Global markets faced a turbulent week as the escalating conflict in the Middle East continued to overshadow economic fundamentals, driving oil prices above $100 a barrel for the first time in over three years. The blockade of the Strait of Hormuz, which is a critical artery through which approximately 20% of the world’s daily oil supply passes has sent energy prices sharply higher, rattling investor confidence across virtually every major asset class and region. Against this backdrop, slowing US economic growth and sticky inflation added to an already complex investment environment.

U.S. equity markets declined for a third consecutive week, with the benchmark S&P 500 ending the week 1.6% lower, recording its lowest level of 2026, while the Dow Jones Industrial Average lost approximately 2% and the Nasdaq Composite dropped 1.3%. Sentiment was further weighed down by concerns emerging in private credit markets, where several funds moved to cap withdrawals amid a wave of redemption requests.

On the economic front, the data was sobering. US GDP growth for the fourth quarter of 2025 was revised sharply lower to just 0.7% annualised, well below expectations and a meaningful step down from the 2.8% growth recorded in 2024. Core PCE inflation, which is the Federal Reserve’s preferred measure rose 3.1% year-on-year in January, running above the Fed’s 2% target. Critically, this data predates the Middle East escalation, meaning the full inflationary impact of energy prices is yet to be captured in official figures.

Consumer confidence also deteriorated, with the University of Michigan Sentiment Index falling to 55.5 in March, its lowest reading in three months, as higher petrol prices weighed directly on household budgets.

Oil prices were the defining market story of the week. Brent crude settled above $100 a barrel for the second consecutive session, reaching its highest level in more than three years, as attacks on oil tankers and Iran’s warnings of further escalation removed any prospect of a quick resolution. Governments moved swiftly to respond, with a coordinated release of strategic reserves estimated at approximately 400 million barrels globally, which is equivalent to roughly 3 million barrels per day, alongside US efforts to ease sanctions on Russian oil and provide insurance support for shipping in the region.

European equity markets demonstrated relative resilience, though caution prevailed throughout the week. The pan-European STOXX Europe 50 Index edged marginally lower, slipping just 0.06%, while the UK’s FTSE 100 declined 0.23%. Investor focus centred on the likely duration of the Middle East conflict, the trajectory of energy prices, and the potential knock-on effects for European economic growth.

With several major central bank decisions scheduled for the week ahead, including the European Central Bank and the Bank of England, markets are also beginning to weigh how policymakers will respond to an environment of slowing growth and renewed inflationary pressure from energy costs.

In Asia, Japanese equity markets came under meaningful pressure, with the Nikkei 225 Index declining 3.24% over the week. Japan, as a major energy importer, is particularly exposed to rising oil prices, and Prime Minister Sanae Takaichi announced the release of a portion of Japan’s strategic oil reserves and introduced subsidies to help contain the rise in domestic petrol prices. The Bank of Japan’s rate decision in the coming week will be closely watched for any signal on how policymakers intend to balance inflation concerns against fragile economic momentum.

Chinese equity markets also retreated, with the Shanghai Composite falling 0.70% and Hong Kong’s Hang Seng Index declining 1.11%. Despite the broader weakness, Chinese export data offered a bright spot with exports surging 21.8% in the January to February period year-on-year, well ahead of analyst expectations. Consumer inflation also accelerated to its fastest pace in over three years, boosted by Lunar New Year holiday spending on travel and tourism.
 
Gold, typically a beneficiary of geopolitical uncertainty, had another volatile week. Despite edging higher on Friday, bullion was on track for its second consecutive weekly decline, losing 3% for the week. Surging energy prices have paradoxically reduced expectations for near-term US interest rate cuts which is a headwind for gold, which tends to perform better in lower-rate environments.

