Wall Street advances despite Middle East uncertainty

Market Commentary

US equities surged on Monday following President Donald Trump’s announcement of a five-day pause in strikes on Iranian energy infrastructure, attributed to constructive talks – despite Tehran’s denial. The S&P 500 rose 1.67%, the Dow advanced 1.98% and the Nasdaq 100 gained 1.77%, reflecting optimism around easing energy costs and moderating stagflation fears. Gains were broad-based across sectors, providing tech giants with respite from last week’s faltering artificial intelligence (AI) demand signals in chip stocks.

Tech heavyweights saw welcome relief, with Nvidia and Apple rising 1.60% and 1.50%, respectively. Cyclical sectors also advanced, with Caterpillar and Morgan Stanley in the industrials and financials sectors climbing 3.10% and 1.90%. Despite Iranian state media denying direct talks, markets rallied on the US administration’s apparent efforts to secure global trade routes.

This improved global sentiment also supported local markets. South Africa’s 10-year bond yield eased to 8.90% from six-month highs of 9.20% on 20 March, as calmer conditions in global markets lifted risk appetite. Although headline inflation met the South African Reserve Bank’s (SARB) 3% target for a second consecutive month in February 2026, analysts caution that this relief may prove fleeting, with elevated oil prices likely to push fuel costs higher and add to broader inflationary pressures.

The rand strengthened to R16.70 against the dollar, clear of four-month lows near R17.20, buoyed by improved risk appetite after the US strike pause on Iranian power plants. Focus now turns to the SARB’s meeting this week, where rates are expected to hold steady amid persistent global uncertainties.

European markets largely followed suit, lifted by signs of de-escalation in the Middle East. The Eurozone’s STOXX 50 climbed 1.20% to 5 566.00, the STOXX 600 rose 0.60% to 577.00 and Germany’s DAX 40 gained 1.20% to 22 595.00, snapping a three-day skid. London’s FTSE 100 bucked the trend, slipping 0.20% to 9 894.00, its lowest close since late December 2025, though it pared sharp intraday losses exceeding 1.50%.

Banks drove European gains, with Santander, UniCredit and Intesa Sanpaolo each up more than 3%. ASML increased over 4% on renewed AI enthusiasm, while Siemens Energy rose nearly 5% alongside softer LNG prices.

In contrast, Asian markets plunged, with the Nikkei, Shanghai Composite and Hang Seng all down over 3%. The sell-off stemmed from President Donald Trump’s stark ultimatum to Iran: reopen the Strait of Hormuz or face destruction of its energy infrastructure. Tehran hit back, threatening a full blockade of the key waterway, still used by a handful of Chinese, Indian and Pakistani vessels, and retaliatory strikes on regional energy and water facilities.

Commodities reflected the volatility. Brent crude plunged over 11% to $99.57 per barrel. Precious metals were mixed: gold pared losses to $4 421.80 per ounce, silver neared $70 per ounce on hopes of a US-Iran diplomatic thaw, while platinum fell 4.77%.