Global markets higher as geopolitical tensions ease

Global equity markets traded with heightened volatility on Wednesday as investors digested a sharp reversal from the prior day’s sell-off and responded to evolving geopolitical signals emerging from the World Economic Forum (WEF). 

After major risk assets plunged on Tuesday – with US indices posting their steepest single-day declines in months – markets staged a mixed to modest rebound as political tensions somewhat eased. US benchmark indices like the S&P 500, Dow Jones and Nasdaq climbed higher in mid-session trading following remarks from US leadership clarifying that military action to acquire Greenland was off the table. This curbed some risk-off behaviour, though underlying concerns remained elevated amid unresolved tariff threats and diplomatic strain with Europe. The US markets’ rebound, nevertheless, was measured and fell short of a full reversal of Tuesday’s losses, reflecting persistent uncertainty over global trade policy and risk sentiment.

South African markets exhibited relative resilience amid global risk-off pressure, supported by strong commodity performance and domestic developments. Mining and resource-linked stocks outperformed, helping the JSE FTSE All-Share Index maintain a firm footing despite external headwinds. The local annual inflation rate increased to 3.60% in December 2025 from 3.50% in November, in line with market forecasts.

European stock markets trended lower for much of the day as renewed concerns over impending US tariff policy weighed on sentiment. The STOXX 600 and major country indices such as Germany’s DAX and the UK’s FTSE 100 declined as investors favoured defensive positioning; luxury and cyclical sectors lagged, while select resource stocks showed resilience.

Asian markets opened cautiously following a broad sell-off in the US and Europe. Major benchmarks in Japan and Hong Kong were softer, though other regional indices like the Shanghai Composite and KOSPI posted modest gains as traders weighed geopolitical developments and local economic data.

Gold fell more than 1% trading at around $4 780 per ounce, easing from a fresh record set in the previous session. However, a sharp sell-off in Japanese government bonds raised fiscal concerns and sustained some haven demand. WTI crude oil futures edged higher towards $61 per barrel, extending gains for a fourth consecutive session.