South Africa's markets on edge amid Middle East tensions and Fed uncertainty
The JSE All Share Index fell 0.7% to 94 695 by 4pm while the rand was weak and traded above the R18.80-mark against the US dollar.
Image: Supplied
South Africa's markets faced a turbulent day on Tuesday as they traded on the backfoot, grappling with the ongoing hostilities in the Middle East and uncertainty surrounding the US Federal Open Markets Committee's (FOMC) upcoming decision on interest rates.
The JSE All Share Index fell 0.7% to 94 695 by 4pm while the rand was weak and traded above the R18.80-mark against the US dollar after reaching R17.70/$1 as the severe escalation in the conflict in the Middle East has increased market risk aversion.
Stocks such as Karooooo, Assura and Harmony Gold saw the most declines, falling 4.55%, 4% and 3.3%, respectively.
However, the marked US dollar weakness of the second quarter continued to persist amid heightened volatility.
The escalation of conflict in the region reached new peaks following a stark warning from US President Donald Trump, who urged Iranians to evacuate Tehran. This statement has intensified fears regarding a possible escalation in the Iran-Israel conflict, contributing to an anxious trading atmosphere.
According to reports, Iran has threatened to execute what it claims will be the largest ballistic missile assault on Israel within the next few days, in response to Israel's military targeting of its governmental facilities.
A key concern is potential disruption to the Strait of Hormuz, a critical chokepoint through which about 18–19 million barrels per day, or roughly 20% of global oil consumption, passes.
Video Player is loading.
Play Video
Play
Unmute
Current Time
0:00
/
Duration
-:-
Loaded :
0%
Stream Type LIVE
Seek to live, currently behind live
LIVE
Remaining Time
-
0:00
This is a modal window.
Beginning of dialog window. Escape will cancel and close the window.
Text Color White Black Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Background Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Opaque Semi-Transparent Transparent Window Color Black White Red Green Blue Yellow Magenta Cyan
Transparency Transparent Semi-Transparent Opaque
Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Dropshadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps
Reset
restore all settings to the default values Done
Close Modal Dialog
End of dialog window.
Advertisement
Next
Stay
Close ✕
Ad Loading
Oil prices remain supported by the ongoing turmoil, while gold continues to attract safe-haven flows. The oil price jumped to $74 (R1 318) per barrel on the intensification of the war in the Middle East after dipping to $60 per barrel last month.
On average for the month to date the oil price is higher but counterbalanced by rand strength against the US dollar. Gold climbed above $3 390 per ounce on Tuesday, extending gains as escalating tensions in the Middle East boosted demand for safe-haven assets.
The rand strength against the US dollar is currently overshadowing the impact of the jump in the oil price, with a very small cut in the oil price signalled, although further escalation in the international oil price would wipe this out.
Investec chief economist, Annabel Bishop, said the US dollar's weakness has been driven by the volatility in US policy, particularly on trade, as the US has hiked tariffs steeply on countries worldwide then paused, or rolled them back, creating uncertainty over the US economy and global growth.
'While the rand has gained against US dollar weakness, it is still weaker against the euro and pound this quarter as risk aversion elevated,' Bishop said.
'With concerns that the war in the Middle-East will last for weeks not days as some had hoped, financial market sentiment has become risk averse, but the US dollar remains suppressed, only seeing a very slight lessening in weakness.
'The rand has consequently only seen very modest weakness against the US dollar compared to last week, with most of the movement coming from the rand against the crosses.'
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
TimesLIVE
2 hours ago
- TimesLIVE
Trump to extend TikTok sale deadline for third time, says White House
US President Donald Trump will extend a June 19 deadline for China-based ByteDance to divest the US assets of short video app TikTok for 90 days despite a law that mandated a sale or shutdown absent significant progress, the White House said on Tuesday. Trump had already twice granted a reprieve from enforcement of a congressionally mandated ban on TikTok that was supposed to take effect in January. "President Trump will sign an additional executive order this week to keep TikTok up and running," White House press secretary Karoline Leavitt said Tuesday. That would extend the deadline to mid-September. "President Trump does not want TikTok to go dark," she added, saying the administration will spend the next three months making sure the sale closes so that Americans can keep using TikTok with the assurance that their data is safe and secure. Trump said in May he would extend the June 19 deadline after the app helped him with young voters in the 2024 election.
