Global markets rise as energy shock concerns ease

Market Commentary

South African markets closed firmer on Wednesday, with the FTSE/JSE All Share Index up nearly 1% as resources and financials outperformed while industrials lagged. The rand strengthened to around R16.47/$, supported by softer oil prices, firmer precious metals, and an improvement in global risk sentiment driven by easing energy inflation fears.

On the macroeconomic front, SA inflation accelerated to 4% in April from 3.10%, the highest in 20 months, driven primarily by a surge in fuel costs linked to elevated global oil prices and the Iran conflict. Transport costs rose sharply, while core inflation edged up to 3.60%, reinforcing expectations that the South African Reserve Bank could deliver a 25bp rate hike at its May meeting — its first increase in three years.

Globally, markets were supported by signs of easing energy pressure as reports of tanker flows through the Strait of Hormuz and comments from US President Donald Trump around potential progress in Iran negotiations helped temper inflation fears. This drove a pullback in oil prices and supported risk assets across regions.

US equities closed higher, with the S&P 500 up 1%, as lower energy costs and declining yields lifted sentiment ahead of Nvidia earnings. The stock rose 1.50% as investors focused on AI-driven growth, while broader tech sentiment was further supported by speculation around a potential OpenAI IPO. Retail names also gained, with markets brushing off hawkish Federal Reserve minutes as rate expectations remained broadly stable.

European equities followed the same risk-on tone, with the STOXX 50 up 2.10% and the STOXX 600 rising 1.60%, as easing oil prices improved inflation expectations and drove sovereign yields lower. Financials rallied strongly, while AI-linked industrial names extended gains on momentum from Nvidia’s outlook.

In China, equities ended mixed, with the Shanghai Composite slipping 0.18% while the Shenzhen Component was flat, as global rate volatility and lingering inflation concerns offset domestic stability. The People’s Bank of China kept lending rates unchanged for a 12th straight month, signalling policy caution amid external uncertainty and rising energy-driven price pressures.

In commodities, gold rebounded above $4 530/oz after briefly hitting a two-month low, supported by easing inflation expectations and stabilising bond markets as energy supply concerns moderated. Reports of tanker movements out of the Persian Gulf reinforced hopes that supply disruptions may ease, even as the Middle East conflict remains unresolved.

Oil remained volatile, trading lower as markets balanced geopolitical risk against improving supply expectations. Despite fresh rhetoric from US President Donald Trump on possible renewed strikes against Iran, traders focused more on signs of potential de-escalation, easing global bond yield pressures and supporting a broader relief rally across risk assets.