Global stocks rise on easing risk sentiment

Market Commentary

US equity futures were higher on Monday, with trading subdued due to the Memorial Day closure in US cash markets, as sentiment improved on growing expectations of progress in US-Iran negotiations that could ultimately ease Middle East energy supply risks and dampen inflation pressures. While talks remain ongoing with final approval still expected to take several days, attention is gradually shifting toward upcoming US macro data, including PCE inflation, GDP, and personal income and spending, alongside a heavy slate of corporate earnings from Zscaler, Salesforce and Dell Technologies.

The constructive tone in geopolitical negotiations provided a stronger tailwind for risk assets globally, with European equities closing sharply higher and reaching their strongest levels since February’s record highs. Gains were broad-based, led by banks and industrials, as falling oil prices and lower energy costs improved the earnings outlook and boosted sovereign bond markets, with financials benefitting from the accompanying rate move.

Asian sentiment was similarly firm, with mainland Chinese equities advancing on strength in semiconductor and AI-linked technology stocks, alongside regulatory measures aimed at curbing illicit capital outflows. The policy backdrop supported financial stocks, while optimism around domestic chip capability progress reinforced longer-term growth expectations in the technology complex.

In South Africa, equities rallied sharply in line with the global risk-on tone, with the broad market recording strong gains and the rand firming to around R16.65/$ on improved sentiment and firmer precious metals. Additional support came from Moody’s, which revised the sovereign outlook to positive from stable while affirming its Ba2 rating, citing gradual fiscal improvement and sustained structural reform momentum, reinforcing expectations of a slow but improving credit trajectory.

In commodities, crude oil prices extended losses on expectations of reduced supply risk should diplomatic progress continue, though sentiment remained sensitive given uncertainty around the timing and finalisation of any agreement. Gold moved higher as markets priced in easing inflation pressures linked to lower energy costs, though gains were relatively measured amid ongoing scepticism over the durability of diplomatic progress and persistently thin liquidity due to the US holiday. Broader precious metals also advanced, while the US dollar softened.