The JSE closed slightly firmer on Friday amid mixed global peers as investors kept a close eye on developments in the Middle East.
The all share fell more than 2% for the week on investor fears over escalating tension between Israel and Iran, and the prospect of “higher-for-longer” US interest rates weighed on sentiment.
Bloomberg reported earlier that Israel had launched a retaliatory strike on Iran less than a week after the latter attacked it with drones and missiles, An explosion was heard early on Friday in Iran’s central city of Isfahan, the country’s semi-official Fars news agency reported.
Oil prices surged more than 4% before paring some of those gains, while metals such as gold, copper and nickel also advanced, according to Bloomberg.
Brent crude hit a high of $90.70 per barrel in intraday trade. At 5.20pm local time, it had eased from those highs and was 0.26% firmer at $87.32 a barrel.
“Financial markets are experiencing a surge in volatility triggered by an alleged Israeli drone strike on Iran. This event has led to significant movements in key indicators [such as oil, precious metals and currencies],” TreasuryOne currency strategist Andre Cilliers said.
“However, diminished concern over a broader regional conflict, as Iran reported minimal damage to its infrastructure and confirmed no impact on its nuclear sites, contributed to the markets’ partial recovery,” said Cilliers.
The JSE all share gained 0.13% to 73,364 points — with major indices mixed, while the top 40 added 0.18%.
At 5.30pm, the Dow Jones industrial average was 0.44% firmer at 37,942 points, while in Europe, the FTSE 100 had gained 0.26%, while France's CAC 40 was little changed and Germany's DAX lost 0.46%.
“Amid these [geopolitical] developments, safe-haven currencies like the dollar made appreciable gains. This was further bolstered by hawkish comments from Federal Reserve officials in light of robust US economic data, leading to speculation about interest rate hikes rather than cuts,” said Cilliers.
“Looking ahead, it is clear that market volatility will persist as geopolitical tension in the Middle East continue to exert a significant influence on global financial dynamics. This is further compounded by the Fed’s cautious stance on monetary easing, driven by persistent inflation concerns,” said Cilliers.
The rand pared some of the session’s losses, having touched an intraday worst of R19.38 against the dollar.
At 5.35pm, it had strengthened 0.3% to R19.1102/$, while it was little changed at R20.3729/€ and R23.7894/£. The euro was 0.22% firmer at $1.0665.
Gold gained 0.45% to $2,391.29/oz, while platinum lost 0.82% to $942.2/oz.
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