The US entered the war between Iran and Israel late last week, but the flare-up in tensions was over within days. Financial markets shrugged off the drama, treating the whole episode more like a choreographed dance of international diplomacy than it did a chaotic war with uncertain outcomes.
US President Donald Trump authorised the largest B-2 bomber strike in US history on 21 June, alleging Iran was making rapid headway towards building a nuclear weapon. “Operation Midnight Hammer” targeted underground Iranian nuclear sites, including Fordow and Natanz, in support of Israel’s goal of preventing Iran from becoming a nuclear power.
Iran struck back on Monday with a limited missile strike on the US Al-Udeid air base in Qatar that it had telegraphed well in advance. No casualties were reported because the early warnings allowed the US to evacuate. Weakened by days of Israeli attacks, Tehran had to strike back but signalled it did not have the appetite for a prolonged war with the US.
Israel and Iran, meanwhile, continued to trade salvos throughout Monday. By late Tuesday, Trump declared that the two warring parties had reached a ceasefire. Trump boasted that the US had “obliterated” Iran’s nuclear capabilities, Israel claimed major wins, and Iran declared that its uranium was intact and that its own country was the real victor.
Markets had hardly flinched by the time the US opened on Monday. Equities, which had treaded water throughout the 12-day war between Iran and Israel, remained rangebound. Oil, which had climbed over 9% as Israel fired up the war machine, barely moved on Monday. Brent crude prices started to drop when the limited nature of Iran’s retaliation became clear.
Traders were thus already relatively confident by then that the risk of supply disruption through the Strait of Hormuz was off the table. At the time of writing, Brent crude was trading at $67 per barrel and West Texas Intermediate (WTI) at $65 per barrel. This represents a drop from $77 for Brent crude and $73 per barrel for WTI at the end of last week.
Oil is still up 7.25% for the month to date at the time of writing, but down 10% since the beginning of the year. Any fears of an oil crisis have evaporated. Indeed, traders now believe there has been no disruption to physical crude flows. Analysts pointed to a growing wave of Persian Gulf crude entering an already oversupplied global market, in line with the broader macro trends of sluggish global growth, weak demand in China, and cautious consumer spending.
By Thursday’s close, the S&P 500 was up 2.9% for the week and powering back towards February’s highs, while the Nasdaq 100 touched a new all-time high. After briefly strengthening at the height of the tensions, the US dollar gave up its gains and retreated to its lowest levels since April 2022, although aided by yet another attack by Trump against the Fed Chairman. Gold, another barometer of risk, declined to a two-week low.
In the second half of the week, markets arguably started to consider fundamentals more than the rise in geopolitical friction. Data released this week showed weaker-than-expected US GDP growth and job figures, leading to speculation that the Fed may cut interest rates sooner than previously thought.
The ramifications of the conflict remain to be seen, but the 12-day dance of war is over, at least for now. Investors remain focused on central banks, liquidity, and inflation, and are desensitised to geopolitical volatility unless it directly affects energy flows or supply chains.
There is, however, always a possibility that the tensions could once again escalate. The peace between Iran and Israel is fragile, and Iran’s nuclear programme might not be set back as seriously as Trump claimed. Attention shifts to renewed denuclearisation talks between the US and Iran. Another round of brinkmanship may be just a miscalculation away.
“The Iranian response today seems manageable and perhaps a clearing event. Lower oil prices are providing a release valve for stress that built up over the weekend, also allowing the bull case of steady global growth to continue.”
– Michael Bailey at FBB Capital Partners
Global News
- A fragile ceasefire between Israel and Iran, brokered by Trump, is currently holding following a 12-day military exchange that included US and Israeli strikes on Iran’s nuclear sites and Iran’s retaliation against a US base in Qatar. Trump said on Wednesday that US and Iranian officials are set to begin nuclear talks next week, while his Middle East envoy, Steve Witkoff, described the discussions as “promising” and expressed hope for a long-term peace agreement. Despite setbacks, including intelligence suggesting Iran’s nuclear capabilities may not be fully incapacitated and intermittent violations, both sides appear cautiously committed to maintaining the truce and pursuing diplomacy.
- NATO leaders agreed to increase defence spending to 5% of GDP and renewed their “ironclad commitment” to mutual security in a historic move to push back against an increasingly belligerent Russia. NATO Secretary General, Mark Rutte, on Wednesday, said that the 32 member states must increase defence spending due to the threat from Russia and international security concerns, while emphasising that “the US is totally committed to NATO”. However, Europe’s pledges, in a bid to retain the US’s support, are something it can ill afford. The 5% of GDP amounts to more than double the amount they set aside for military spending, likely leading to creative accounting to move money around.