eNCA
6 hours ago
- eNCA
Trump extends TikTok deadline for third time
USA - US President Donald Trump will this week give TikTok a fresh 90-day extension to find a non-Chinese buyer, the White House said Tuesday, the third time he has put off a threatened ban on the popular app. A federal law requiring TikTok's sale or ban on national security grounds was due to take effect the day before Trump's January inauguration. "President Trump will sign an additional Executive Order this week to keep TikTok up and running. As he has said many times, President Trump does not want TikTok to go dark," Press Secretary Karoline Leavitt said in a statement. "This extension will last 90 days, which the administration will spend working to ensure this deal is closed so that the American people can continue to use TikTok with the assurance that their data is safe and secure." Trump, whose 2024 election campaign relied heavily on social media, has previously said he is fond of the video sharing app. "I have a little warm spot in my heart for TikTok," Trump said in an NBC News interview in early May. "If it needs an extension, I would be willing to give it an extension." - Digital Cold War? - Trump said at the time that a group of purchasers was ready to pay TikTok owner ByteDance "a lot of money" for the video-clip-sharing sensation's US operations. Trump has repeatedly downplayed risks that TikTok is in danger, saying he remains confident of finding a buyer for the app's US business. The president is "just not motivated to do anything about TikTok," said independent analyst Rob Enderle. "Unless they get on his bad side, TikTok is probably going to be in pretty good shape." Trump had long supported a ban or divestment, but reversed his position and vowed to defend the platform after coming to believe it helped him win young voters' support in the November election. Motivated by national security fears and belief in Washington that TikTok is controlled by the Chinese government, the ban took effect on January 19, one day before Trump's inauguration, with ByteDance having made no attempt to find a suitor. TikTok "has become a symbol of the US-China tech rivalry; a flashpoint in the new Cold War for digital control," said Shweta Singh, an assistant professor of information systems at Warwick Business School in Britain. The Republican president announced an initial 75-day delay of the ban upon taking office. A second extension pushed the deadline to June 19. - Tariff turmoil - Trump said in April that China would have agreed to a deal on the sale of TikTok if it were not for a dispute over his tariffs on Beijing. ByteDance has confirmed talks with the US government, saying key matters needed to be resolved and that any deal would be "subject to approval under Chinese law". Possible solutions reportedly include seeing existing US investors in ByteDance roll over their stakes into a new independent global TikTok company. Additional US investors, including Oracle and private equity firm Blackstone, would be brought on to reduce ByteDance's share in the new TikTok. Much of TikTok's US activity is already housed on Oracle servers, and the company's chairman, Larry Ellison, is a longtime Trump ally. Uncertainty remains, particularly over what would happen to TikTok's valuable algorithm. "TikTok without its algorithm is like Harry Potter without his wand -- it's simply not as powerful," said Forrester Principal Analyst Kelsey Chickering. Meanwhile, it appears TikTok is continuing with business as usual. TikTok on Monday introduced a new "Symphony" suite of generative artificial intelligence tools for advertisers to turn words or photos into video snippets for the platform. By Danny Kemp With Glenn Chapman In San Francisco
TimesLIVE
8 hours ago
- TimesLIVE
Fed policymakers meet as new data raises growth concerns, geopolitical risks rise
Federal Reserve officials met on Tuesday armed with new economic data that could give more weight to their concerns that US President Donald Trump's administration policies, or at least the intense uncertainty around them, will slow growth in the coming months. Shortly before the start of the two-day policy meeting, the commerce department reported that US retail sales fell 0.9% in May, exceeding the expected 0.7% decline in a Reuters poll of economists and marking the biggest drop in four months. The US central bank then released a report showing a surprise contraction in industrial production last month. The data, however, was hardly clear-cut. The retail sales report, with revisions also showing a small drop in April, was heavily influenced by slower auto sales after a surge earlier in the year driven by consumers hoping to avoid 25% levies on imported vehicles. Bad weather may have also been an influence, said Bradley Saunders, a North America economist at Capital Economics, with sales of an underlying group of goods more closely related to broader economic