Markets slide on Fed rate outlook and escalating Middle East tensions

European markets closed lower on Thursday, weighed down by the US Federal Reserve's hawkish stance on interest rates and escalating tensions in the Middle East. The STOXX 50 slipped 1.30% to 5 200, while the broader STOXX 600 lost 0.80% to finish at 536. Meanwhile, the Bank of England opted to keep interest rates unchanged at 4.25% in a 6 to 3 vote, citing ongoing global uncertainty and sticky inflation. Policymakers suggested that inflation will likely hold steady through year-end before easing, reinforcing a cautious path forward for monetary policy.

In South Africa, the FTSE/JSE All Share Index dipped slightly by 0.08% after data showed a steep 20.80% year-on-year drop in building plans approved in April 2025—marking the steepest decline since January—largely due to a drop in non-residential permits.

Asian markets also saw widespread losses. Hong Kong’s Hang Seng Index plunged 2% to 23 238, hitting a three-week low on its third straight day of declines. The slide was triggered by a sharp drop in US futures following reports that American officials may be planning a strike on Iran, raising fears of deeper US involvement in the Israel-Iran conflict. In Japan, the Nikkei fell 1.02% to 38 488, and the Topix slipped 0.58% to 2 792, ending a three-day rally as geopolitical tensions unnerved investors.

US markets were closed on Thursday due to a public holiday.

Brent crude surged past $77 a barrel, reaching a four-month high, amid mounting conflict risks. Reports claimed Israel struck Iran’s Arak nuclear facility, while US officials are allegedly preparing potential military action—adding fuel to fears of a wider regional conflict.