Market Commentary

US equities slid from record highs on Friday as rising energy prices and expectations of a more hawkish Federal Reserve (Fed) weighed on investor sentiment. The S&P 500 declined 1.20%, the Nasdaq dropped 1.50% and the Dow Jones slipped 1.10% as concerns around war-driven inflation and elevated interest rates returned to the forefront.

Profit-taking hit the technology sector after recent gains: Intel declined about 5%, Advanced Micro Devices dropped 3% and Micron Technology fell roughly 4%, while Nvidia was down 2%. Microsoft bucked the trend, rising 4% after Bill Ackman disclosed that Pershing Square had built a stake in the company. Boeing extended losses – down about 3% – after tumbling nearly 5% on Thursday, as investors responded to President Donald Trump’s claim that China had agreed to buy 200 Boeing jets, a figure only marginally above earlier expectations.

Inflation expectations strengthened after recent CPI and PPI data pointed to mounting price pressures linked to the Middle East conflict and the continued closure of the Strait of Hormuz. The yield on the US 10-year Treasury note climbed 10bps to 4.60%, its highest level in a year, while markets fully priced in one Fed rate hike by March next year and assigned more than a 50% probability of additional tightening before the end of 2026.

European equities also closed sharply lower as elevated energy prices and higher sovereign bond yields pressured sentiment. The Eurozone STOXX 50 dropped 1.80% to 5 825, while the STOXX 600 declined 1.60% to 606. Industrial and technology shares led losses, with Siemens, Airbus, Schneider Electric, ASML, and Infineon all retreating sharply.

The UK’s FTSE 100 plunged about 2% as mining and banking stocks came under pressure amid renewed political uncertainty in the UK and rising inflation worries. Anglo American slid 6.30%, while HSBC, Barclays and Lloyds all finished lower. Germany’s DAX 40 underperformed its European peers, ending the day around 2.10% down and halting a two-day rally.

Asian markets fell on Friday, with the Nikkei down nearly 2% and both the Shanghai Composite and Hang Seng off more than 1%. In Beijing, President Donald Trump wrapped up two days of talks with President Xi Jinping and the pair agreed to meet again in the US later this year. The White House said China will buy at least $17 billion of US agricultural goods annually through 2028, extending earlier commitments. Both sides also agreed to establish trade and investment boards to streamline bilateral dialogue.

China signalled it would look at tariff reductions as part of the package, though the US statement made no explicit mention of duties. Beijing confirmed plans to buy about 200 Boeing aircraft and said the US would ensure the supply of engines and other parts; China continues to develop its own passenger jet programme but remains reliant on some foreign components.

The rand slid to around R16.70 against the US dollar, on Friday, while the 10‑year government bond yield climbed to roughly 8.78% as inflation worries and political uncertainty weighed on sentiment.

In Parliament, President Cyril Ramaphosa said the government is finalising a formal electric‑vehicle (EV) programme and is coordinating with Chinese manufacturers on nationwide charging infrastructure. The announcement followed questions about unemployment in the manufacturing sector and concerns after Morocco became Africa’s largest vehicle producer in 2025.

The Department of Trade, Industry and Competition is completing an EV plan intended to attract manufacturers and support local assembly. Officials say South Africa’s relatively advanced industrial base should ease the transition, but domestic EV production remains limited.

On Friday, commodity markets experienced significant volatility, with sharp declines in precious metals contrasting with a strong rally in energy prices. WTI crude oil futures rose by more than 4.50% to trade near $106 per barrel, ending the week around 11% higher as the Strait of Hormuz remained effectively closed, intensifying concerns over global oil supply disruptions. Efforts to resolve the conflict remain stalled, with ongoing disruptions continuing to place pressure on energy markets and support higher oil prices. Meanwhile, Brent crude futures climbed above $109 per barrel, recording a weekly gain of approximately 8.10%.

The International Energy Agency warned that the oil market could remain significantly undersupplied until October 2026, even if hostilities subside next month. At the same time, oil inventories continue to tighten, while tanker traffic through the Strait of Hormuz remains severely constrained.

Precious metals also came under pressure, with gold declining by more than 2% to trade at approximately $4 542 per ounce, while silver fell close to 9%, sliding for the third straight session reflecting increased volatility across global commodity markets.