Market Commentary

In the US, minutes from the Federal Open Market Committee’s (FOMC) June 2026 meeting showed policymakers divided on the future path of interest rates, though most still expected rates to finish the year at or slightly below current levels. They flagged upside inflation risks, citing resilient labour markets, strong artificial intelligence (AI)‑related investment, the Middle East conflict and tariffs as factors that could keep inflation above the Federal Reserve's (Fed’s) 2% target. US equities extended losses as rising energy prices added to a less favourable macro environment: the S&P 500 and Nasdaq 100 were about 0.44% lower, while the Dow fell more sharply, down 1%.

Credit‑sensitive stocks underperformed, with JPMorgan and Visa down around 2%, while Home Depot and GE Vernova fell roughly 3%. AI hyperscalers were mostly weaker as renewed concerns over heavy data‑centre spending weighed on the sector.

Meanwhile, the International Monetary Fund (IMF) left its 2026 global growth forecast broadly unchanged at 3% in its July World Economic Outlook, saying the world economy has shown resilience despite heightened geopolitical tensions and continued investment in AI. Prospects vary across countries: growth is being shaped by higher energy costs linked to the Middle East conflict alongside ongoing technology spending. The IMF lifted its 2027 global forecast to 3.40% from 3.20%, but cautioned that downside risks persist as the full economic impact of recent geopolitical events has yet to materialise. Global inflation is expected to rise to 4.70% in 2026 before easing to 3.90% in 2027. Among major economies, the IMF projects 2026 growth of 2.30% for the US, 4.60% for China, 0.60% for Japan and 0.90% for the Eurozone.

European equity markets ended the session firmly in negative territory as investors reacted to escalating geopolitical tensions in the Middle East and the prospect of renewed inflationary pressures. The Euro STOXX 50 declined 2% to 6 190, while the STOXX Europe 600 fell 1.80% to 634.

The rise in energy costs pushed sovereign bond yields higher as markets reassessed the outlook for European Central Bank (ECB) policy, with expectations growing that rates could remain higher for longer. Financial stocks led the declines: Santander and Deutsche Bank both fell more than 5%. UniCredit lost 2.90% after increasing its stake in Commerzbank, reinforcing speculation it could pursue a full takeover in the coming quarters. Technology shares also remained under pressure as investors continued to unwind AI‑related positions, with SAP down 4%.

Asian markets closed mixed, with sentiment hit by renewed Middle East tensions following US strikes on Iran and by the ongoing sell‑off in tech names. Japan’s Nikkei 225 fell more than 2%, while China’s Shanghai Composite declined 0.42%. Hong Kong’s Hang Seng bucked the regional trend, rallying nearly 3%.

South African equities closed lower on Wednesday, tracking global market declines as renewed geopolitical tensions dampened investor sentiment. The Johannesburg Stock Exchange extended its losses, with the All Share Index and Top 40 each falling 1.79%. Metals and Mining led the declines, dropping 4.32%, while the Resources Index lost nearly 4%.

The sharp rise in oil prices was a stark reminder of how quickly inflation risks can re‑emerge. Reuters reported Brent crude jumped about 7.50% to near $80 a barrel, a move that acted as an ‘inflation wake‑up call’ and prompted a broad retreat across global equity markets. Meanwhile, gold extended losses to around $4 069 an ounce and silver slipped almost 3%.