<\/p>\n
The JSE All Share Index closed the week at 114 924 points as global markets reacted to escalating conflict in the Middle East and the resulting surge in oil prices.<\/p>\n
Over the past month, the index has lost just over 3% as investors have become more defensive amid heightened geopolitical tension and volatile energy prices.<\/p>\n
Read:
SA stocks set for a 10% correction as losses deepen
Higher oil prices could dent SA growth \u2013 Standard Bank<\/p>\n
With oil prices climbing above $100 a barrel amid the escalating war in the Middle East, investor sentiment turned sharply negative.<\/p>\n
On the JSE, resource stocks were among the biggest losers on Friday.<\/p>\n
Impala Platinum dropped around 10%, Northam Platinum fell about 8%, and Sibanye-Stillwater declined roughly 7%.<\/p>\n
Not all shares were weaker. Sasol \u2013 which typically benefits from higher oil prices \u2013 jumped 10%, while Naspers and coal producer Thungela gained about 4% and 3%, respectively.<\/p>\n
Read:
Brent oil closes above $100 for first time since August 2022
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Sasol has nearly doubled in 12 months, but is it still cheap?<\/p>\n
Omri Thomas, director at Abax Investments, says a large part of the JSE\u2019s decline over the past two weeks has been driven by resource stocks.<\/p>\n
\u201cHowever, if you take one step back and compare current prices with those of three months ago, the decline does not appear as dramatic.\u201d<\/p>\n
He cites Impala Platinum as an example. Although the share price is down about 30% for the month, it remains roughly 5.5% higher than it was three months ago and about 117% higher than a year ago.<\/p>\n
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He cautions that markets could still move significantly lower.<\/p>\n
Rand on the back foot<\/p>\n
The rand has also experienced a volatile week.<\/p>\n
The currency briefly weakened to around R16.92 to the dollar earlier in the week \u2013 a three-month low \u2013 before recovering somewhat and trading in the R16.30 to R16.49 range midweek.<\/p>\n
Renewed pressure linked to elevated oil prices and geopolitical uncertainty later pushed it back toward R16.85 on Friday evening.<\/p>\n
Listen: Simon\u2019s weekly wrap: Oil, food, tech and the price you\u2019ll pay<\/p>\n
Thomas says the factors that previously supported the rand have now reversed. \u201cBut the rand\u2019s reaction to the dollar is logical, given the circumstances.\u201d<\/p>\n
He warns that if oil prices do not turn lower quickly, South Africa\u2019s trade balance could come under significant pressure.<\/p>\n
\u201cAnd petrol prices could potentially increase by about R5 a litre and diesel by as much as R7. This would completely change South Africa\u2019s inflation outlook.\u201d<\/p>\n
SA\u2019s oil vulnerability<\/p>\n
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South Africa\u2019s reliance on imported oil makes the local economy particularly sensitive to global energy shocks.<\/p>\n
Gavin Kelly, chief executive of the Road Freight Association, notes that most of the petroleum products consumed in South Africa are imported, meaning that international price movements feed directly into local fuel costs.<\/p>\n
\u201cFor an economy like South Africa that imports oil, the outcome is often inevitable: higher domestic energy prices,\u201d he notes in a media statement.<\/p>\n
The effects extend far beyond the petrol pump.<\/p>\n
\u201cOnce fuel prices increase, the cost of moving goods from agricultural, mining and production sites to manufacturing and distribution centres and finally to retailers is exposed to these input price increases,\u201d Kelly says.<\/p>\n
Meanwhile, the conflict between the United States, Israel and Iran has intensified following air strikes on 28 February that killed Iran\u2019s Supreme Leader, Ali Khamenei.<\/p>\n
Of particular concern is the Strait of Hormuz, through which about a fifth of the world\u2019s oil exports pass. Shipping through the strait has been severely disrupted since the conflict escalated.<\/p>\n
Read\/listen:<\/p>\n
From crude to CPI: how oil swings shape inflation and rates
\nSpiralling oil prices could spell trouble for SA agriculture \u2026 and consumers
\nHigher oil prices may cloud interest rate path \u2013 FNB<\/p>\n
The International Energy Agency says the crisis could become the largest supply disruption in the history of the global oil market. Crude and oil product flows through the strait have fallen from about 20 million barrels a day before the conflict to almost zero.<\/p>\n
The disruption has pushed oil prices sharply higher. Late on Friday, Brent crude was trading just over $100 a barrel.<\/p>\n
\u2018Watch the next two weeks\u2019<\/p>\n
Bianca Botes, director at Citadel Global, says the next two weeks may shape the economic outlook for the rest of 2026.<\/p>\n
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According to Botes, markets are particularly focused on developments around the Strait of Hormuz.<\/p>\n
\u201cEach day the waterway remains effectively closed extends the supply deficit that no reserve release can fully offset.<\/p>\n
\u201cAny credible signal that traffic is resuming would move markets faster than policy announcements.\u201d<\/p>\n
She adds that while a de-escalation scenario remains possible, investors can no longer assume that energy markets will quickly normalise.<\/p>\n
\u201cThe base case, which remains possible, is that the conflict eases within weeks and allows energy flows to normalise. But it is no longer the only scenario that needs to be considered.\u201d<\/p>\n
Economists are increasingly concerned about the potential macroeconomic fallout if oil prices remain elevated for an extended period.<\/p>\n
Oxford Economics says a scenario in which Brent crude averages around $140 a barrel for two months \u2013 combined with tighter financial conditions and supply-chain disruptions \u2013 could be enough to push parts of the global economy into a mild recession.<\/p>\n
Using its Global Economic Model, the consultancy estimates that such a shock could see global real GDP decline by roughly 0.7% by the end of 2026.<\/p>\n
Read: Over R2trn JSE wipeout<\/p>\n
#JSE #slides #points #Middle #East #oil #shock<\/p>\n","protected":false},"excerpt":{"rendered":"
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