Markets show resilience despite Middle East energy pressures

Market Commentary

US stocks advanced on Tuesday, extending the rebound from four-month lows last week on fresh optimism that the halt in energy exports from the Persian Gulf will not translate to stagflation. The S&P 500 gained 0.30%, the Nasdaq 100 rose 0.50%, and the Dow rose a softer 0.10%. Strikes in Iran and across the GCC pointed to ongoing risks of near-term energy export disruptions, but equities remained supported as investors looked through geopolitical risks and focused on earnings resilience. Trading Economics added that “asset managers rallied as traders reassessed default risks in large private-sector loans tied to the software industry, with KKR, Blackstone, BlackRock, and Blue Owl rising between 3% and 5%. Nvidia edged 0.70% lower despite projecting $1 trillion in AI chip revenue by 2027, while Qualcomm gained 3% after announcing a higher dividend and a $20 billion share buyback.”

European equities recorded a choppy session on Tuesday, managing a tentative rebound as markets stabilised despite persistent upward pressure from oil prices weighing on sentiment. Strength was concentrated in energy majors, highlighting how renewed Middle East tensions are driving sector rotation and shaping investor risk appetite. The STOXX 600 rose 0.70%, though the advance masked underlying fragility, with gains narrowly led by a handful of heavyweights and only around 55% of constituents closing higher. The FTSE 100 outperformed, up 0.83% and supported by its energy exposure, while continental indices lagged, with the DAX slipping 0.20% amid profit-taking in defence stocks.

Asian markets closed mixed, as investors balanced regional growth optimism against Middle East-driven oil pressures. Strong factory activity in China bolstered hopes for stimulus, supporting Hong Kong’s Hang Seng, which inched up 0.20% on BYD’s surge from new EV export deals in Latin America. Meanwhile, the Shanghai Composite slipped 0.60% on profit-taking. Japan’s Nikkei fell 0.20%, as oil’s rally past $100 weighed on exporters and reinforced the Bank of Japan’s policy caution. Broader Asia showed pockets of resilience, with Taiwan’s Taiex climbing 1.50% and Korea’s Kospi gaining 1.60%.

South Africa’s FTSE/JSE All Share Index advanced 0.59%, showing domestic resilience as the market held up despite Middle East oil pressures that pushed Brent crude past $100 and raised fuel inflation concerns for the import-dependent economy. Financials and industrials led gains, supported by dividend flows such as Discovery’s ex-date and a steady rand, while resources lagged as miners like Sibanye faced profit-taking and Sasol contended with crude volatility. The Top 40 tracked closely at 0.60%, countering YTD softness, though analysts caution that looming Eskom tariff hikes and SARB scrutiny of pass-through inflation could weigh on the market—breaks above 118 000 would confirm strength, while a drop below 116 000 could trigger deeper pullbacks if Hormuz tensions persist.

Commodities saw heightened activity on Tuesday after Brent crude surged 3% to $103 per barrel, its highest since August 2022, on attacks on Iraqi oil facilities and UAE gas disruptions, which amplified Strait of Hormuz supply concerns. WTI eased 1.80% to $94.56 following surprise US inventory builds reported by API, though it remains up 42% YTD. Spot gold held steady at $5 007.61/oz, as safe-haven demand from Iran-US tensions was balanced by a firmer dollar and pre-FOMC caution. Resistance at $5 145 now draws focus, as oil volatility continues to drive global energy rotations while traders weigh de-escalation rhetoric against ongoing supply risks.