After weakening for much of the day the JSE and rand closed firmer on Wednesday, breaking a two-day losing streak, as global markets attempted a rebound on the sixth day of Israel and Iran’s war.
The brief reprieve may be short-lived, as markets remain cautious over concern the conflict between the two countries could spread to the wider Middle East.
US President Donald Trump has called for an unconditional surrender by Iran and has not ruled out the possibility of his country joining the battle.
The local bourse, which fell as much as 1.8% on Friday after Israel launched an attack, closed 0.35% firmer at 94,992 points on Wednesday. By 6pm the rand had firmed 0.38% to R17.95/$, having fallen the most since Trump’s tariff announcement in early April on Tuesday.
Israel launched sweeping air strikes targeting Iran’s nuclear infrastructure, missile sites and military command centres in and around Tehran. In response, Iran launched large-scale missile and drone attacks on Israeli cities, including the capital Tel Aviv, resulting in casualties and infrastructure damage on both sides.
Fears have emerged that the conflict could affect the Strait of Hormuz — a vital route for about 20% of global oil shipments.
Trump has called for the evacuation of Americans from Tehran and abruptly left the Group of Seven (G7) summit in Canada to tackle the crisis. Reports indicate he has instructed the US national security council to remain on high alert in the situation room, further stoking market uncertainty and speculation about possible US military involvement.
“Tension in the Middle East is rising, with speculation mounting that the US could soon join the ongoing conflict,” said Citadel director Bianca Botes. “High-level security meetings and strong public statements have added to the sense of urgency, while both Israel and Iran appear determined to escalate the conflict after several days of hostilities.
“These developments have pushed oil prices higher, as markets brace for the possibility of a broader confrontation,” Botes said.
Brent crude, which at one stage was up 13% on Friday at a six-month high, pulled back a little on Wednesday to $75.52 a barrel.
Analysts warn that any escalation threatening major energy infrastructure could send prices soaring, with Deutsche Bank saying Brent could reach $130 a barrel in a worst-case scenario.
General retailers performed best on the JSE on the day, up 1.59%.
Botes said investors were also cautious before a monetary policy decision by the Federal Reserve later on Wednesday.
“Expectations are that rates will remain unchanged, but it’s the forward guidance that will play a critical role in market dynamics.
“Traders weigh geopolitical risk and uncertainty over future US interest rate moves, with global markets awaiting further clarity,” said Botes.
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