Geopolitical dealmaking under US President Donald Trump has always been defined by a transactional approach, where personal relationships, economic leverage, and unpredictability take centre stage. In his last term, he favoured headline-grabbing negotiations that showed quick results and his prowess as a dealmaker.
It was thus no surprise Trump made bold promises about how quickly he would bring peace to Ukraine and Gaza before he was re-elected. But developments in both regions this week show that concluding deals between the warring parties in these conflicts will not be as straightforward as Trump suggested when on his campaign trail.
Trump has managed to get Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskyy to reach a concord on a limited halt on strikes on each other’s energy infrastructure. Both sides also agreed to further talks to expand the ceasefire to the Black Sea and beyond as well as prisoner of war exchanges.
While the Trump administration has been upbeat about the results of the negotiations, many observers are sceptical that the initial agreement will provide a solid foundation for lasting peace. In particular, Russia’s readout of the phone call between Trump and Putin raised questions about what concessions Putin may offer to secure peace.
There have been no signs that Russia is willing to slow down attacks on Ukrainian civilians. Nor does Putin seem ready to abandon his claims on territory Russia seized following its invasion of Ukraine, or able to accommodate the security guarantees Ukraine is seeking to protect itself from future Russian aggression.
There are concerns that the deal Trump is pushing for is about his own goals rather than peace in Ukraine and European security. Trump has seemed eager to reintegrate Russia into the world economy, to trade with the country, and perhaps move close to the nation in the hope of sideling China – which Trump sees as the US’s major geopolitical rival.
But there is no guarantee that European powers or Ukraine will accept a deal that leaves Russia unpunished for invading a sovereign nation and unconstrained from further aggression (especially given its history of breaking numerous ceasefires since the annexation of Crimea in 2014).
This is, in other words, just the start of a precarious process that could take months to produce results and that may still fail. Indeed, these moves to pause hostilities in Ukraine unfolded in the same week as the ceasefire in Gaza shattered with Israel launching air raids and a ground incursion – a reminder of the difficulties in ending a war amid the competing priorities of the different players.
Benjamin Netanyahu, Israeli Prime Minister, claims he resumed hostilities because Hamas refused to release remaining hostages or accept a US proposal to extend the ceasefire. But some observers believe that he may be protracting the war to protect his domestic political position and delay a long-pending corruption trial.
The collapse of the Gaza ceasefire coincides with a new US air offensive against Iran-backed Houthi rebels in Yemen. This suggests that Trump is eager to keep pressure on Iran to force it into talks on its nuclear program and weaken its regional proxies, thereby creating a danger of wider regional conflict.
Many of our investors have been concerned about these geopolitical events and have wondered what impact they will have on the markets. This week, we have seen only slight movements in gold (up 1.64%), the S&P 500 (strengthening slightly after last week’s weakness) and the US dollar (mostly flat).
Markets have not been negatively impacted by this week’s geopolitical developments because these conflicts have been underway for long enough to be priced into the markets. Until there is news positive enough (possibility of lasting peace), or negative enough (disruption of energy markets or supply chains), to change the status quo, our view is that market reactions will tend to be relatively subdued.
In the nearer term, factors such as the tariffs Trump aims to introduce on 2 April, corporate results for the first quarter, Fed commentary, as well as job, inflation and consumer spending data will have more bearing on market performance. (As an example, the S&P 500 closed 1.08 % up yesterday on the back of the Fed signalling its room to cut rates later this year because any increase in inflation due to tariffs will likely be brief. Fed Chairman Jerome Powell also downplayed growth concerns).
Geopolitical tensions remain high, but markets will wait for more definitive shifts before reacting significantly.
“My style of deal-making is quite simple and straightforward. I aim very high, and then I just keep pushing and pushing and pushing to get what I’m after.”
– Donald Trump in his book: The Art of the Deal
Global News
- Israel launched a limited ground incursion into Gaza on Wednesday, retaking parts of the Netzarim Corridor to create a buffer between northern and southern Gaza. This follows the collapse of a six-week ceasefire and recent airstrikes that killed hundreds. Israel warned of further escalation unless Hamas releases 59 remaining hostages. The operation raises concerns of a return to full-scale war, with tensions in the region heightened as Israel intercepted a missile from Yemen. Mediation efforts by Qatar, Egypt, and the US are now stalled.
