Following a period of steady recovery, global and domestic markets have encountered new uncertainty in South Africa due to tensions in the Strait of Hormuz, which has impacted oil prices and overall economic stability.
Impact of geopolitical tension
Last week, market sentiment worsened after renewed attacks by Iran and the US on military and other targets, particularly in the Strait of Hormuz area. As a result of the slowdown or complete halt of transit traffic, the price of Brent crude oil rose sharply. Furthermore, targeted strikes on regional natural gas production and export facilities caused a sharp spike in gas prices.
The blockade of shipping in the Persian Gulf restricted supplies of vital agricultural resources, putting pressure on global food stocks. Stocks and bonds took a heavy hit mid-week as it was anticipated that increased fuel and freight costs would be passed on to consumer goods, forcing central banks to adopt a tighter monetary policy.
Investor behavior and market indices
Inflation fears and rising interest rates led investors to withdraw funds from riskier stocks into safe-haven assets such as gold and platinum, resulting in a widening of bond yields in developed economies. The prevailing uncertainty is related to whether the Strait of Hormuz will reopen.
Global stock markets ended the week with no significant changes as oil prices declined. Previously, uncertainty surrounding peace talks between Iran and the US and prospects for a ceasefire led to a sharp drop in quotes at the beginning of last week. However, there was a recovery later in the week as oil prices began to fall.
Brent crude oil quickly rose from $72 per barrel on Monday to $79 per barrel on Wednesday. Signs of ongoing negotiations to resume operations in the Strait of Hormuz contributed to a decrease in Brent crude oil prices to $75 per barrel on Friday afternoon. In response, stocks recovered over the last two days, and most indices closed the week unchanged.
Dynamics of key global markets
The Nikkei in Japan, after losing 2.3% compared to last Wednesday, managed to recover and close the week with a decline of only 0.5%. A similar trend was observed in Germany, where the DAX index recovered almost 2.0% after losing 3.1% in the first half of the week. In the UK, the FTSE 100 index closed 1.1% lower, recovering from a 3.3% drop in the first three days. In the US, the S&P 500 index maintained a bullish stance and finished the week up 1.23%. The Dow Jones Industrial Average moved sideways, losing 0.5%, while the NASDAQ rose by 1.74%. The MSCI World Index, after losing 1.1% on Tuesday and Wednesday, strongly recovered on Thursday (up 0.83%) and Friday (up 0.34%), ending the week with a gain of 0.5%.
On the JSE, stock quotes also lost ground until last Wednesday. The ALSI index initially fell by 2.7% but recovered, closing the week with a loss of only 1.0%. The largest losses last week were seen in the precious metals and mining index, which fell by 6.0% as prices for precious metals such as gold and platinum came under pressure. This led to a 4.8% decline in the Resources 20 index, putting pressure on the ALSI. The finance and industry sectors showed slight growth—by 0.3%.
Fuel prices and exchange rate
Despite the unpredictable and volatile movement of Brent oil prices, which rose by $3 per barrel last week, a stable exchange rate supported the continued recovery of gasoline and diesel fuel prices since the last price setting. Last Thursday, the price of 95 ULP gasoline recovered by 1.62 rand per liter, and the price of diesel fuel by 1.29 rand per liter. Fuel prices for September will be determined by the average prices from June 26 to July 30, and prices are expected to fall more than the current recovery.
The Rand currency remained stable against most world currencies. Against the US dollar, the Rand fell by only 6 cents over the week, closing at 16.29 per dollar on Friday. Against the pound, the Rand lost 23 cents over the week, closing at 21.86 per pound on Friday, and weakened against the euro by only 7 cents, reaching 18.64 per euro.
Forecasts for the coming week
This week, South Africa's domestic financial markets await the publication of the country's mining production data for May 2026 on Tuesday. In global markets, in addition to monitoring events related to the current peace agreement between the US and Iran, investors will await the release of the US Consumer Price Index (inflation rate) on Tuesday, the Producer Price Index (PPI) on Wednesday, and retail sales data for June 2026 on Thursday, as well as various housing market indicators.
If both the core and headline inflation rates in the US decline in June, markets will react positively to expectations that the US Federal Reserve will not raise interest rates. Additionally, the Bank of Canada's (BoC) interest rate decision will be announced on Wednesday, and China will publish its GDP growth rate for the second quarter of 2026.