to alternative pipeline capacities and non-Middle Eastern regions (like the US, Canada, and Ghana) which increased output to bridge supply gaps. Finally, major international bodies, including the International Energy Agency indicated that there was slowing consumption and a broader economic slowdown, and notably reduced oil demand from major importers like China driven partly by the transition to electric vehicles.

In the middle of all this, on Tuesday and Wednesday this week the US Federal Reserve Bank’s monetary policy committee will be meeting to decide on the future course of interest rates, and they will be focusing on these figures.

https://coinpaper.com/35641/stock-market-today-sp-500-nasdaq-jump-1-as-oil-falls-despite-hot-cpi

The US inflation rate for August 2026 came in at 3,4% for the year to the 31st August 2026. This was the same rate as July and shows broad increases across both goods and services with the price of gasoline being the major contributor. In the month itself, inflation was 0,4% because of a 3,9% increase in the price of gasoline.

Following hotter-than-expected August inflation data, market metrics and prediction venues show a massive shift toward monetary tightening. The CME Fedwatch Tool suggests that the probability of a 25 basis point hike in  interest rates is now between 84% and 87% while Polymarket says there is an 81% probability. A hike in interest rates will add to the misery of consumers in America already facing an average price across the country of $4.30 per gallon of petrol.

The S&P500 index has been trying to discount all these disparate forces and is basically moving sideways since it broke above the key support/resistance level at 7609. Consider the chart:

There can be little doubt about the bullish sentiment which underlies the extended sideways market in the S&P. The news coming from big tech companies appears to be slowly overcoming the bad news coming out of the Middle East. The unexpected spike in the oil price to $110 was short-lived, but it did unnerve the market for a day. That was quickly rectified the next day.

And in the background is the looming mid-term election in America, which is increasingly focusing the Trump camp’s attention, resulting in some radical moves on his part like promising to pay every adult American $5000 if the Republicans win both the House and the Senate. The cost of this is a further $1,23 trillion to be added to the budget deficit already above $40 trillion. He also said that after the elections the petrol price will drop back to $2 per gallon – and anyone who believes that is not following what is happening on the ground.

Trump approval rating hits new low over Labor Day weekend

The Focaldata/Financial Times poll released on September 6, 2026, found that only 32% of Americans now approve of Trump's job performance. Trump's approval rating dropped three points from the previous month, the lowest since the poll series began in May. Critically, his approval among Republicans fell to 72%, a two‑point decline and a new low for that group. The poll was conducted from August 28 to September 2 with 2,178 U.S. adults surveyed. Only 17% of respondents approved of Trump's handling of inflation and the cost of living, while 69% disapproved.

In our view, the Republicans will almost certainly lose the House and the Senate race is now a “toss-up”. If he loses both, we can expect impeachment proceedings to commence promptly.

The S&P500 and markets around the world will ultimately be drawn higher by the AI driven boom in American and elsewhere. We expect new record highs on all indexes in due course.

Perhaps the best way to measure the progress of South Africa as a country is to look at our currency – especially against the so-called hard currencies of the Western World. Its strength or weakness gives a very good overall picture of how the country is doing economically, politically and in terms of its image with overseas investors.

As an emerging economy, South Africa is not regarded as a poor country, but rather as one which is striving to become first world. For overseas investors this typically means a country and a currency which offers high risk and high potential return. Whereas a 10-year US Treasury Bill can offer the international investor a return of 4,8%, a South African 10-year government bond offers around 8,8% - that is 4% better, if the investor is prepared to take the risk of investing here.

We have a number of advantages over other emerging markets. Perhaps most importantly, we have relatively low inflation. In fact, due to the tireless efforts of Lesetja Kganyago, Governor of the Reserve Bank, our inflation rate is very comparable to many First World countries – and certainly far better than many of the other emerging economies. For example, Turkey’s inflation rate is 31,5%, Argentina is at 33,8% Egypt is at 14,9% and Columbia is at 6%.

We are generally grouped among those less risky emerging economies with lower inflation rates like Brazil (4,6%), India (4,4%), Mexico (3,4%), Indonesia (2,9%), and South Korea (2,8%). These are very comparable to the inflation rates of First World economies like Europe (3,3%), the United Kingdom (2,9%) and America (3,4%).