In the week ahead the war in the Middle East and its impact on energy supply will continue to dictate global markets and will play a key part in a series of rate decisions from major monetary authorities. In the US, The Federal Reserve is widely expected to hold interest rates steady at 3.50%–3.75%. Investors will focus closely on the updated FOMC economic projections and Chair Jerome Powell’s press conference for guidance on how the Fed is navigating the tension between slowing growth and renewed inflation risks. Rate decisions from the ECB, Bank of England, Bank of Japan, Swiss National Bank, Reserve Bank of Australia, Bank of Canada, and several other major central banks will also feature prominently.

Market Moves of the Week:

South African markets came under renewed pressure this week, with the rand, equities, and bonds all weakening as the ripple effects of the Middle East conflict continued to weigh on emerging market sentiment. Rising oil prices pose a particular challenge for South Africa as a net energy importer, amplifying inflation concerns at a time when the domestic economy is showing tentative signs of improvement.

Amid the challenges, there was a welcome bright spot with South Africa recording its first current account surplus in more than two years in the fourth quarter of 2025, meaning the country earned more from exports than it spent on imports. The surplus came in at 0.6% of GDP, swinging from a deficit of 0.9% the prior quarter, driven by a sharp widening of the trade surplus from R169 billion to R282.2 billion. The primary catalyst was higher global prices for precious metals, with the increase in the gold price playing a central role.

The JSE All Share Index declined 1.42% over the week, with resource counters among the notable underperformers. The broader market has now fallen approximately 10% since the start of March which is a sharp reversal that, if sustained, would represent the market’s first monthly decline after an impressive 14 consecutive months of gains.

The rand extended its losing streak for a second consecutive week, closing at approximately R16.95 to the US dollar, over 2% lower than the prior week. The weakness reflects both the global flight from emerging market assets and South Africa’s specific vulnerability as a net oil importer, with further pressure likely should energy prices remain elevated.

Domestically, investors will focus on the release of January inflation and retail sales data from Statistics South Africa. Inflation figures will be particularly closely watched given the recent surge in global oil prices and rand weakness both of which feed directly into domestic price pressures. Any upside surprise in inflation could complicate the SARB’s monetary policy outlook and reduce the likelihood of near-term rate relief for consumers.

Chart of the Week:

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Global markets experienced a volatile week as a combination of geopolitical tensions and economic data created what many investors described as a “perfect storm” in markets. The escalation of the conflict in the Middle East following the United States’ military campaign against Iran pushed oil prices sharply higher, raising concerns about renewed inflation pressures at a time when global growth signals are becoming more mixed. Brent crude surged more than 30% during the week amid fears of potential supply disruptions, particularly as the Strait of Hormuz – through which roughly a fifth of global oil supply passes – faces potential disruption. Higher energy prices have historically been a challenge for both economies and financial markets, as they tend to lift inflation while simultaneously weighing on growth, a combination often referred to as stagflation.

The conflict has broadened into a regional confrontation, with Iran launching missile and drone attacks on several U.S. allies across the Gulf, while the United States and Israel have continued military strikes targeting Iran’s nuclear and military infrastructure. Attacks on vessels and energy infrastructure have already been reported, adding to concerns about the security of global energy supply routes. The human toll continues to rise, with casualties exceeding 1,000 people across the region. While diplomatic efforts have reportedly begun, the duration and ultimate scope of the conflict remain uncertain, leaving markets highly sensitive to further developments.

Against this backdrop, investors also digested a mixed set of economic data from the United States. Business activity indicators remained relatively resilient, with both manufacturing and services sectors continuing to expand. The ISM services index rose strongly to 56.1, its highest level since mid-2022, while manufacturing activity remained above the expansion threshold. Labour market data, however, sent a more cautious signal later in the week. Nonfarm payrolls unexpectedly declined by 92,000 in February, and the unemployment rate ticked up to 4.4%, raising questions about whether the labour market is cooling more quickly than previously anticipated. The weaker employment report complicates the Federal Reserve’s policy outlook, as policymakers must balance signs of slower growth against the risk that rising oil prices could push inflation higher again.

