Oil surge drives volatility as markets navigate tensions

Market Commentary

US equities ended mostly higher amid swinging trading on Thursday, as investors weighed the effects of climbing energy prices on company profits. The S&P 500 and Nasdaq 100 both rose 0.30%, while the Dow Jones Industrial Average closed flat. Oil prices spiked after President Donald Trump's warnings of potential escalation with Iran, pushing Brent crude to its highest since 2008. Shares rebounded from intraday lows following news of Iran and Oman discussing a toll system for tankers passing through the Strait of Hormuz. Tech shares led gains, with Nvidia, Microsoft and AMD gaining between 1–3%. Tesla bucked the trend though, dropping 5.40% on disappointing sales figures.

US Treasury yields dipped slightly, with the 10-year note settling at 4.31% after touching 4.38%. Strait of Hormuz coordination eased some tensions, but persistent oil-price strength and robust economic data kept inflation concerns alive, anticipate steady Federal Reserve rates this year.  

This economic resilience was underscored as the US unemployment rate fell to 4.30% in March 2026 from February's 4.40%, beating expectations of no change. Unemployed numbers dropped 332 000 to 7.239 million, although total employment slipped 64 000 to 162.85 million. The labour force contracted by 396 000 to 170.09 million, nudging the participation rate down 0.1 points to 61.90%.  

European shares rebounded from session lows but closed lower, as US-Iran escalation fears weighed on oil supply prospects from the Persian Gulf. The STOXX Europe 600 fell 0.30% to 596, while the Euro Stoxx 50 dropped 0.70% to 5 695.  Banks slid amid economic and credit demand concerns, with UniCredit and BNP Paribas down 2.50%. Tech faced pressure from risk aversion, with ASML falling 2.40% and Infineon 3%. Germany’s DAX 40 trimmed losses to end 0.60%, while London’s FTSE 100 outpaced regional peers, rising over 0.50%. European bourses closed on Friday for Good Friday, extending the break until Monday.  

According to reports, Asian markets closed lower across the board, erasing early gains after US President Donald Trump's national address on the Iran conflict unsettled investors. Delivered early in the Asian session, the speech confirmed ongoing US military operations, dashing hopes for de-escalation. The Nikkei 225 tumbled 2.38% closing at 52 463.27, reversing a 500-point early advance. The Hang Seng shed 0.80%, while the Shanghai Composite ended 0.83% lower.   

South Africa’s 10-year bond yield climbed to around 9% after touching an eight-day low of 8.88% on 1 April, as President Trump’s hawkish stance on Iran drove oil prices higher and stoked inflation fears. Higher oil, given South Africa’s status as a net importer, raises the prospect of sustained price pressures should Middle East tensions persist. Markets reflected this unease on Thursday closing in the red, with the JSE All Share Index fell 0.52%, the Top 40 shed 0.55% and the rand weakened to 16.88 against the US dollar, though it held slightly firmer against the pound and euro.  

President Trump warned of intensified strikes on Iranian infrastructure unless Tehran accepts US ceasefire terms, prompting sharp retaliation rhetoric from Iran. Dated Brent benchmarks (actual cargoes with confirmed loading dates) later climbed past $140, the highest since 2008, after intraday relief from Oman-Iran toll coordination for Hormuz tanker transits proved fleeting. Meanwhile, the UK is convening talks with dozens of nations to secure the vital shipping route, while OPEC+ weighs output hikes, though near-term market impact remains limited.  

Elevated energy costs are also feeding through to global food markets. The Food and Agriculture Organization of the United Nations (FAO) Food Price Index rose for the second consecutive month in March 2026, hitting 128.5 points, the highest since September 2025. Prices advanced across all major commodity groups, fuelled by supply dynamics and Middle East-linked energy costs. Sugar prices surged 7.20%, propelled by elevated crude oil levels [that are expected to prompt Brazil, the leading global exporter, to channel more sugarcane into ethanol for the coming harvest].