Markets mixed as Middle East tension eased

Market commentary

The FTSE/JSE All Share Index (ALSI) ended slightly higher on Friday amidst a backdrop of mixed global markets, with investors closely monitoring events in the Middle East. Throughout the week, the overall market index fell by over 2%, driven by investor concerns about increasing tensions between Israel and Iran, as well as apprehension regarding the likelihood of sustained higher interest rates in the United States. Meanwhile, the South African rand recovered some of its losses from the day, having reached a low point of R19.38/$ during the trading session.

Wall Street was mostly down on Friday with the Dow being the exception, the S&P 500 experienced a nearly 0.9% decline, while the Nasdaq dropped by 2%, largely due to concerns related to geopolitical tensions and ongoing inflation worries, with Nvidia and Netflix bearing the brunt of the downturn. Netflix saw a significant 9% decline after its second quarter revenue guidance fell short of expectations. Tesla also suffered, losing 1.90% for a sixth consecutive session of declines, as new security concerns surrounding its vehicles emerged. In contrast, the Dow Jones saw a rise of 211 points, driven by a 6.10% increase in American Express shares following better-than-expected earnings and revenue results.

Asian markets declined on Friday with the Shanghai Composite dropped by 0.29%. This marked the end of a two-day advance for mainland Chinese stocks, as they mirrored a global market selloff triggered by reports of Israel conducting a limited strike against Iran in response to Tehran's recent attacks on Israel. Chinese stocks were also influenced by another day of declines on Wall Street, where hawkish comments from Federal Reserve officials reduced expectations of future interest rate cuts. In China, investors are eagerly awaiting the central bank's decision on key lending rates, which is scheduled for Monday. Additionally, the Nikkei in Japan plummeted by 2.66% on Friday, with Japanese shares closing at their lowest levels in two months, as global risk assets experienced a downturn following reports of Israeli strikes against Iran.

European stocks on the other hand were a mixed bag. The UK’s FTSE 100 ended higher, with Mondi shares leading the gains with a more than 9% increase. In Frankfurt, the DAX 40 Index managed to recover some of its early losses, closing 0.50% maintaining its position around an over six-week low. This recovery came as concerns about a potential escalation in Middle East tensions began to ease, particularly after Iran seemed to downplay the suspected Israeli attack. Additionally, markets were digesting more hawkish comments from Federal Reserve officials.

Oil prices experienced a surge of over 4% initially before retracting some of those gains, while metals like gold, copper, and nickel also saw advances, as reported by Bloomberg. Brent crude reached a peak of $90.70 per barrel during intraday trading. By 17h20 PM local time, it had moderated from those highs and was up 0.26% at $87.32 per barrel.