Crossing the line, Weekly News Flash

Russia and Israel both overstepped once sacred geopolitical boundaries this week, but markets have mostly shrugged off the drama. On Tuesday, Israel carried out an airstrike in Doha that targeted Hamas leaders, an unprecedented attack that drew immediate condemnation from Qatar and further inflamed tensions across the region.

Separately, in the early hours of Wednesday morning, Poland shot down at least three drones after a Russian incursion into its airspace. This is the first time a NATO member has fired shots during Russia’s war in Ukraine. Poland also invoked NATO’s Article 4, which calls for allied consultations when a member’s security is threatened.

Market response was relatively muted outside the affected countries. Equities in Gulf countries saw mild declines after the Doha strike, with banking, real estate, and energy stocks under pressure. In Poland, equities slipped, and the zloty weakened, according to Bloomberg.

But major indices in Europe and the US were up overall for the week. European defence stocks, such as BAE Systems (up 11.3% for the week at the time of writing), Rheinmetall (up 7.80%), and Thales (up 11.6%), added to their strong performance for the year to date.

Gold briefly spiked to an all-time high of nearly $3,700 earlier in the week, falling slightly to $3,650 at the time of writing. But these price movements are mostly about the same factors that have driven performance the whole year – expectations of US rate cuts, a weaker dollar, trade war jitters, and global central bank buying. Gold is up 39% for the year-to-date.

Oil prices briefly gained around 1.5% after the Israeli strike in Qatar as traders contemplated possible supply disruptions. But prices rapidly normalised as traders became confident that there would be no such dislocation. Indeed, oil prices remain relatively soft due to oversupply and concerns about US demand.

This week’s pattern is similar to the one we saw when Israel and the US carried out airstrikes on Iranian targets in June this year. Those actions and Tehran’s retaliation raised the spectre of a wider regional conflict. But markets stabilised within days as the players stepped back from the conflict and equities resumed their march.

Investors and traders seem to be betting that neither of the events will mark a Rubicon crossing moment. For now, they are regarding the actions of Russia and Israel as temporary disruptions rather than geopolitical turning points. Whether that complacency will hold will depend on what happens next.

NATO consultations underscore the possibility of an escalation in Eastern Europe, while the potential for a wider and more disruptive conflict in the Middle East cannot be ruled out. Expensive equity valuations may leave investors exposed to volatility if either conflict breaks into a larger-scale war that disrupts global supply chains.

Barring conflicts that cause massive disruption to supplies of key commodities and manufactured goods, short and medium-term global equity market performances will likely be informed by the Fed’s monetary policy and corporate earnings growth, particularly in the tech sector. In the longer term, fractured globalisation could reshape supply chains, trade flows, and capital allocations, with uncertain outcomes.

“Israel is taking off the gloves; it is being more aggressive and more open about being more aggressive, which is creating concerns around the world.”

– Professor Yuval Shany, an expert in international law at the Hebrew University of Jerusalem

” We are ready to repel such provocations. The situation is serious, and no one doubts that we must prepare for various scenarios.”

