U.S. markets delivered another strong week of gains, marking a second consecutive week of positive performance. The S&P 500 rose 3.55%, the Dow Jones Industrial Average gained 3.04%, and the Nasdaq Composite led the way with a 4.68% increase.

Investor sentiment improved meaningfully as geopolitical tensions in the Middle East eased following news of a ceasefire agreement between the U.S. and Iran. This reduced concerns around oil supply disruptions and led to a sharp pullback in oil prices, which supported equity markets.

Technology stocks continued to drive performance, particularly those linked to artificial intelligence and semiconductors. Investors remain focused on long-term themes such as compute demand and infrastructure investment, which continue to underpin strong performance in this part of the market. Economic data was more mixed. Inflation picked up slightly, largely due to higher energy prices, while consumer sentiment weakened. This suggests that while markets are responding positively to global developments, underlying pressure on consumers remains.

European markets also moved higher during the week, supported by improving global sentiment. The Euro Stoxx 50 rose 4.09%, while the FTSE 100 gained 1.58%.

The rally was largely driven by easing geopolitical tensions, which encouraged investors to move back into equities. Gains were broad-based across the region, although performance varied between countries.

Despite the positive week for markets, the economic outlook remains uncertain. Policymakers have warned that growth forecasts may be revised lower, with risks of slower growth combined with rising inflation. This type of environment can be challenging for both businesses and consumers.

Recent data continues to reflect this mixed picture. Germany saw modest growth in factory orders, although below expectations, while services activity in France and Italy remained weak. In the UK, house price growth slowed, pointing to some pressure on the housing market. While markets have responded positively to global developments, underlying economic conditions in the region remain somewhat fragile.

Asian markets delivered strong gains during the week, supported by the improvement in global sentiment.

In Japan, the Nikkei 225 surged 7.16%, making it one of the best-performing major markets globally. The rally was led by technology and export-focused companies, which benefited from easing geopolitical tensions and improved global trade expectations.

A weaker yen continues to support exporters, although rising energy costs are beginning to feed into inflation. Consumer confidence declined during the week, highlighting growing pressure on households.

In China, markets also moved higher. The Shanghai Composite Index rose 2.74%, while the Hang Seng Index gained 3.08%. A notable development was the return of positive producer price inflation for the first time in several years, driven largely by higher commodity and energy prices. While this reflects rising cost pressures, it also suggests some stabilization in industrial pricing.

Market Moves of the Week:

South African markets had a strong week, in line with the broader recovery across emerging markets. The FTSE/JSE All Share Index rose 2.50%, supported by improved global sentiment and renewed investor appetite for risk.

Performance was broad-based across sectors. Financials led the way, with the FTSE/JSE Financial 15 Index gaining 3.04%, while Industrials also performed well, with the FTSE/JSE Industrial 25 Index up 2.52%. Resources lagged slightly but still delivered positive returns, with the FTSE/JSE Resource 10 Index rising 2.33%. Listed property was a standout, posting a strong gain of 4.67%.

The rand strengthened during the week, with USD/ZAR falling 3.31%, supported by a weaker U.S. dollar and improving global risk sentiment.

While markets performed well, the local economic backdrop remains under pressure, particularly from rising fuel costs. Petrol prices have surged to a two-year high, while diesel has reached record levels.

These pressures are expected to feed through the broader economy. Transport costs are rising, which impacts the entire supply chain from raw agricultural inputs through to finished food products. As a result, consumers are likely to feel the effects through higher prices on everyday goods.

Government has attempted to cushion the impact by temporarily reducing fuel levies, providing some relief to households and businesses. However, South Africa remains particularly vulnerable to global energy shocks due to its reliance on imported fuel and fertiliser.

This creates an interesting dynamic. While global factors are currently supporting local markets, particularly through improved risk sentiment and capital flows, rising input costs present a near-term challenge for the domestic economy. Overall, the week highlights the dual nature of South Africa’s position. The market benefits quickly from improving global conditions, but the local economy remains sensitive to external shocks, particularly those linked to energy prices.

