Global markets slip amid Fed hawkishness and geopolitical tensions

Market Commentary

Wall Street closed lower as investors pared back risk exposure after the FOMC minutes suggested that disinflation could prove more persistent and that interest rates may need to stay higher for longer. Longer-dated Treasury yields rebounded, while oil prices climbed amid the Iran standoff and President Trump’s comments about potential strikes, supporting energy stocks but weighing on banks.

European stocks closed sharply lower on Thursday, retreating from the previous session’s record levels as weaker-than-expected earnings and concerns that the Federal Reserve will keep interest rates higher for longer dampened investor sentiment. The Eurozone’s STOXX 50 slipped 0.80% to 6 054 points, while the broader STOXX 600 fell 0.60% to 624.

In Asia, Japan’s Nikkei and broader Topix climbed on Thursday, building on gains from the previous session, supported by a rebound in US tech shares. Investor concerns over potential AI-related disruptions eased, and hawkish signals from the Federal Reserve had little impact. The recent pullback in software stocks was seen as a buying opportunity, with investors evaluating potential winners and losers from the AI trend. Japanese equities also benefitted from a sharp yen depreciation, boosting the outlook for export-driven sectors. Chinese markets remained closed for the Lunar New Year holiday.

Local markets traded lower, with the FTSE/JSE Top 40 slipping as risk sentiment weakened globally, while the US dollar strengthened ahead of key inflation data. The stronger dollar put pressure on the rand and weighed on rand-hedge counters, while resource stocks softened alongside weaker commodity prices. Financials were mixed amid a modest rise in local bond yields, and industrials tracked the broader decline in global equities after hawkish signals from the Federal Reserve reinforced expectations of higher-for-longer rates.

Commodity markets were mixed but dominated by strength in energy and precious metals as geopolitical tensions, particularly around the Middle East and US–Iran relations, lifted crude prices to multi‑month highs. Brent crude was trading near $72 a barrel and WTI similarly firm — supported by a heightened risk premium on potential supply disruptions through key chokepoints like the Strait of Hormuz. Gold held above the psychologically important $5 000 per ounce level, with firm trading and rising open interest signalling sustained safe‑haven demand, while silver and other metals rebounded from recent lows, albeit with greater volatility.