Approximately $19bn worth of rands are traded in our currency market every day on average. This makes it a highly liquid and very free currency exchange. Overseas investors can quickly take or sell large positions in what is a strong and well-organised market. This has tended to mean that the rand has become a proxy for all emerging economies. When international sentiment is risk-on they pile into our currency and government bonds. When it is risk-off, as it was when Trump began his war with Iran, they sell out quickly.

But overall, for at least the past 17 months the rand has been steadily appreciating against most first world currencies. In our view, this is related to the stabilising impact of the government of national unity (GNU) and the fact that the ANC is no longer in complete control. This together with the various initiatives set in motion by President Ramaphosa have meant that the economic environment has been steadily improving since April 2025.

On 10th April 2025 one euro would have cost you R21,90 and today it costs R18,53. On the same day, one British pound would have cost you R25,34 whereas today it costs only R21,56 and of course over the same time period the US dollar has fallen from being worth R19,75 to being worth R15,96. Consider the chart:

What is significant about this chart is that it clearly shows the steady improvement in international sentiment towards South Africa. The massive, well-informed international investors of the world are betting on our country and putting their money here instead of elsewhere. That is a significant vote of confidence and one which many South Africans caught up in the cut and thrust of daily life here do not appreciate.

In our view, the rand is about to break below its previous cycle low of R15.79 to the US$ made on 29th January 2026. The outcome of the municipal elections on 3rd November 2026 will have a significant impact. If the ANC loses further ground and the DA gains ground (which is what we believe will happen) then you can expect the rand to appreciate further.

A stronger rand is good for everyone in South Africa. It means lower fuel prices, lower inflation, lower interest rates, more stability and a better future for everyone involved in the economy. It is the most telling and reliable indicator of our progress as a nation.

The gold price has been in a persistent correction since its record high on 28th January 2026. It has been in what technical analysts call a descending flag formation which we have drawn you attention to on several occasions. As with any formation we are looking for the direction of the breakout from that formation to give a clear idea of the future trend. In the case of gold, we have always been confident that it would break to the upside – and that is what it did last week on 19th August 2026. Consider the chart:

The chart shows the US dollar price of gold since August 2022. It broke up out of a long-term sideways pattern in March 2024, and we drew your attention to that in the Confidential Report at the time. The chart shows how the upward trend was paused in 2025 until the precious metal broke above resistance at $3424 and it shows the all-time record high of $5305 on 28th January 2026.

The flag formation has taken place between two parallel downward sloping trendlines, showing how gold lost about $1000 over 5 months then found support before breaking to the upside.

As a private investor you should be thinking about which shares would have enabled you to capitalise on gold’s amazing run – and one of the best was Harmony. Of course, gold shares are always going to be speculative and risky, but under the right circumstances they can provide an excellent long-term investment.

In the case of Harmony, the key, for us, was its purchase of the Mponeng gold mine for $200m in September 2020. This was a very brave, potentially dangerous acquisition and we waited for some time before recognising that they were making a success of it. Mponeng is the deepest mine in the world. It is currently mining at depths of around 3800 meters with plans to go deeper to 4200 meters. This means that it is operating 2 kilometres below sea level from the Highveld near Carletonville. At those depths the grade is excellent - around 11,27 grams per ton – more than double the average grade for South African gold mines. The problem is that mining at those extreme depths is expensive and potentially very dangerous. It is the very definition of a high-risk, high-return investment.

We added Harmony to the Winning Shares List (WSL) on 16th November 2023 at a price of 9920c per share. It reached an all-time high of 40841c on 28th January this year before falling back as gold corrected. Since 3rd August 2026 it has been moving up strongly again as gold recovered. Consider the chart:

Harmony published an excellent trading statement on Friday last week, predicting that its headline earnings per share (HEPS) would increase by between 90% and 105% in US dollars. 

Altogether, Harmony has risen by more than 250% since we added it to the WSL nearly 3 years ago and we believe it will continue to perform well – but it remains a commodity share and hence both volatile and risky.