Global equities markets have traded relatively flat this week, holding on to the exceptionally strong gains they have made so far in April. Not only have the markets fully reversed the rout seen in March, but the S&P 500 and Nasdaq have continued to edge their way to new highs. And with the Dow Jones Industrial Average and MSCI World also up for the month and year-to-date, the recovery spans geographies and sectors alike.
Resources and energy stocks are trading choppily, but the overall picture is one of resilience. Even emerging markets are holding up well, with Asian bourses that have heavy representation in the technology sector proving to be especially robust. Given that the Strait of Hormuz remains blockaded under a fragile ceasefire between Iran and the US, markets appear to be defying wartime gravity.
Analysts and traders point to five key reasons that markets are continuing to climb during a time of uncertainty and disrupted supply chains. Firstly, the Artificial Intelligence (AI) trade has come back with a vengeance after a rocky start to the year for the Big-Tech companies. mega-cap stocks like Microsoft, Amazon and Meta posted healthy gains for April, which lifted the Nasdaq and S&P 500 due to their weighting in these indices.
Secondly, markets have been gratified with the earnings reports from US-listed companies for the first quarter of the year. Roughly 80% of S&P 500 companies that reported so far have beaten consensus forecasts. Those results are testimony to the underlying strength of the US economy, which has so far absorbed geopolitical shocks and new tariffs with greater ease than many feared.
Thirdly, markets are still betting on a swift end to the war, in that the US and Iranian governments are both seeking a diplomatic off-ramp that allows each side to claim strategic wins. (The lack of progress in a negotiated settlement, political posturing by both Iran and the US, the effective reclosing of the Strait of Hormuz, and the resultant fears of a prolonged energy shock should normally be enough to rattle markets.)
Fourthly, investors have developed a dip-buying mentality under years of headline-driven volatility, especially with the unpredictable Donald Trump as US President. But the Ukraine and COVID-19 trades have also conditioned market participants to expect selloffs in the face of unexpected global events to be swiftly reversed. Investors continue to believe Trump will change course when it looks like markets are taking too much pain.
Finally, Bloomberg points to an oil cushion that has prevented Middle East oil and gas supply disruptions from spiralling into a global energy shock. “Record releases from strategic petroleum reserves, some spare capacity among major oil producers, and demand destruction have so far cushioned the impact,” according to Bloomberg – although some markets in Asia are already seeing shortages.
It is important to note that conditions remain uncertain, and any resumption of full-blown hostilities could lead to markets plunging again. But most market participants are already looking beyond the war to what we can expect from the inflation trajectory and corporate earnings in 12 or 18 months’ time.
Our image represents geometric shards and fluid, smoke-like forms surge upward through deep indigo-black space. At the bottom, spheres that should fall instead stretch and pull upward like they are resisting gravity.
“Markets may be applying the ‘transitory’ principle to a situation that will continue to work its way through the system over a prolonged period of time. Investors are continuing to focus on global liquidity, adopting a glass-half-full read of fundamentals.”
– Magdalena Polan, head of EM macro research at PGIM Fixed Income
“For markets, the key point is today’s shock isn’t hitting the severity thresholds of past oil shocks, on a whole range of metrics. Therefore, the resilience we’ve seen across multiple asset classes makes more sense than it might first appear and isn’t just a sign of complacency.”
– Henry Allen, Deutsche Bank Strategist
Global News
- Investors are returning to US equities as easing tensions over the Iran war and stronger-than-expected corporate earnings, particularly in AI-driven sectors, are fuelling a growing fear of missing out on the market rally, according to a Reuters analysis published on Thursday. After an earlier selloff, major indices have rebounded sharply, with the S&P 500 and Nasdaq rising about 11% and 18% from their March lows, while an index of emerging market stocks has risen 15%, supported by renewed inflows and expectations for nearly 20% earnings growth in 2026. Portfolio managers are increasingly positioning around AI, data centres and infrastructure-linked commodities, suggesting confidence that the rally could extend despite ongoing geopolitical and policy uncertainty.
- US-Iran peace negotiations remained fragile on Wednesday, with Trump extending a ceasefire to allow more time for talks, even as key obstacles persist around reopening the Strait of Hormuz and unresolved nuclear issues. Iran continues to control the vital oil shipping route while the US maintains a naval blockade, creating a central impasse. Tehran has resisted US demands to curb its nuclear programme while seeking sanctions relief and recognition, while Washington continues to push for broader concessions. Despite mediation efforts, both sides remain entrenched, raising the risk that talks could collapse, accelerating nuclear tensions and triggering broader regional instability, with global energy markets exposed to renewed supply disruptions and prolonged supply shocks.