- During a call between Putin and Trump on Tuesday, Putin spurned Trump’s call for a 30-day ceasefire and instead proposed a limited halt on attacks targeting energy infrastructure and demanded the cessation of US arms and intelligence support for Ukraine. Subsequently, on Wednesday Trump spoke to Zelenskyy and the latter called the ceasefire on energy infrastructure a very good call while Trump promised renewed support, including air defence systems.
- US officials are reassuring their EU counterparts that they will be involved in any peace deal. The EU is advancing a military aid package worth €40 billion to Ukraine, with broad political support among member states. The proposal, discussed by EU foreign ministers, includes artillery ammunition, air defence systems, drones, and other weapons to bolster Ukraine’s military capabilities. While most countries support the plan, France, Italy, and Hungary have expressed reservations or requested more details.
- Germany’s parliament approved a landmark spending package, unlocking hundreds of billions of euros for defence and infrastructure, marking a shift from decades of austerity. The bill, passed with a two-thirds majority, exempts defence spending from borrowing limits and establishes a €500 billion infrastructure fund. It aims to revive Germany’s economy, deter Russian aggression and address climate change. The move is expected to boost growth and strengthen European defence.
- In his first overseas trip as Canada’s Prime Minister, Mark Carney visited France and the UK on Monday to strengthen Canada’s European ties amid escalating tensions with Trump. Trump’s tariffs and suggestions that Canada should become a US state have spurred Carney to showcase Canada’s international friendships. Toronto has excluded Tesla vehicles from its EV incentive programme for taxis and ride-shares due to the trade tensions. The programme, which reduces licensing and renewal fees to promote EV adoption, no longer applies to Teslas as of 1 March.
- Fed Chairman Jerome Powell faced a delicate balancing act this week as he needed to reassure investors that the economy remains strong while signalling readiness to act if needed. As expected, the Fed held rates steady at 4.25%-4.5% for the second consecutive meeting. With the economy weakened by rising tariffs and labour shortages, Powell must balance controlling inflation while fostering growth.
- The Paris based OECD said on Monday that escalating trade tariffs and “increased geopolitical and policy uncertainty” will slow global growth, increase inflation, and disproportionately impact Canada and Mexico in particular. The organisation predicts global growth will slow to 3.1% in 2025, with inflation rising to 3.8% in major economies. Growth in the US has also been downgraded, with growth of 2.2% expected this year and 1.6% in 2026, down from previous forecasts of 2.4% and 2.1%. The UK’s growth forecast has also been cut, though less severely than the Bank of England’s outlook.
- Canada’s inflation accelerated to 2.6% in February, driven by the end of a sales tax holiday, which had previously suppressed food prices. Core inflation also picked up, with measures excluding food and energy rising to 2.9%. This surge complicates the Bank of Canada’s decision-making, as tariffs from the US are expected to push inflation higher. Despite this, analysts predict the central bank may hold off on rate cuts in April due to the complex impact of tariffs on both inflation and economic growth.
- DeepMind CEO Demis Hassabis predicts AI matching or surpassing human intelligence to emerge in five to 10 years. Other tech leaders, like Anthropic’s Dario Amodei and Cisco’s Jeetu Patel, foresee artificial general intelligence arriving sooner, within two to three years or even by 2025. However, the timeframe to achieving superintelligence remains uncertain.
- Alphabet is in talks to acquire cloud-security firm Wiz for $33 billion, a deal that could be announced soon. This would be Alphabet’s largest acquisition and could help Google catch up to Microsoft and Amazon in the competitive cloud market. Although Wiz initially rejected a $23 billion offer last year to remain independent, the company is now reconsidering the sale. The deal may face antitrust scrutiny, particularly due to Google’s ongoing regulatory challenges.