– Polish Prime Minister Donald Tusk

Global News

Israel carried out an unprecedented strike in Doha on Tuesday against senior Hamas leaders, sharply escalating tensions with Arab nations amid the Gaza conflict. PM Benjamin Netanyahu’s office described the operation as “wholly independent,” noting the US was informed only shortly beforehand. Qatar condemned it as a “flagrant violation of international law,” saying it would not tolerate Israel’s actions or continued interference with regional security. The attack drew swift condemnation from Saudi Arabia, the UAE, Turkey, Iran, and Kuwait, fuelled fears of a wider conflict, and highlighted rising risks to both regional stability and US diplomacy.
On Wednesday, Poland reported that multiple Russian drones entered its airspace overnight, some launched from Belarus, before being shot down with help from NATO allies, marking the most serious breach of its skies since the war with Ukraine began. Polish Prime Minister Donald Tusk called it “a large-scale provocation” that brought Poland “closer to open conflict, closer than ever since World War II”. Authorities invoked Article 4 of the NATO treaty, triggering alliance-wide consultations, and tightened air traffic restrictions in regions bordering Belarus. While Russia insists the drones weren’t targeting Poland, European leaders largely see the breach as deliberate, heightening fears that Russia is testing NATO’s resolve.
Wall Street analysts are raising their year-end targets for the S&P 500 as strong corporate earnings and AI optimism drive a record rally. Deutsche Bank lifted its forecast to 7,000 points, while Barclays and Wells Fargo project gains of up to 11% by next year. US stocks have surged in recent months on hopes of interest rate cuts and resilient economic growth. Stocks will end the year on a high note, according to the latest Markets Pulse survey.
Goldman Sachs CEO David Solomon said on Wednesday that US economic growth is slowing amid US President Donald Trump’s trade war, citing softer job data and persistently high prices. He joined peers like JPMorgan’s Jamie Dimon, who said on Tuesday that “the economy is weakening,” as uncertainty over trade policy continues to weigh on growth. Research by Yale’s Budget Lab published on Tuesday said tariff hikes could push 875,000 more Americans into poverty in 2026. The study, based on the Official Poverty Measure, notes that low-income families are hit hardest as tariffs raise prices on everyday goods. Economists say this reinforces expectations that the Fed will begin cutting interest rates at its September meeting, especially given weak hiring reports in August and fresh signs of cooling across multiple industries.
A federal judge on Tuesday temporarily blocked Trump from removing Lisa Cook from the Fed Board of Governors, allowing her to continue serving while she contests her dismissal. Trump had sought to oust Cook over allegations of falsified mortgage documents. Trump board nominee Stephen Miran cleared a procedural Senate committee vote on Wednesday for his nomination as a Fed governor. All 50 senators will soon vote on whether to confirm him. He is expected to join next week’s rate-setting meeting.
China’s exports to the US plunged 33% in August on the back of trade tariffs, although overall exports rose 4.4% as it pivoted to the EU and other trading partners. This was the slowest growth since February. The nation’s shipments to the EU, the Association of Southeast Asian Nations, and Africa gained for the month. In the year to August, China’s exports to the US plunged 15.5% from the same period last year, while exports to Africa gained almost 25% in the same period.
The Bank of Russia is expected to cut interest rates by 200bps points for a second consecutive meeting on Friday, fully reversing last year’s tightening cycle, Bloomberg reported this morning based on its poll of nine economists. The median expectation is for the rate to fall from 18% as growth cools faster than expected and risks undershooting official targets. The central bank began easing in June from a record 21% after monthly price growth neared 4%. Businesses have warned of the strain from high borrowing costs since late last year.