- Kuwait declared force majeure on Monday on crude and fuel shipments after the Strait of Hormuz blockade halted tanker movements, preventing it from meeting contractual delivery obligations. Kuwait Petroleum Corporation notified customers it would suspend scheduled cargoes under contract clauses, though exports are not expected to stop entirely. The disruption underscores mounting strain on global energy flows, with constrained logistics supporting elevated oil prices and ongoing market volatility.
- Kevin Warsh told lawmakers on Tuesday he would act independently if confirmed as Fed Chairman, stating he would “absolutely not” serve as a proxy for Trump amid concerns about political pressure on monetary policy. During his Senate confirmation hearing, Warsh emphasised the importance of central bank independence and signalled potential reforms to the Fed’s policy framework, while avoiding commitments on the near-term path of interest rates. Ahead of the hearing, Trump said he expects rate cuts if Warsh is confirmed.
- Data released on Tuesday showed that higher fuel costs drove a broad increase in US retail sales in March, with spending rising 1.7% month-on-month, the strongest gain in a year. The rise was led by a jump in gasoline receipts, although most categories also posted increases. The report indicated that consumer spending remained resilient despite higher pump prices, likely supported by larger-than-usual tax refunds, with the value of overall retail purchases up a full percentage point from the revised February figure.
- A Reuters/Ipsos poll released on Tuesday showed growing concern among Americans over Trump’s leadership amid the Iran war, with his approval rating holding at a low 36% and only 26% of respondents viewing him as even-tempered. Public support for the conflict remains weak, with just 36% backing US strikes on Iran and only 26% believing the military action has been worth the cost, as rising fuel prices and geopolitical tensions weigh on sentiment.
- Britons are the most pessimistic about their finances and the wider economy since 2023 after the Iran war drove up petrol prices, according to GfK’s consumer sentiment gauge released on Thursday. The decline was steeper than in March, when confidence dipped only slightly after the first US-Israeli strikes on Iran, suggesting households are beginning to factor the conflict into their budgets. Wednesday data from the Office for National Statistics showed inflation rose to 3.3% in March from 3% a month earlier, driven by an 8.7% jump in motor fuel prices, the largest monthly increase since the Ukraine war pushed prices higher in 2022.
- A Reuters poll conducted between 16 and 21 April and published on Tuesday showed that economists expect the Bank of England to hold interest rates at 3.75% through 2026, despite rising inflation risks driven by higher energy prices linked to the Iran war. Separately, another Reuters poll published on Thursday indicated that just over half of economists expect the European Central Bank to hold rates on 30 April before delivering a quarter-point hike in June to shield the eurozone economy from a war-fuelled energy shock, although there was little consensus on the path beyond June given uncertainty over potential second-round inflationary effects from higher fuel prices.
- Japan on Tuesday unveiled its biggest overhaul of defence export rules in decades, scrapping restrictions on overseas arms sales and allowing exports of equipment such as warships and missiles. The move aims to strengthen its defence industrial base and marks a further shift away from its post-war pacifist stance. It comes alongside efforts to deepen regional ties to counter China’s growing influence.
- A record wave of US IPOs is expected in 2026, with companies including SpaceX, OpenAI and Anthropic potentially adding around $3 trillion in combined market value despite remaining unprofitable, according to estimates released on Thursday. The listings reflect strong investor demand for high-growth AI and technology exposure, but they also highlight a growing gap between valuations and earnings, raising questions about sustainability, as these companies will ultimately need to deliver profitability to justify their pricing. This has implications for market stability and longer-term investor confidence.
- Microsoft and Meta are cutting up to 23,000 jobs as they streamline operations and offset heavy AI spending, sources said on Thursday. Meta plans to cut about 10% of its workforce, or 8,000 roles, from 20 May, while also leaving 6,000 vacancies unfilled. Microsoft is offering voluntary retrenchments to thousands of US employees, with around 7% eligible. The moves come as both companies invest billions in data centres and infrastructure to meet AI demand, with Meta forecasting record capital expenditure and Microsoft expanding globally.
- Apple announced on Monday that Tim Cook will step down as Chief Executive on 1 September after nearly 15 years, transitioning to Executive Chairman, with longtime hardware chief John Ternus set to take over. Cook’s tenure saw Apple become one of the world’s most valuable companies, while Ternus, a two-decade veteran, is viewed as a continuity choice with strong product expertise. The transition marks a key leadership shift, with investors focused on whether he can sustain growth and drive innovation, particularly in AI.