- Nvidia CEO Jensen Huang’s keynote address on Tuesday at the GPU Technology Conference may have allayed investors’ fears that the chipmaker’s earnings are peaking. He unveiled new AI chips, including the Blackwell Ultra and Vera Rubin, set for 2025 and 2026, alongside Dynamo software to optimise AI efficiency. Huang also likened AI’s economic impact to a new industrial revolution. Nvidia’s valuation is near a five-year low, attracting dip buyers.
- Chinese automakers like BYD, Great Wall, and Chery are rapidly expanding their presence in emerging markets such as Brazil, South Africa, and Thailand, offering affordable, feature-rich vehicles that appeal to cost-conscious consumers. Traditional manufacturers like Ford and Toyota are struggling to compete, with some exiting markets or partnering with Chinese firms. Chinese cars are reshaping global auto markets, particularly in regions with underdeveloped EV infrastructure.
- BYD unveiled its “Super E-Platform,” claiming it can charge vehicles in five minutes for a 400km range, surpassing Tesla’s 15-minute charging time. BYD plans to build 4,000 ultra-fast charging stations across China, aiming to make EV charging as quick as refuelling petrol- or diesel-powered cars. On Tuesday, Tesla sank 5.3% following BYD’s announcement.
- Berkshire Hathaway has increased its stakes in Japan’s top five trading houses – Mitsubishi, Marubeni, Mitsui, Itochu, and Sumitomo – raising its average holding to about 9.3%. Warren Buffett hinted at further investments, as the firms relaxed a 10% ownership cap. While the move may boost confidence in Japanese stocks, analysts caution that the impact may be limited amid global tariff concerns and market volatility. The Nikkei 225 has dropped over 6% this year, contrasting with the S&P 500’s 4.5% decline.
- As at Wednesday’s close the S&P 500 was 0.64% up for the week.
Local News
- The South African Presidency is confident it can reset relations with the US after the expulsion of Ambassador Ebrahim Rasool, who was accused of anti-American sentiments and supporting Hamas. The presidency prefers a methodical approach to rebuilding ties, noting the importance of the US as a key trade partner under the African Growth and Opportunity Act.
- On the local currency front, the US dollar spot index has moved sideways over the last two weeks. This has kept our estimate of the fair value for the exchange rate stable with the current exchange rate at R18.08 to the dollar, and the fair value estimate is at R18.28. Technically, the exchange rate is overbought and could weaken from current levels while the US dollar spot index is oversold and may well strengthen.
- Government could save R12 billion a year by the 2029/30 financial year through a three-year phase-out of inefficient and underperforming programmes, Deputy Finance Minister Ashor Sarupen told parliament’s appropriations committee on Wednesday. Wastage in expenditure is under intense focus as opposition parties argue that reducing government costs could remove the need for the proposed VAT increase.
- Ramaphosa proclaimed the Climate Change Act, effective Monday, though many sections are deferred for regulations to be finalised. While some regulations are nearly complete, key sections – such as emission reduction targets, carbon budgets and adaptation strategies – are delayed. The law aligns policies to meet Paris Agreement goals and address climate change impacts on the economy and society.
- Meanwhile, Minister Gwede Mantashe on Wednesday lashed out at environmental groups lobbying against oil and gas exploration off the West Coast and fracking in the Karoo as he called for more drilling and less focus on renewable energy. Speaking at the Southern Africa Oil and Gas Conference in Cape Town, he emphasised that government is committed to the fight against “foreign-funded non-government organisations” that get in the way. He insisted government will support companies that get taken to court over their exploration projects.
- Small electricity users in South Africa face disproportionate tariff hikes, with bills potentially rising 37% from April 1, despite the National Energy Regulator of South Africa capping Eskom’s average increase at 12.74%. The removal of the inclining block tariff, which subsidised low-income households, has shifted costs to smaller consumers. Eskom’s direct customers are facing a 12.74% hike from April, while municipal customers will see an 11.32% increase from July.
