Global tensions weigh on markets as South African shares show resilience

Market Commentary

US stocks trimmed Monday's early plunge but lingered near year lows, as Iran war risks heightened fears of a global energy shock. The S&P 500 and Dow Jones Industrial Average fell 0.70%, while the Nasdaq-100 edged up 0.05% on tech strength. Gulf Cooperation Council (GCC) producers – Saudi Arabia, Kuwait, Bahrain, and the United Arab Emirates – cut oil output after Iran sealed the Strait of Hormuz, flooding storages and lifting energy prices. The 10-year Treasury yield held at 4.13% after hitting 4.21%, with oil below $100 per barrel. Energy-driven inflation fears continue to dim Federal Reserve (Fed) rate cut hopes. Financials dropped: Bank of America, Wells Fargo, and Citigroup lost over 3%; Jefferies dropped 5% on private credit woes, while chipmakers Broadcom, Advanced Micro Devices and Micron Technology gained over 2%.

The cautious tone extended to European equities, where markets also finished the session lower. European markets closed lower on Monday, prolonging this month's downturn as elevated energy prices clouded the inflation outlook. The EURO STOXX 50 shed 0.70% to 5 681, while the STOXX Europe 600 dipped 0.70% to 595. Banks, industrials and consumer discretionary firms bore the brunt, hit by Persian Gulf tensions and soaring oil and gas costs. UniCredit and Deutsche Bank each lost 1.50% as Eurozone yields climbed on European Central Bank (ECB) rate-hike fears, curbing lending prospects. Siemens and Schneider Electric tumbled 1.70% apiece amid margin pressures from power price surges. In health care, Roche plunged 3% after its breast cancer drug combo missed its late-stage trial's main goal.

In the meantime, Germany’s DAX 40 trimmed early steep falls to end 0.80% down at 23 394, its lowest since November 2025. The FTSE 100 eased 0.20% to a five-week low, rebounding from an intraday drop exceeding 1.50%.

Commodities remained at the centre of market attention, with oil prices driving much of the global sentiment. Brent crude futures slipped under $100 per barrel on Monday following an early spike, driven by output curbs from key Middle East producers amid Strait of Hormuz disruptions. Saudi Arabia, the United Arab Emirates, Kuwait, and Iraq scaled back supply as tanker restrictions rapidly filled storage tanks, heightening fears of global energy shortages and renewed inflation pressures. Prices eased further after G7 finance ministers indicated readiness to release strategic reserves if needed. Last week marked crude's largest gain in over 40 years, surging 35% – levels last breached after Russia’s 2022 invasion of Ukraine. Precious metals diverged: Gold fell 1.35% to $5 100.25 an ounce, while silver edged up 0.25% and platinum gained 1.23%.

Asian markets reflected similar caution as investors digested the geopolitical and energy developments, posting losses. Japan’s Nikkei 225 fell 5.20%, indicating one of its sharpest declines in months, amid concerns over the rising oil prices, a weaker yen and inflation risks. Hong Kong’s Hang Seng Index and China’s Shanghai Composite Index also closed lower as investors assessed the potential impact of disruptions to oil flows through the Strait of Hormuz. Technology and industrial shares led declines across the region.

Back home, the local market proved more resilient delivering a mixed performance. The FTSE/JSE All Share Index (ALSI) edged 0.17% higher, supported by strength in resource-linked counters as firmer commodity prices lifted the sector. The FTSE/JSE Resources Index gained close to 1%, while the FTSE/JSE Metals and Mining Index advanced 1.21% as investors rotated into commodity producers. By contrast, the FTSE/JSE Industrials Index declined 0.47%, reflecting softer sentiment towards globally exposed industrial and consumer stocks. Overall, gains in commodity-related shares helped offset weakness in industrial counters, leaving the broader market marginally higher. Despite the resilience the rand fell to 16,54 – hovering around its weakest since mid-December 2025.