Oil tops $100 per barrel as tech rout deepens

Market Commentary

In the US, Wall Street extended losses on Thursday as the escalating Middle East conflict sent oil above $100 a barrel, fuelling renewed inflation concerns and lifting the odds of a rate hike next week. Concerns about large-scale artificial intelligence capital spending, amplified by Alphabet’s higher guidance and Tesla’s sharp decline after reporting negative free cash flow, weighed on major tech names and pulled indices lower. At 21h15 SAST, the Nasdaq led the rout, down 2.38%, the S&P 500 fell 1.43% and the Dow Jones Industrial Average slipped just over 1%. The US dollar index strengthened to 101.3 points, reaching its highest level in nearly three weeks, while the 10-year Treasury yield rose to 4.71%, reflecting an increased geopolitical risk premium.

The South African rand weakened to around R16.86 against the US dollar, its weakest level since 19 May 2026, following the South African Reserve Bank's decision to leave the repo rate unchanged at 7% at its July Monetary Policy Committee meeting. The decision, which was supported by a 4–2 vote, surprised markets, where expectations had been for at least a 25-basis-point increase. The rand also came under pressure from a broader sell-off in emerging market currencies amid a recent resurgence in global inflation concerns.

The FTSE/JSE All Share Index ended the day 1.23% lower, while the Top 40 Index closed down 1.26%. The Metals and Mining sector led the decline, falling 3%.

The Middle East conflict weighed on European equities, which also fell on Thursday as energy costs raised the prospect of higher Eurozone interest rates. The Euro STOXX 50 slipped 1.70% to 6 210 and the STOXX Europe 600 fell 1.30% to 638. The European Central Bank left rates unchanged as expected but warned that upside inflation risks could necessitate further rate hikes. Investors, meanwhile, digested a string of corporate results: UniCredit tumbled 4.80% despite a strong quarter, after its proposed takeover of Germany’s Commerzbank put its share-buyback plan at risk, while BNP Paribas slid 2.80% even after beating profit forecasts. Luxury names also came under pressure: LVMH, Hermès and Ferrari each dropped more than 3.50% after disappointing results at Moncler weighed on the sector.

Crude oil jumped close to 8% trading above $100 per barrel on Thursday, extending gains for a fifth straight session and hitting its highest level since early June 2026. US President Donald Trump warned that the US would hold Iran responsible for any future Houthi attacks on commercial shipping in the Red Sea, threatening both Tehran and the Yemen‑based militants. Oil is now up more than 30% from pre‑conflict levels earlier this month. Precious metals, in contrast fell, with gold closing 2.05% lower at $4 044.77 per ounce and silver dropping close to 4% at $57.49 an ounce.

Asian equities rose after major US technology companies announced increased capital expenditure plans, boosting sentiment towards regional semiconductor manufacturers. Gains were, however, tempered by renewed concerns over escalating conflict in the Middle East. Japan’s Nikkei rose 0.46%, while the Shanghai Composite gained 0.26%. The Hang Seng advanced by more than 1%.