In Europe and the United Kingdom, investor sentiment also deteriorated as higher energy prices raised concerns about inflation and growth. European equities fell sharply over the week, with the STOXX Europe 600 index declining more than 5%. Inflation in the eurozone rose modestly to 1.9% in February, while unemployment fell to a record low of 6.1%, highlighting a mixed macroeconomic backdrop. In the UK, economic indicators suggested modest growth but ongoing fragility. Construction activity weakened and sterling fell to its lowest level in several months as markets assessed the potential economic impact of the conflict in the Middle East and rising energy costs.

Asian markets were similarly affected by the shift in global risk sentiment. Japanese equities declined sharply as investors assessed the potential inflationary impact of higher oil prices on an economy that remains heavily reliant on imported energy. Chinese markets were also weaker, with investors balancing geopolitical risks against domestic policy developments following the country’s annual National People’s Congress. Chinese policymakers set a GDP growth target of between 4.5% and 5% for 2026 and announced additional fiscal support measures aimed at boosting domestic demand and investment, particularly in technology and advanced manufacturing.

Overall, the week saw a broad risk-off move across financial markets. In the United States, the Dow Jones fell 3.01%, the S&P 500 declined 2.02%, and the Nasdaq eased 1.24%. European equities underperformed, with the Euro Stoxx 50 dropping 6.82% and the FTSE 100 falling 5.74%. In Asia, markets were also weaker, with Japan’s Nikkei 225 down 5.49%, Hong Kong’s Hang Seng declining 3.33%, and China’s Shanghai Composite slipping 0.93%. Bond yields moved higher across most developed markets, with the US 10-year yield rising to 4.13%, while UK and German 10-year yields increased to 4.57% and 2.86% respectively. In commodities, Brent crude oil surged 27.09% to $92.88 per barrel, reflecting supply concerns linked to Middle East tensions, while gold declined 2.02% but remains up 17.91% year-to-date.

Market Moves of the Week:

Recent economic data from South Africa presents a mixed but gradually improving picture. The manufacturing sector remains under pressure, with the ABSA Manufacturing PMI declining to 47.4 in February, signalling continued contraction. However, the S&P Global PMI held steady at 50.0, suggesting that activity across the broader private sector may be stabilising after a difficult period.

Business sentiment has shown some improvement. The Bureau for Economic Research (BER) business confidence index rose to 47 in the first quarter of 2026 from 44 previously – the strongest reading since 2015 outside of the post-COVID rebound. The improvement reflects a more stable political environment, supportive interest rate conditions and a relatively steady currency, although confidence remains below the neutral 50 level, indicating that businesses are still cautious about the economic outlook.

There have also been some encouraging developments on the investment and infrastructure front. A consortium of manganese producers is preparing a bid to build and operate a new export port at Ngqura in partnership with Transnet, which could significantly expand South Africa’s export capacity. At the same time, financiers are working on a R2 billion “water bond” aimed at funding projects to restore key water catchments and improve long-term water security. These initiatives highlight ongoing efforts to strengthen infrastructure and support the country’s longer-term economic resilience.

Local equities ended the week sharply lower, reflecting the broader global risk-off environment. The JSE All Share Index declined 9.24%, with losses broad-based across sectors. Resource stocks led the decline, falling 13.83%, while Financials dropped 10.07%, Listed Property declined 7.46%, and Industrials fell 4.10%. Despite the weekly weakness, performance on a year-to-date basis remains mixed, with Resources still up 10.60%, while Industrials (-8.05%), Financials (-0.59%), and Listed Property (-0.62%) remain slightly negative for the year. The rand weakened to around R16.56 against the U.S. dollar, while the South African 10-year government bond yield rose to 8.49%, reflecting the more cautious global risk backdrop.

Chart of the Week:

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Global markets experienced a more volatile week as investors digested a mix of economic data, earnings releases and ongoing geopolitical and trade uncertainty. While headlines around artificial intelligence and credit markets unsettled sentiment, underlying economic indicators continue to point to a global economy that is slowing in parts but remains broadly resilient.