Chart of the Week:

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Global equity markets ended a volatile, holiday-shortened week in positive territory, with tentative signs of Middle East de-escalation lifting sentiment. The Nasdaq led the way, logging its best week since November, while the S&P 500 and Dow gained 3.36% and 2.96% respectively. European markets followed suit, with the STOXX 50 up 3.4% and the UK’s FTSE 100 gaining 4.7%.

The mood swung sharply through the week. Equities rallied early on hopes the US campaign in Iran was nearing its end, only to reverse after Trump’s Wednesday evening address threatened further escalation, including strikes on Iranian oil facilities over the next two to three weeks, while offering no plan to reopen the Strait of Hormuz. Markets largely recovered by Thursday’s close.

Brent crude surged above $109/barrel, its highest level in nearly four years on renewed supply disruption fears, while gold rebounded nearly 4% to around $4,672/oz as the dollar strengthened and rate cut hopes faded. US Treasuries advanced, with the 10-year yield falling from 4.44% to 4.31%, aided by Fed Chair Powell’s comments tempering near-term inflation concerns.

On the labour market, the US added 178,000 jobs in March, well ahead of the 59,000 consensus estimate and the unemployment rate dipped to 4.3%. However, the headline figures masked softer underlying trends: job openings fell to 6.9 million in February from 7.2 million in January, hiring slid to its lowest since 2020, and the labour force shrank by 396,000, with the participation rate dropping to 61.9%, its lowest since November 2021. Economists cautioned the Iran war is making businesses more hesitant to hire, with the full impact likely more visible in the April report. Markets now price virtually no Fed rate move through year-end, with futures pointing to a 77.5% probability of rates on hold.

Eurozone inflation jumped to 2.5% in March from 1.9% in February, above the ECB’s 2% target, driven by a 4.9% surge in energy costs. ECB President Lagarde signalled the central bank is monitoring the situation closely and stands ready to hike rates if necessary, even if the inflation spike proves temporary.

Japan’s Nikkei fell 1.7% amid expectations the Bank of Japan may raise rates at its April meeting in response to oil-driven inflation pressures. Chinese markets were mixed, while Beijing and Islamabad jointly proposed a five-point peace plan calling for a ceasefire and protection of Strait of Hormuz shipping lanes.

Next week, focus remains on the Iran conflict as it enters its sixth week, alongside US CPI, FOMC minutes, the PCE report, Michigan Consumer Sentiment, and monetary policy decisions from the Reserve Bank of India.

Market Moves of the Week:

South African Revenue Service (SARS) collected a net R2.01 trillion in tax for the fiscal year ended 31 March, 8.4% higher year-on-year and R24.7 billion above the 2025 budget forecast. The agency credited compliance initiatives, improved efficiency, and a strong contribution from the mining sector. For 2026/27, SARS is targeting R2.13 trillion, a 5.8% increase.

President Ramaphosa has appointed Ngobani Makhubu as the new SARS Commissioner for five years, effective 1 May. Makhubu, currently Deputy Commissioner for Taxpayer Engagement and Operations, takes over from Edward Kieswetter, who steps down after seven years at the helm.

On the fuel front, petrol rose R3.06/litre to R23.25 from 1 April, while inland diesel hit a record R26.11/litre, up R7.51. The Iran conflict, which has pushed Brent above $100/barrel and pressured the rand, is the primary driver. A R3/litre fuel levy cut softened the blow, without it, economists warned the increase could have added at least 1.0 percentage point to annual CPI in April. February CPI came in at 3.0% year-on-year, bang on the SARB’s target, leaving little room for an unmanaged fuel shock.

Markets recovered some recent losses, with the FTSE/JSE All Share ending the holiday-shortened week 3.9% higher, buoyed by resource counters. The rand also firmed, gaining over 1% to close at R16.92/$.

Chart of the Week:

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