Britain’s Finance Minister Rachel Reeves said on Monday the government should focus on helping the Bank of England lower inflation, as well as boosting growth, ahead of a budget due later in the year, which is expected to raise taxes. Reeves, who has set the budget vote for 26 November, has vowed to trim spending to help lower inflation and borrowing costs. Britain had the highest inflation in the Group of Seven (G7) of 3.8% in July, and the Bank of England forecasts it will peak at 4% this month.
French President Emmanuel Macron appointed Sebastien Lecornu as PM on Tuesday, making him the country’s fifth premier in two years. Lecornu faces the challenge of passing a 2026 budget through a divided parliament. Macron has tasked Lecornu with consulting political forces to adopt a budget before forming a new government, while the current cabinet remains in a caretaker role. Lecornu took office on a day of sprawling anti-government protests on Wednesday.
Tech stocks, especially those tied to AI, have been climbing so rapidly that many investors are questioning whether the gains are sustainable. Oracle’s recent surge, along with other AI-heavy names, has pushed some valuation multiples into ranges not seen since the dot-com bust, fuelling fears of overexuberance. Furthermore, market concentration in a small number of large tech firms increases concentration risk. However, the technology sector continues to benefit from strong fundamentals in AI demand, and actual earnings growth may be in line with expectations, this being supportive of current valuations.
Oracle is set to double cloud infrastructure revenue for the current financial year, and then double it again the next year, it said on Tuesday. CEO Safra Catz said in the earnings statement that the company signed four multibillion-dollar contracts with three different customers in the quarter. Earlier during the Northern Hemisphere summer, Oracle signed an unprecedented deal with ChatGPT operator OpenAI for 4.5 gigawatts’ worth of data centre capacity, enough energy to power millions of American homes. The stock soared on the news and is up over 32% for the week.
OpenAI and Microsoft announced yesterday that they have signed a non-binding memorandum of understanding paving the way for OpenAI to restructure its for-profit arm into a public benefit corporation. Under this deal, OpenAI’s nonprofit parent would retain governance control and receive an equity stake of more than $100 billion, while the companies work toward finalising definitive terms.
Apple on Tuesday unveiled the iPhone Air, its first major iPhone redesign in years, at its annual hardware event in Cupertino, California. CEO Tim Cook called it the “biggest leap ever for iPhone”. There were also upgrades to the Apple Watch and AirPods Pro. With investor concerns already heightened by tariff risks and slowing sales in key markets such as China, the iPhone Air is seen as a potential lift for sentiment, though its success will depend on whether Apple can translate design wins into stronger growth
Tesla’s US market share fell to a near eight-year low in August as buyers bought rival cars, according to Cox Automotive. Once holding more than 80% of the US EV market, Tesla accounted for 38% of total EV sales last month, its first drop below 40% since October 2017. Analysts expect the sales bump from other manufacturers’ EV incentives to continue through this month before falling when federal tax credits expire, putting financial pressure on Tesla.
Novo Nordisk will cut 9,000 jobs globally and lower its profit forecast for the third time this year as it tries to regain market share from rival Eli Lilly & Company in the obesity drug sector, it said on Wednesday. The Danish maker of Ozempic and Wegovy plans to save $1.3 billion by the end of 2026, reinvesting the funds into new drug development and sales. 5,000 of the reductions are in Denmark, where mass layoffs are rare. Novo’s shares rose as much as 3.2% in Copenhagen on the day, having dropped 60% over the past year.
Oracle co-founder Larry Ellison on Wednesday became the world’s richest person for the first time, ending Elon Musk’s nearly year-long reign, after his fortune jumped $101 billion. This follows the company’s shares leaping on the back of Oracle’s results. The share price jump lifted Ellison’s total wealth to $393 billion, ahead of Musk’s $385 billion, marking the largest one-day increase ever recorded by the Bloomberg Billionaires Index. The 81-year-old is Oracle’s largest individual shareholder. Shares retreated 4% yesterday after their record surge.
As at Thursday’s close the S&P 500 was 1.63% up for the week.