In the United States, equity markets ended the week lower. The Dow Jones declined 1.31%, the S&P 500 fell 0.44% and the Nasdaq lost 0.95%. Early in the week, markets sold off after a widely circulated research paper reignited concerns about the potential disruptive impact of artificial intelligence across various industries. The report amplified existing nervousness around whether AI could accelerate structural shifts in business models and earnings patterns. Sentiment stabilized midweek ahead of NVIDIA’s quarterly results. Although the company delivered earnings that beat expectations, the strong numbers were not enough to fully reverse the cautious tone, and markets drifted lower into the weekend.

On the economic front, producer price inflation surprised slightly to the upside, rising 0.5% month on month in January and 2.9% year on year, driven largely by services prices. Factory orders declined in December, reflecting some softness in parts of the manufacturing sector. Consumer confidence improved modestly to 91.2, suggesting households remain cautious but not overly pessimistic. Initial jobless claims edged up to 212,000 but continue to point to a labour market that remains relatively stable. U.S. government bond yields moved lower during the week, with the 10-year Treasury yield declining to 3.95%, as investors sought some safety amid equity market volatility.

In the United Kingdom and Europe, markets were more resilient. The Euro Stoxx 50 rose 0.12% for the week and is now up 5.99% year to date, while the FTSE 100 gained 2.09%, taking its year to date performance to 9.86%. European equities have continued to benefit from solid corporate earnings and investor interest in diversifying beyond the U.S. technology-heavy market. German business confidence improved again in February, while inflation readings across the region were mixed but generally consistent with gradual easing price pressures. In the UK, consumer confidence slipped slightly, reflecting ongoing cost pressures, although comments from Bank of England officials about potential interest rate cuts in 2026 provided some support. Bond yields in both the UK and Germany eased modestly over the week.

Asian markets delivered stronger performance. In Japan, the Nikkei 225 rallied 3.56%, extending its year to date gain to 16.91%. Investors remain constructive on Japan’s policy direction and corporate reform momentum. Inflation data in Tokyo came in slightly ahead of expectations, reinforcing the view that the Bank of Japan will likely continue with a gradual and measured approach to adjusting interest rates.

In China, markets also advanced, with the Shanghai Composite rising 1.98% and the Hang Seng gaining 0.81%. Trading volumes improved following the Lunar New Year break, and attention is turning to upcoming policy meetings where economic targets and stimulus measures are typically outlined. The People’s Bank of China adjusted certain foreign exchange policy settings in what is seen as a move to manage currency volatility rather than signal a major change in direction.

Market Moves of the Week:

South African markets were among the strongest performers this week. The JSE All Share Index rose 4.42%, bringing its year to date gain to 10.90%. The Resources sector led the advance with an 11.39% weekly gain and is now up 28.35% year to date, supported by firm commodity prices. Financials gained 1.49%, while Industrials edged up 0.23% but remain negative for the year. Listed property rose 0.44%. Gold increased 3.27% and Brent crude oil gained 2.14%, providing additional support to the local bourse. The rand strengthened to 15.90 against the U.S. dollar, while the South African 10-year government bond yield declined to 7.97%.

The national budget was broadly well received by markets. Government maintained its projection that debt will peak this fiscal year at 78.9% of GDP before gradually declining over the medium term. Although near term deficit projections were slightly wider, the overall debt path remains stable. A reduction in weekly government bond issuance supported the local bond market. Several tax changes were announced, including an increase in the annual Tax Free Savings Account contribution limit to R46,000, a higher annual capital gains tax exclusion of R50,000 and an increase in the primary residence capital gains exclusion to R3 million. The single discretionary allowance was increased to R2 million per calendar year, and further clarity was provided on the regulatory treatment of crypto assets.

Chart of the Week:

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