Global markets volatile amid Iran conflict, oil swings and inflation data

Market Commentary

Global markets remained volatile as investors monitored developments in the Middle East and awaited key US inflation data that could provide insight into recent price trends. The yield on the 10-year US Treasury note held around 4.14% after facing heightened volatility earlier in the week, while traders also tracked mixed signals from the Trump administration regarding the conflict with Iran. President Donald Trump said the conflict could end soon amid mounting market pressure, though senior officials indicated that military operations were intensifying and that diplomatic talks remained unlikely. Iran’s Revolutionary Guards dismissed President Trump’s claims, warning that the blockade would continue until US and Israeli attacks cease.

In Europe, The Europen Central Bank’s (ECB) President Christine Lagarde affirmed the central bank would act decisively to contain inflation despite surging energy prices. In an interview, she stressed policymakers' commitment to preventing repeats of recent sharp spikes, assuring Europeans they would avoid the increases seen in 2022 and 2023. Lagarde noted Europe was better placed to absorb the current energy shock than in 2022, thanks to stronger policy responses and regional resilience –though she cautioned that uncertainty and market volatility remained high. The DAX 40 closed 2.40% higher at 23 935 on Tuesday, recovering from three-month lows in line with peers, while London’s FTSE closed at 1.75%.

Asian markets struggled for direction, with the Shanghai Composite hovering near the flatline as investors reacted to the ongoing conflict in the Middle East. The US-Israeli campaign against Iran entered its 12th day with no resolution in sight, contrasting with Trump’s suggestion that the conflict could end soon. Oil prices were capped by reports that the International Energy Agency proposed the largest release of oil reserves in its history to help stabilise markets. New energy stocks led gains, including Sungrow Power rising 9.90%, Contemporary Amperex up 4.40% and EVE Energy advancing 9.60%. Technology stocks also strengthened, with Huagong Tech climbing 6.30%, Zhongji Innolight gaining 2.30% and Beijing Teamsun adding 7.40%.

South African markets experienced a shift in sentiment, as the US-Israel-Iran conflict weighed on global risk appetite. Oil price volatility and the military campaign against Iran contributed to a dramatic intraday reversal in US indices, while the South African rand started the week sharply weaker, slipping past R16.50 against the US dollar to its weakest level in three months. Economic data released by Statistics South Africa showed the country’s economy grew by 0.40% quarter-on-quarter in 4Q25, following a downwardly revised 0.30% expansion in the third quarter.

In commodity markets, Brent crude futures held below $90 per barrel after a sharp decline in the previous session following reports that the International Energy Agency proposed the largest release of oil reserves in its history, surpassing the 182 million barrels released in 2022 when Russia invaded Ukraine. Oil markets remained volatile amid uncertainty surrounding the Iran war and shipping through the Strait of Hormuz. Major Middle Eastern producers have collectively reduced output by more than 6 million barrels a day as the waterway remains effectively shut. Energy Secretary Chris Wright also mistakenly posted a message claiming that the US Navy had escorted an oil tanker through the narrow waterway near Iran before the White House later clarified that no such operation had taken place.

Precious metals extended gains as geopolitical tensions persisted. Gold rose to around $5 210 per ounce, building on gains from the previous session as the ongoing conflict in the Middle East kept markets on edge. Silver held above $88 per ounce after rising for three consecutive sessions.