African markets ended the first week of February with the majority of indices sitting on the green zone. The week was marked by a mining rally driven by a sliding dollar making commodities attractive alternative investments despite fundamentals basically unchanged and prone to remain that way for some time. Contributing to the new positive sentiment were speculations that the Chinese economy would reenergise as the country set its growth target at 7% for 2016, higher than most consensus expectations.

African markets portrayed somewhat a rebound this week with 10 out 14 indices under watch ending on green territories. Despite broad economic uncertainties, few positive news translated into major movements of the specific index, highlighting the volatility of the African markets.

This week ended on a bitter note as on top of an already fragile market perception of China came the news of an easing of sanctions against Iran which raised concerns about an increase in oil supplies in a market facing the lowest prices seen in more than a decade. Indeed, home to almost 10% of the world’s proven oil reserves, Iran’s exports could put further pressure on prices and it is that very concern that sent Brent crude to a new 12-year low on Friday helping to spur a global stock rout.

As expected by most investors, the Federal Reserve raised its target federal funds rate by 0.25 percent on 16th December, the first such hike since 2006. A priori not a good news for African markets where the main concern could be an acceleration of capital outflows and a return of money to the US. The rate hikes further strengthening the US dollar could cause a spill over effect and potentially exacerbate the emerging market currency turmoil.