Middle East tensions drive commodities higher

Market Commentary

Commodities were at the forefront of headlines as oil overshadowed artificial intelligence (AI) amidst escalating geopolitical conflicts in the Middle East. Brent crude prices closed higher at just over 2%, trading at $91.08 per barrel, on Tuesday, as traders weighed reports of mediation between the US and Iran after Washington continued to carry out strikes against the Middle East, threatening the Strait of Hormuz shipping route. Beyond the Middle East, attacks on a terminal on Russia’s Black Sea coast disrupted exports from Kazakhstan, a major crude supplier. Saudi Arabia said it would take all necessary steps to protect its vessels in line with international law. Precious metals rose with gold increasing almost 2% to $4 082 per ounce and silver surging over 4% to close at $58.93.

US stocks extended their gains on Tuesday, with technology shares leading the advance ahead of a heavy earnings calendar. The S&P 500 rose close to 1%, the Nasdaq 100 climbed 1.39% and the Dow Jones added about 400 points as investors rotated back into the sector. On the monetary policy side, Federal Reserve (Fed) Chair Kevin Warsh has kept inflation at the centre of the debate, a stance echoed by several other officials in recent weeks. The Fed is now in its blackout period ahead of next week’s Federal Open Market Committee (FOMC) meeting, where rates are widely expected to be left unchanged, but traders perceive a hike in September.

Micron and SanDisk each jumped more than 12%, while Applied Materials and Marvell advanced over 8%. Chipmakers continued to recover from last week’s sell-off, helped by strong export data from Taiwan and South Korea, which kept support flowing into the semiconductor space. The broader tech rally also came ahead of Alphabet’s results due on Wednesday, which investors will view as another important signal for AI infrastructure demand from the hyperscalers.

European equities ended higher on Tuesday, supported by easing oil prices and a steadier tech sector. The pan‑European STOXX Europe 600 gained 0.50% and the Euro STOXX 50 added almost 1%, snapping a two‑day slide. Markets rebounded as the global AI sector positioned for major results reports.

ASML rose 4.70%, while Infineon increased 6.80%, tracking gains for companies with exposure to chip manufacturing after strong export data from South Korea and Taiwan, reigniting speculative demand for the sector. Siemens Energy also benefited from the development due to its push to power data centres, lifting shares by 4%. In turn, UniCredit and BNP Paribas closed 1.50% higher each ahead of their earnings on Wednesday. Outside the Eurozone, Novartis gained 2.10% after beating its earnings estimates, although expiring patents prevented the drug giant from raising its guidance. The strong session for equities prevailed despite another surge in European natural gas prices, as the war in the Middle East continued to hamper liquefied natural gas exports to the continent.

Asian equities closed up with the help of a rebound in the tech sector. The move has created a positive environment after yesterday’s sell-off. In Japan, the Nikkei surged above 3%, while the Shanghai Composite increased by nearly 2%. However, the Hang Seng index in Hong Kong remained almost flat.

South Africa’s government secured an agreement worth US$1.5 billion Development Policy Loan from the World Bank and will utilise the funds for financing infrastructure upgrades that will create economic development and job opportunities. This is the fourth such arrangement between these two entities.

The rand appreciated by 0.32% against the US dollar at 16.46 and increased against the euro and pound by 0.43% and 0.69%, respectively. Equities traded positively with the FTSE/JSE All Share Index increasing by 0.04%. Resources together with Metals and Mining moved positively by over 2% each.