Global markets retreat amid inflation concerns and geopolitical risks

Market Commentary

US equities extended losses on Wednesday as investors balanced persistent inflation concerns against softer labour market signals. The S&P 500 fell 1.40%, the Nasdaq 100 declined 1.30%, and the Dow dropped 1.60%. The updated FOMC commentary suggested caution on upside inflation risks, while an unexpected rise in PPI reinforced concerns about higher energy costs and tariff pass-through. Geopolitical risks added to market pressure: strikes on Iranian energy infrastructure pushed oil prices higher and lifted yields, weighing on equities. Weakness was broad-based, with credit services leading the decline—Visa and Mastercard fell 3.10% and 3.70%, respectively—while defensives underperformed, including B&G and Walmart, each down more than 2.50%. Micron ended flat ahead of its earnings release, reflecting a wait-and-see approach among investors.

European equities softened as Middle East tensions kept oil markets volatile and inflationary risks in focus. The pan-European STOXX 600 fell 0.75%, erasing a brief rebound and leaving the index roughly 5.70% below its February peak. Germany’s DAX dropped 0.96%, the FTSE 100 declined 0.43%, and France’s CAC 40 slipped 0.27%. Losses were broad-based, led by consumer staples and healthcare, though energy showed resilience amid elevated oil prices.

Asian markets were mixed. Japan and South Korea advanced on strong export data and tech momentum, with Japan’s Nikkei rallying on February export growth of 4.20% y/y and the Topix up around 2%. Mainland Chinese equities posted modest gains, led by Shenzhen on solid turnover of CNY2.05 trillion, while Hong Kong’s Hang Seng was flat to slightly lower as investors remained cautious over ongoing Middle East risks.

South African equities sold off, with the FTSE/JSE All Share Index down 3.02% to 113 710 points, extending its monthly decline to 6.70%. The JSE Top 40 fell 3.37% to 105 887 points, reversing recent gains. Miners led the downturn as metals retreated, with gold easing after recent highs and prompting profit-taking following February’s commodity-driven rally. The rand traded near 16.96/USD, slightly weaker amid external policy uncertainty and domestic growth and power constraints.

Commodities were mixed, driven by geopolitical risks and ongoing inflationary pressures. Oil led gains, with Brent surging to $109–$112/bbl, up over 5% on the day, while WTI approached $99/bbl amid tighter US inventories. Gold remained elevated in the $4 800–$5 000/oz range, supported by safe-haven demand as yields softened and equities weakened, though recent rallies encouraged some profit-taking. Base metals eased alongside broader risk assets. Overall, the commodity complex has remained firm year‑to‑date, underpinned by geopolitical premiums and inflationary pressures, even as markets continue to gauge the next Fed move.