- South Africa’s load-shedding crisis cost the economy R2.8 trillion in 2023, the worst year for power cuts. The CSIR reported that higher electricity tariffs have surpassed renewable energy costs and are likely encouraging more investment. Private solar PV generation contributed to reducing power cuts.
- National Treasury proposes two fiscal anchor options to address high public debt, now at 74% of GDP and projected to peak at 76.2%. The first option suggests a numerical debt/deficit ceiling, while the second requires each administration to commit to a five-year fiscal plan monitored by Parliament. The goal is to enhance fiscal credibility, discipline and investor confidence, supporting economic growth.
- Finance Minister Enoch Godongwana’s proposed VAT hike from 15% to 15.5% is legally sound and cannot be blocked before its 1 May implementation, according to a parliamentary legal opinion. Parliament faces a tight deadline to approve the broader fiscal framework by 3 May. The parliamentary budget office warns that rushing the VAT increase undermines public participation. The DA opposes the hike, setting the stage for further debate.
- The South African Reserve Bank this afternoon kept interest rates unchanged, with the repo rate remaining at 7.5% and the prime lending rate at 11%. Four members on the Monetary Policy Committee voted to keep rates stable, while two favoured a cut of 25bps. Ahead of the interest rate decision, economists were divided on whether the Reserve Bank will hold rates steady at 7.50% or cut by 25bps. Most expect rate cuts later in 2025, assuming inflation remains stable and global conditions do not worsen. Prior to today’s announcement, there had been three consecutive cuts.
- South African farmers remain optimistic, with agribusiness confidence reaching its highest level since 2021, according to AgBiz’s latest index. Despite geopolitical tensions and concerns over the potential loss of the African Growth and Opportunity Act, the index rose by 11 points in the first quarter of 2025. Improved port efficiency, disease control, and favourable weather conditions contributed to the positive outlook. South Africa’s grain harvest is projected to rise by 11% to 17.2 million tonnes, offering hope to farmers after a challenging drought last year, the Crop Estimates Committee said on Monday.
- Google South Africa has officially launched its R2.5 billion Google Cloud region in Johannesburg. The introduction of this cloud region positions South Africa among the 40 global regions and 121 zones in Google Cloud’s expansive network, delivering cutting-edge services to over 200 countries and territories.
- Sun International reported strong 2024 results on Tuesday, driven by growth in its online gambling platform, SunBet, which saw a 60.6% income surge and exceeded five-year targets. Tourism also rebounded, with resorts and hotels benefiting from robust local and international demand, although strained US-South African relations might reduce American tourist numbers, particularly in Cape Town. Sun International’s overall income rose 5.1%, with adjusted earnings up 13.5%.
- Reflecting South Africa’s weak economic environment, major banks, Absa, FirstRand, Nedbank, and Standard Bank, reported a combined 5.9% rise in headline earnings for 2024, reaching R119 billion. Digital banking platforms saw significant growth, with 21 million active users. While lending and deposits rose, costs outpaced revenue growth, partly due to tech investments.
- Remgro expects a 43% increase in first-half profit, driven by improved portfolio performance, lower finance costs, and the absence of corporate actions. Headline earnings per share are forecasted to range between 645c and 694c, up from 485c last year. The prior year’s earnings were restated due to an accounting error related to its investment in TotalEnergies’ SA business.
- Super Group reported a 7.6% drop in revenue for the six months to December, with headline earnings per share falling 24.2% to 104.8c. The decline was driven by weaker performances in its UK Dealerships and Supply Chain Africa Commodity businesses, impacted by coal export disruptions in Mozambique, local port delays, and rerouted copper exports. Europe’s environmental policies also hurt UK dealerships. Despite challenges, the group expects improved earnings in the second half, relying on better copper export performance and cost rationalisation in the UK. Super Group’s share price rose 3.47% to R28.35 on Tuesday.
- As at the time of writing, the rand was 0.25% weaker against the dollar and the ALSI was 2.24% up for the week.
Sources: Dynasty, Moneyweb, Business Report, AFP, Bloomberg, CNBC, CNN, BusinessLIVE, BBC, New York Times, Reuters, TechCentral, Daily Maverick, etc.
