The 2025 G20 Summit is unfolding against a backdrop of global uncertainty and shifting power dynamics. As South Africa takes the reins of the G20 presidency, the international community finds itself grappling with unprecedented challenges that threaten to reshape the very foundation of global cooperation.
The week’s key themes:
· Notable absence of the US at G20
· Gold glitters, oil oscillates
· US bond yields retreat following FOMC meeting minutes
· Postponed SA Budget Speech has little effect on the rand
Mere Schedule Clashes?
Under the theme “Solidarity, Equality, Sustainability”, South Africa has set an ambitious agenda for its G20 presidency. The focus on inclusive economic growth, industrialisation, employment, and reducing inequality reflects the pressing needs of the Global South. Coupled with priorities like food security and harnessing artificial intelligence (AI) for sustainable development, the agenda aims to address critical global challenges while elevating Africa’s voice on the world stage.
However, the summit’s potential for progress has been overshadowed by a series of high-profile absences from United States (US) leaders. In a move that has diplomatic circles talking, US Secretary of State, Marco Rubio, announced he would not attend the G20 Foreign Ministers’ Meeting in Johannesburg. Adding to the controversy, US Treasury Secretary, Scott Bessent, is set to skip the upcoming G20 Finance Ministers and Central Bank Governors’ meeting in Cape Town. These absences seem to be far from mere scheduling conflicts. They represent a significant departure from the traditional US role in shaping G20 agreements on financial and monetary policy matters. The boycott aligns with the current administration’s scepticism towards multilateral institutions and international cooperation, signalling a potential shift in US foreign policy that could have far-reaching consequences.
The US decision to stay away from these crucial meetings has also cast a spotlight on deteriorating US-South Africa relations. Tensions have been simmering due to disagreements over South Africa’s domestic policies, particularly regarding land reform, and its stance on international issues such as the Israel-Gaza conflict. The boycott appears to be a clear message of disapproval from Washington, which is further straining the relationship between the two nations.
Beyond bilateral tensions, the US absence poses a significant challenge to the G20’s effectiveness. As the world’s largest economy, the US has traditionally played a pivotal role in coordinating global economic policies and addressing pressing international challenges. Without active US participation, the G20’s ability to lead global economic cooperation may be severely compromised.
This vacuum in leadership, however, creates an opportunity for other major powers to assert their influence. Russia and China, whose foreign ministers will be attending the meetings, stand to benefit from the US boycott. The situation could potentially push South Africa and other Global South nations closer to alternative power structures like BRICS, reshaping international alliances in the process, while also potentially leading to stronger cooperation among other G20 members, particularly between emerging economies and European nations.
The implications of this diplomatic standoff extend far beyond the current summit. It raises serious questions about the future cohesion and effectiveness of the G20 as a forum for global economic governance. Without the active engagement of all major economies, particularly the US, the G20’s ability to address global challenges and coordinate economic policies could be significantly diminished. Moreover, the US boycott could accelerate the trend towards a more fragmented international order, with competing blocs and institutions vying for influence. This fragmentation poses a significant challenge to addressing global issues that require coordinated action, such as climate change, pandemic preparedness, and economic stability.
For South Africa, the situation presents an unprecedented challenge. Managing a G20 presidency with a diminished or combative US presence is uncharted territory. The success of South Africa’s presidency will depend on its ability to navigate these turbulent waters and foster cooperation among the remaining members. However, this crisis also presents an opportunity, it may spur a revaluation of global economic governance structures and potentially lead to more inclusive and diverse decision-making processes.
The success of South Africa’s presidency and the future relevance of the G20 hang in the balance. Will other nations step up to fill the void left by the US? Can the G20 maintain its role as the premier forum for international economic cooperation in the face of these challenges? The answers to these questions will likely shape the trajectory of global governance for years to come. As the world grapples with pressing issues like climate change, economic inequality, and technological disruption, the need for effective international cooperation has never been greater.
The outcome of this G20 summit may well determine whether the world rises to meet these challenges together or fragments into competing spheres of influence.
MARKET SNAPSHOT
Let us dive into the week’s key movements, at the time of writing, across equities, bonds, commodities, and currencies.
Equities
The equity markets have displayed a mixed bag of performance. In the US, major indices hit record highs early in the week, buoyed by strong earnings and AI-driven enthusiasm. The S&P 500 initially dipped 0.95% on Monday but rebounded strongly, gaining 1% by Wednesday. However, the mood soured slightly on Thursday as big-data analysis company, Palantir’s stock plummeted 10% following its CEO’s share sale.
European markets faced headwinds as President Trump’s renewed tariff threats impacted the automotive sector, in particular. Despite this, the STOXX 600 showed resilience, supported by positive earnings from companies like automobile manufacturer, Renault, and aerospace corporation, Airbus.
In the United Kingdom (UK), the FTSE 100 experienced modest gains, bolstered by strong UK employment data and earnings reports.
South Africa’s JSE FTSE All Share index saw a pullback, declining 0.81% on Thursday, with the industrial index down 0.72% and basic materials shedding 1.90%.
Bonds
The bond markets have been particularly sensitive to inflation data and central bank communications this week. US Treasury yields initially climbed, with the 10-year yield reaching 4.65% on Monday following hotter-than-expected consumer price index (CPI) data. However, the trend reversed after the release of the Federal Open Market Committee (FOMC) minutes, which revealed discussions about potentially slowing or pausing quantitative tightening. By Thursday, the 10-year yield had retreated to around 4.53%.
In Europe, Germany’s Bund yields initially followed the US trend but moderated as the week progressed.
The UK Gilt market saw increased volatility following stronger-than-expected UK inflation data, pushing yields higher before settling.
South African bonds remained under pressure, with yields edging higher amid global uncertainty and local economic challenges.
Commodities
Gold has been the star performer this week, surging to a record high of $2,942/ounce on Monday. The precious metal continued to hover near these historic levels, trading at $2,935 by Thursday, supported by safe-haven demand amid geopolitical tensions and inflation concerns.
Oil markets experienced a midweek rally, with WTI crude climbing above $72/barrel and Brent reaching $75.98/barrel. The surge was driven by supply uncertainties from Russia, Kazakhstan, and the expanded Organisation of the Petroleum Exporting Countries, OPEC+, as well as potential disruptions in US production. However, prices moderated slightly on Thursday following a build in US crude inventories.
Currencies
The currency markets have been a battleground between inflation expectations and central bank policies. The US Dollar Index initially strengthened to 108.2 early in the week on expectations of a hawkish Fed. However, it retreated to around 107.1 by Thursday as the FOMC minutes suggested a more cautious approach to monetary policy.
The euro faced pressure, trading around $1.045/€, weighed down by renewed concerns about Ukraine being sidelined following Trump’s comments about President Zelensky.
Sterling showed resilience, briefly pushing above $1.26/£ before settling slightly lower, supported by strong UK economic data.
The Japanese yen emerged as a surprise performer, strengthening against the dollar with the exchange rate approaching the ¥150/$ level, driven by safe-haven flows and comments from Bank of Japan officials.
South Africa’s rand traded largely rangebound for the week. While the “budget which never took place” rattled the currency on Wednesday, the rand quickly recovered ground to settle towards the stronger end of its trading range by Thursday afternoon.
Key indicators
USD/ZAR: 18.37
EUR/ZAR: 19.27
GBP/ZAR: 23.25
GOLD: $2,930
BRENT CRUDE: $76
