Global equities remain cautious as ceasefire hopes emerge in the Middle East

Market Commentary

The yield on the US 10‑year Treasury note fell to around 4.25% overnight, slipping to its lowest level in almost three weeks, after President Donald Trump delayed his threat to strike Iranian civilian infrastructure by two weeks under what he called a ‘double‑sided ceasefire’. The move is conditional on Iran reopening the Strait of Hormuz, with President Trump saying the US has received a 10‑point proposal from Iran that he described as a ‘workable basis for negotiations’, and the two‑week window affording time to finalise and implement any agreement.

Iran has agreed to reopen the vital waterway for two weeks, provided all attacks are halted, while Israel has reportedly assented to the ceasefire. In the data arena, US consumer inflation expectations rose in March, with transportation costs in the logistics sector posting a notable increase. Looking ahead, the release of US March CPI on Friday will be closely watched for further signals on price pressures that may be linked to the ongoing conflict.

This softer tone in the US marks a sharp shift from the mood on Tuesday, when US stocks extended losses amid rising Middle East tensions and fears of a global energy crisis. On that day, the yield on the US 10‑year Treasury note climbed towards 4.37%, its highest in about a week, as oil prices continued to rise and investors rotated out of riskier assets. However, the pivot towards a negotiated, time‑bound ceasefire has now eased some of the immediate escalation risk, pulling yields lower and providing a marginally more supportive backdrop for markets heading into the CPI release and broader conflict‑related uncertainty.

Commodities traded on a mixed but cautious note on Tuesday, with gold prices steadying just above $4 650 per ounce, while silver slipped around 2%. Investors adopted a more defensive posture ahead of President Trump’s deadline for the reopening of the Strait of Hormuz, as elevated oil prices continued to fuel stagflation concerns. The continued disruption to the vital shipping route has supported oil prices, lifting energy majors Shell (+0.40%) and BP (1.30%). These concerns have weighed on non‑yielding assets, leaving silver roughly 25% below its pre‑conflict levels. Platinum also declined by 1.53%, reflecting broader risk‑off sentiment and pressure on industrial metals amid the uncertain outlook for growth and energy supply.

European equities closed lower on Tuesday as mounting fears of an escalation in the Middle East conflict heightened the risk of an energy crisis for major European oil and gas importers. The Eurozone’s STOXX 50 fell 1.10% to 5 630, while the broader STOXX 600 dropped around 1% to 591.

The surge in oil and natural gas prices that followed pushed bond yields higher and weighed on industrial groups, with Siemens, Schneider Electric and Airbus each falling by nearly 2%. ASML slid 4% after US lawmakers unveiled the MATCH Act, which aims to tighten existing controls on exports of semiconductor manufacturing equipment and further restrict the sale of chip‑making tools to China. Germany’s DAX 40 ended the day about 1.17% lower at 22 938 after a volatile session, while London’s FTSE 100 slipped more than 0.50% as investors sought safer havens amid the deteriorating geopolitical outlook.

Locally, the rand weakened falling about 6% last month as economists flagged the risk of higher inflation in the net energy‑importing economy. By 19h33 SAST on Tuesday, the rand had edged lower against the dollar, but edged slightly higher Wednesday morning, trading R16.42. 

Although the South African Reserve Bank held rates steady at its March meeting, it signalled a willingness to raise borrowing costs if inflationary pressures intensify and is expected to keep policy relatively tight in the near term to safeguard its inflation target. On the local bourse, the Johannesburg Stock Exchange remained in the red, with the All Share Index closing nearly 1% lower. The Resources sector deepened its slide, down 2.39%, while Metals and Mining fell more than 3%.

Asian equities closed mixed on Tuesday, with Japan’s Nikkei edging 0.03% higher as the Shanghai Composite followed with a 0.26% gain, supported by hopes of further policy support, while Hong Kong’s Hang Seng ended almost 1% lower as global risk‑off sentiment and concerns over US‑China technology restrictions weighed on sentiment.