- Amazon plans to invest an additional $5 billion in AI startup Anthropic, deepening their strategic partnership and taking Amazon’s total commitment to up to $25 billion, including future milestones. In return, Anthropic has agreed to spend more than $100 billion over the next decade on Amazon Web Services, securing large-scale computing capacity to train its AI models. The deal underscores accelerating demand for AI infrastructure and highlights Amazon’s strategy to strengthen its position in cloud and custom chip technologies, with growing investment in the sector seen as a key driver of future growth.
- SpaceX said on Monday it has secured the right to acquire AI coding startup Cursor for $60 billion later this year, or alternatively pursue a $10 billion strategic partnership, as it accelerates its push into AI ahead of a potential IPO. The agreement would give SpaceX access to Cursor’s widely used developer tools and user base, while providing the startup with significant computing capacity through SpaceX’s infrastructure.
- As at Thursday’s close the S&P 500 was 0.25% down for the week.
Local News
- Speculation that Patrice Motsepe may contest the ANC presidency continues to circulate in political and market circles ahead of the party’s 2027 elective conference, with the succession debate increasingly attracting investor attention as they assess the future direction of economic reform. Market participants, including those cited by Bank of America, view Motsepe as a relatively “market-friendly” candidate compared to other contenders such as Paul Mashatile and Fikile Mbalula, although his outsider status within party structures raises uncertainty over his viability.
- S&P Global said on Monday that South Africa is on track to maintain its current credit ratings with a positive outlook when it next reviews the country on 29 May, subject to the impact of the Middle East conflict on economic conditions. The agency’s stance is supported by stronger tax revenue, primary budget surpluses, and reduced risks at state-owned entities, pointing to a gradually improving fiscal outlook.
- Mineral and petroleum resources minister Gwede Mantashe said on Tuesday South Africa’s fuel supply is not at risk despite rising prices linked to Middle East tensions, citing diversified import sources and stable supply arrangements. He told Parliament that the country’s position, including its relationship with Iran, has helped avoid disruptions, even as global oil flows face pressure and domestic price increases are expected to continue.
- Johannesburg’s financial strain deepened on Wednesday after the Agence Française de Développement declined the city’s request for additional funding, citing concerns over governance and financial management, including an alleged failure to meet conditions tied to a R2.5 billion loan extended in 2024. The municipality disputed this, stating it had met all its obligations and would seek financing from other sources, including local commercial banks and development finance institutions from South Africa and the EU.
- The Bank of America warned on Thursday that South Africa inflation would jump to 3.7% in April and then to 4.1% in May amid rising oil, fuel, and food costs linked to global tensions, and would require a 25bps interest rate hike. South African Reserve Bank Governor Lesetja Kganyago said on Tuesday the central bank would act if inflation pressures from the Iran war prove persistent, warning that higher oil prices could feed through into domestic inflation. He noted that while such shocks are typically treated as temporary, sustained pressures could require a policy response. Forward rate agreements are almost fully pricing in a quarter-point rate increase at the next MPC meeting scheduled for the end of May, with traders also pricing in one more hike of the same size by the end of the year.
- Data released on Tuesday showed business confidence fell sharply in March, with the South African Chamber of Industry and Commerce index dropping 3.3% to a five-month low in its biggest monthly decline since April 2025. The fall was driven by higher energy prices, a weaker rand and lower equity and commodity prices amid market volatility linked to Middle East tensions, although sentiment remains stronger than a year earlier.
- Capitec reported a 23% increase in headline earnings to R16.8 billion for the year to end-February on Wednesday, as its active client base grew to more than 26 million. Growth was driven by higher interest and transaction income, while bad debts increased as the lending book expanded. The bank declared a full-year dividend that was 23% higher than a year ago. Capitec said it continues to invest in its digital platform, including data and AI capabilities such as fraud detection, to enhance client experience, security and operational efficiency.
- Remgro said on Wednesday it has sold its remaining stake in FirstRand for about R3.6 billion, completing its exit from the banking group through on-market transactions. The disposal of almost 40 million shares follows earlier sales this year worth R4.88 billion and forms part of the group’s ongoing portfolio reshaping. Remgro still has investments in Mediclinic, Heineken, Rainbow Chicken, and OUTsurance, among others.
- The rising use of weight-loss drugs in South Africa is shifting household spending toward treatments such as GLP-1 medications, often at the expense of discretionary purchases, according to a report by Visa and Discovery Bank published on Thursday. Around 16% of respondents spend on dietitians or clinics, while 14% use medications such as semaglutides. Among these users, nearly six in 10 report higher spending on healthier foods and cutting back on takeaways, restaurants and alcohol, highlighting broader changes in consumption patterns.
- As at the time of writing, the rand was 1.7% weaker against the dollar, and the ALSI was 4% down for the week.
Sources: Dynasty, Bloomberg, AP, Business Day, Reuters, IOL, WSJ, Business Report, etc.
