Market Commentary

US inflation accelerated to 4.20% in May 2026, as equities extended their decline, with the S&P 500, the Nasdaq Composite, and the Dow Jones Industrial Average each dropping more than 1%. Market sentiment remained fragile as escalating tensions in the Middle East pushed oil prices higher and renewed concerns about the potential economic impact of rising energy costs.

Investor caution intensified after President Donald Trump reiterated his hard-line stance towards Iran, warning that Tehran had delayed negotiations for too long and signalling that stronger action remained on the table. The remarks added to geopolitical uncertainty and weighed on risk appetite across global markets.

Technology stocks led the downturn, with semiconductor shares facing renewed pressure amid ongoing concerns over stretched valuations linked to the artificial intelligence (AI) theme. Investors also adopted a more cautious approach ahead of SpaceX's widely anticipated initial public offering later this week. Nvidia declined 2.90%, Broadcom lost 3.70%, AMD fell 4.50%, and Micron Technology dropped 4.10%, while Tesla retreated 3.40%.

European equities closed mixed as investors stayed cautious ahead of the European Central Bank’s policy announcement and amid escalating geopolitical tensions. The STOXX 50 fell 0.40%, while the broader STOXX 600 was little changed. London’s FTSE 100 outperformed continental peers, recovering from early weakness to close 0.30% higher. Gains were led by property names after Tritax Big Box REIT surged 4.90% on a favourable appeal outcome for its £360 million Heathrow data‑centre development, boosting sentiment across real estate. UK banking shares remained under pressure after a JPMorgan note flagged potential disruption from new Chinese regulations. STMicroelectronics edged lower.

The South African rand traded around R16.50 against the US dollar, hovering near its weakest level since mid‑May 2026 as softer prices for key export commodities, notably gold and platinum‑group metals (PGMs), weighed on sentiment. Risk aversion increased following renewed Middle East tensions after US strikes on Iran. The South African Reserve Bank cautioned in its Financial Stability Review that higher oil prices could prolong inflationary pressure, increasing the risk of further tightening. Its quarterly projection model now points to an additional rate rise in 2026 after the 25‑basis‑point hike implemented at the end of last month.

The JSE was mixed: the ALSI and Top 40 each lost more than 1%, Financials fell 0.77%, Metals & Mining plunged almost 5%, while Industrials ended slightly higher at 0.09%.

In commodities, Brent crude extended gains, rising 3% to $94.24 per barrel. Iran blocked most shipping at the Strait of Hormuz, while the US imposed restrictions on Iranian ports. Precious metals tumbled: gold fell 3.45% to $4 115.58, its lowest since late 2025 and silver extended its sell‑off after US inflation met expectations.

Asian markets closed lower, pressured by a major retreat in technology and semiconductor stocks following Wall Street’s retreat. The Nikkei dropped almost 2%, while the Shanghai Composite and Hang Seng slipped 0.41% and 0.70%, respectively.