Local News

The local economy grew 0.8% in the second quarter, the fastest pace in two years, driven by a rebound in manufacturing and mining, Statistics South Africa said on Tuesday. The result exceeded the 0.6% median forecast and prompted Goldman Sachs and Oxford Economics to raise their 2025 growth forecasts to 1.2% and just above 1%, respectively. The 3.7% gain in mining made it the largest contributor to GDP growth on the back of soaring precious metal prices. Despite the stronger-than-expected outcome, analysts warn that short-term economic momentum remains limited, with US trade tariffs continuing to cloud the outlook.
South Africa’s exports to the US fell 18% in the second quarter, even before a 30% tariff took effect in August, Absa CIB said at its third-quarter media round-table last Friday. Vehicle and parts exports to the US dropped 53% year-on-year, following a 33% decline in the first quarter, while iron and steel exports were down 32%. Absa noted these declines followed strong growth between 2022 and 2024. Precious metals and stones fell 6%, excluding diamonds. Investec chief economist Annabel Bishop on Tuesday concurred that trade was lower. However, should Trump lose a series of cases in America over the legality of tariffs, the 30% tax would have to be reversed, she said.
South Africa’s current account deficit nearly doubled in the second quarter, widening to R82.8 billion from R47.8 billion in the first quarter, the Reserve Bank said on Thursday. As a share of GDP, the deficit rose to 1.1% from 0.6%, driven by weaker exports and higher payments to foreign investors. The trade surplus shrank to R177.1 billion from R211 billion, as export earnings fell by R23.3 billion while imports increased by R8.2 billion on higher prices. The weaker balance raises fresh risks for the rand and highlights how global headwinds and foreign investor payouts are straining South Africa’s finances.
The Bureau for Economic Research (BER) said on Monday that South Africa’s economy is expected to remain stuck at below 2% growth as weak investment in public infrastructure and fixed capital holds back expansion. The country has averaged less than 1% growth for more than a decade, and risks such as US tariffs and uncertainty around the coalition government’s stability further cloud the outlook. The BER said faster growth, rising above 2% and approaching 3% within five years, would require reforms to energy, logistics, and water systems, along with stronger institutions and restructuring of state-owned enterprises to restore investor confidence.
On Tuesday, President Cyril Ramaphosa confirmed that a South African delegation, including officials from the Presidency and the Department of Trade, Industry and Competition, has travelled to Washington to negotiate the removal of the 30% tariffs recently imposed by the Trump administration on South African imports. The team will present a revised trade proposal focused on securing better access for critical minerals and encouraging exports of finished products rather than raw materials. Ramaphosa stressed that, despite diplomatic strains, South Africa remains committed to engaging directly with US lawmakers and business leaders.
The Government of National Unity (GNU) plans to hold an economic indaba within the next two weeks to ease tensions among partners and restore policy confidence, Tourism Minister Patricia de Lille said on Tuesday. Ministers will present their departments’ economic plans, with de Lille noting that all ministries share responsibility for driving growth. The announcement comes as an Ipsos poll shows public sentiment toward the GNU has declined since its mid-2024 formation, with the initial 36%-40% optimism about the country’s direction dropping to 80% pessimism in September.
The government on Monday announced significant labour reforms aimed at easing the burden on small businesses, particularly those without dedicated HR resources, by simplifying the process for dismissing experienced employees who consistently underperform. The new Code of Good Practice: Dismissal rules, gazetted by Employment and Labour Minister Nomakhosazana Meth, emphasises corrective discipline, speeds up dispute resolution, and gives small businesses exemptions from complex procedures. Officials described the changes as the most significant shift in labour policy since the 1990s.
The South African Reserve Bank has seized R94.5 million belonging to the alleged “gold mafia” Rappa Resources after the company breached exchange control rules, BusinessLIVE reported on Monday. The Johannesburg-based firm that mines waste has faced growing banking restrictions amid reputational concerns, with Capitec halting its foreign currency transactions last year. Rappa and other entities are accused of short-changing the fiscus by billions of rand through untaxed gold and falsified VAT payments.
Anglo American’s shares jumped 11% on Tuesday after announcing a proposed all-share merger with Canadian copper miner Teck, its biggest one-day gain in 16 months. The deal, one of the largest mining mergers in over a decade, would create a $53 billion group with world-class copper assets, placing it among the top five global producers. South African shareholders will receive a R73 per share special dividend.
Sun International CEO Ulrik Bengtsson said on Monday that weak online gambling regulation could push punters to illegal offshore sites, quickly eroding the state’s tax base. Speaking after the group’s results, he said licensed operators could thrive only if regulation balances consumer protection, revenue collection, and competitive offerings. Trade, Industry, and Competition Minister Parks Tau has previously told Parliament that 90 illegal gambling websites have been identified, most overseas licensed. SunBet, the group’s online gaming arm, saw six-month revenue rise 128.7% and is now almost a fifth of group income, while the broader group’s income rose 6.7% excluding Table Bay Hotel.
Remgro said on Wednesday it expects full-year headline earnings per share to rise between 33% and 43% for the year ended June. The group, led by Johann Rupert, cited improved operational performances from Rainbow Chicken, RCL Foods, Outsurance, and Mediclinic, as well as a return to profitability at Heineken Beverages. Lower finance costs also supported earnings. Remgro will release results on September 23. Its shares closed 1.28% higher at R170.65, valuing the company at R90.3 billion, and are up 11.4% year-to-date.
Walmart will open its first stores under its own name in South Africa before year-end, moving beyond its Massmart investment. The US retail giant, with nearly 11,000 outlets in 19 countries and almost R12 trillion in sales last year, will challenge Shoprite and other local retailers. The move caps a 15-year presence in the country that began with a controlling stake in Massmart in 2010 and follows a period of losses and stalled expansion.
As at the time of writing, the rand was 1.3% stronger against the dollar, and the ALSI was 3% up for the week.