Global equities retreat as energy prices rise and uncertainty lingers

Market Commentary

Commodity markets strengthened on Friday as escalating tensions in the Middle East heightened concerns about global energy supply. Oil prices led the gains, with Brent crude rising above $90 per barrel for the first time in nearly two years, while WTI crude also moved sharply higher amid fears that disruptions to shipping through the Strait of Hormuz could tighten global supply. Precious metals also benefited from the risk-off environment, with gold attracting safe-haven demand as investors sought protection against rising geopolitical uncertainty and the potential inflationary impact of higher energy prices. The rally in commodities reflects growing concerns about supply constraints rather than stronger demand, with energy markets particularly sensitive to developments in key global shipping routes.

US equities weakened as investors weighed geopolitical developments alongside softer labour market data. The S&P 500 declined 1.40%, the Nasdaq fell 1.60% and the Dow Jones lost 1%. February’s non-farm payrolls surprised to the downside with a loss of 92 000 jobs, while unemployment edged up to 4.40%, pointing to some cooling in labour market momentum. At the same time, elevated WTI crude prices continued to draw attention as tensions in the Middle East raised concerns about potential supply disruptions. The combination of firmer energy prices and weaker employment data prompted a more cautious tone in markets, with some investors trimming risk exposure.

European markets followed a similar trend, with equities closing lower as higher energy prices and geopolitical uncertainty weighed on sentiment. The Eurozone’s STOXX 50 declined 1.30%, while the broader STOXX 600 fell 1.20%, capping a softer week for regional markets. Rising oil and natural gas prices also pushed European bond yields higher, prompting renewed discussion around the European Central Bank’s policy outlook and adding pressure to rate-sensitive sectors such as banks.

Asian equity markets traded in mixed fashion as investors navigated heightened geopolitical tensions and regional economic concerns. Sentiment remained cautious as the US-Israel-Iran conflict entered its seventh day, pushing oil prices above $90 per barrel and raising concerns about the impact on oil-importing Asian economies. In China, the Shanghai Composite rose 0.38% and the Shenzhen Component gained 0.59% as some bargain hunting emerged, despite both indices recording modest losses for the week. Investor focus also remained on China’s 2026 growth target of around 4.50% to 5%, set against persistent deflationary pressures and the potential for further US trade tariffs. Japan’s Nikkei added 0.62%, while Hong Kong’s Hang Seng advanced 1.72%, although the latter still ended the week lower overall. Across the region, rising energy prices and geopolitical uncertainty continued to temper risk appetite despite pockets of buying interest.

South African stocks closed lower on Friday, with the FTSE/JSE All Share Index declining 2.98% and the Top 40 falling 3.02%. The pullback was largely driven by profit-taking in the mining sector following recent gains in precious and base metals, which weighed on resource stocks. Financials also contributed to the decline amid broader market weakness, while energy shares showed relative resilience. The rand weakened to R16.87/$, adding pressure to sentiment as currency softness raises the risk of higher imported inflation, particularly following recent fuel price increases. Despite the monthly decline, the All Share Index remains significantly higher on a year-to-date basis, reflecting the market’s strong performance earlier in the year.