conditions suggesting 'overall consumption continues to look healthy'. The 0.2% drop in industrial production, however, pushed overall capacity utilisation down 77.4%, its lowest level since January. A separate survey showed sentiment among home builders slid to the lowest point in two and a half years amid weak demand among buyers and high financing costs, a factor tied to monetary policy and the Fed's reluctance to reduce interest rates further until it is clear Trump's tariff policies won't lead to a persistent increase in inflation. Recent inflation data has been tame despite rising tariffs, but the Fed is trying to reduce the pace of price increases to 2% after it surged in the years after the Covid-19 pandemic, with tariff-driven price hikes continuing to be seen as on the way. The risk of rising prices remains a dominant concern for the central bank despite signs the economy overall may be slowing. Trump's final tariff plans remain unclear, with trade deals promised but not done with dozens of nations he has threatened to tax, and one-off proposals to levy specific goods such as appliances that may or may not be implemented. Ongoing hostilities between Iran and Israel, meanwhile, have boosted the price of oil, another risk the Fed must contend with as it prepares to release on Wednesday a new policy statement and updated policymakers' economic and interest rate projections. James Knightley, chief international economist at ING, noted the retail sales data is not adjusted for inflation, and the drop, once accounting for price rises, 'paints a weak picture that reflects subdued consumer confidence readings'. 'Households are nervous that tariff-induced price hikes will squeeze spending power while respondents have become much more cautious about job prospects, and this suggests consumer spending will continue to cool through this year.' How to balance the risk of slowing growth against the risk of anticipated higher inflation will be at the centre of Fed policymakers' debate on Tuesday and Wednesday, along with likely discussion of the implications of the crisis in the Middle East. The US central bank is widely anticipated to leave its benchmark overnight interest rate in the 4.25% to 4.50% range, where it has been since December, and repeat that it can't give much guidance until it is clearer whether Trump's import tariffs and fiscal policies push inflation higher, undercut growth, or, as his administration contends will happen, keep growth on track while prices ease. Trump has demanded immediate rate cuts. Days of intense missile exchanges between Israel and Iran, however, have presented the Fed with more reason for caution after oil prices jumped again on Tuesday and presented a possible new source of inflation. The conflict highlights the uncertainty Fed officials said has gripped their policy debate since Trump returned to power in January and unveiled a far more aggressive effort than expected to raise import taxes and rewrite global trade rules. Fed officials and many economists have largely expected Trump's trade policies will have a stagflationary effect on the US economy, simultaneously slowing growth and raising prices, with the monetary policy path — whether rate cuts or an extended hold of borrowing costs at the present level — dependent on which problem seems to be more serious. The Fed will issue a new policy statement and updated projections for the economy and the benchmark interest rate at 2pm on Wednesday, with Fed chair Jerome Powell scheduled to hold a press conference half an hour later. The central bank's summary of economic projections may draw more attention than the policy decision itself, as analysts and investors look for evidence of how Fed officials' views of the outlook have changed since their last set of projections in March, before the scope of Trump's tariff plans became clear but also before he delayed some of the stiffest levies in the face of largely negative market reaction. Fed officials in March marked down their expectations for economic growth this year and raised their level of expected inflation, but left unchanged the median outlook for two quarter-percentage-point rate cuts this year. Though that rate outlook matched the one in December, the spread of views in the Fed's 'dot plot' chart narrowed, and some analysts anticipated a further hawkish shift in light of the central bank's emphasis on keeping inflation controlled and expectations that Trump's new tariffs will lead to price increases. 'Trade policy developments have likely led to a significant change in Fed forecasts,' towards even slower growth and higher inflation this year than expected as of March, Michael Feroli, chief US economist at JPMorgan, wrote on Friday. 'The stagflationary revisions don't point to a clear direction of the revision to the dots. Even so, we think the dots will revise in a modestly hawkish direction' with only a single rate cut this year.