- Canada signed a defence partnership with the EU on Monday in the latest indication that two of the US’ closest allies are deepening military cooperation, while the UK on Monday agreed to buy at least a dozen new US-made F-35 fighter jets capable of carrying nuclear weapons, which will give the Royal Air Force a nuclear role for first time in a quarter century.
- Fed Chairman Jerome Powell on Tuesday reiterated his view that policymakers need not rush to adjust policy, a counter to Trump’s demands and recent statements from Fed Governors Christopher Waller and Michelle Bowman that signalled the two would be open to lowering rates as soon as July. He was responding to a question about the possibility of a rate cut next month during a House Financial Services Committee hearing. Weaker inflation or worse labour market rates could lead to a cut, while higher inflation would see the Fed maintain current rates, he said. “But I wouldn’t want to point to a particular meeting. I don’t think we need to be in any rush because the economy is still strong.”
- Trump is reportedly weighing an early announcement of his pick to succeed Powell, possibly as soon as September or October, sparking a decline in the US dollar to its lowest level in nearly three years. Markets interpret this move as a signal that rate cuts may come sooner than expected, with the dollar and Treasury yields weakening amid concerns over central bank independence and dovish policy expectations. Trump on Wednesday called Powell an “average mentally person,” and said he already has “three or four people” in mind to replace the Chairman. He did not name his candidates.
- Senate Republicans are attempting to reduce the apparent $3.8 trillion cost of extending 2017 tax cuts through a novel “current policy baseline” accounting trick, rather than using the traditional method that compares proposed tax changes against current law. Under this new baseline, extensions aren’t seen as new spending, dramatically cutting the headline cost and enabling the bill to appear budget friendly. Critics argue this misleading approach could weaken long-standing fiscal rules and obscure the true multitrillion-dollar cost of the legislation.
- The Treasury Department has reached a deal with G7 allies to exempt US companies from certain foreign taxes in exchange for dropping the Section 899 “revenge tax” from Trump’s tax bill. The provision, backed by House Republicans and the White House, aimed to counter what they see as unfair taxation of US companies by several European countries, Canada, Australia, and others. Treasury Secretary Scott Bessent said yesterday the agreement ensures US companies won’t face “Pillar Two” taxes, which require multinationals to pay at least 15% tax in every country where they operate.
- Tariff talks with the Trump administration are hitting roadblocks as Japan, India, and the EU raise concerns over a US Commerce Department probe into key sectors like semiconductors, pharmaceuticals, and critical minerals. The investigation is expected to lead to tariffs under Section 232 of the Trade Expansion Act on various foreign-made goods. This comes as the US and China finalised a trade deal that includes China’s commitment to supply rare earth minerals. Commerce Secretary Howard Lutnick said in a Bloomberg interview that ten more deals are expected soon.
- Japan will take additional action to ease the impact of US tariffs on the auto sector as needed and “without hesitation,” its economy minister, Yoji Muto, says. He told reporters the impact had already been seen in the auto sector. However, he also indicated that he looks forward to fruitful discussions between the US and Japan, as well as an agreement that is beneficial for both.
- US GDP contracted at a downwardly revised annualised rate of 0.5% in the first quarter, as consumer spending increased at its slowest pace since the start of the pandemic, driven by a sharp pullback in spending on various services. According to data released yesterday by the Bureau of Economic Analysis, spending on services added just 0.3 percentage points to GDP in the first three months of the year, the weakest contribution since the second quarter of 2020 and a significant drop from the previously reported 0.79-point boost. The figures suggest that the economy’s early-year struggles weren’t solely tied to trade balance deterioration linked to tariffs introduced by the Trump administration.
- Trump’s move to double tariffs on imported steel and aluminium to 50% is driving up costs for companies that rely on metal packaging for food, beverages, and personal care products. In response, many are exploring alternatives like glass, plastic, and fibre-based containers. While switching materials isn’t always easy, producers of these non-metal packaging materials see new growth opportunities. Industry analysts say long-term changes may depend on how trade policies evolve.
- New York State is set to build the first major nuclear power plant in over 15 years, aiming to add at least 1GW of zero-emission energy to support a stable and affordable grid. New York Governor Kathy Hochul said in a Monday statement that the plan was “a critical energy initiative” that would complement the construction of renewable energy, and the state agency would “safely and rapidly deploy clean, reliable nuclear power for the benefit of all New Yorkers”. The decision drew strong criticism from renewable energy advocates.
- The Chinese auto industry’s widespread practice of registering brand-new cars straight off the production line and exporting them as “used” vehicles, despite never being driven, has drawn public criticism, but a Reuters investigation reveals that local governments continue to support it due to the economic benefits. These so-called “zero-mileage” cars are part of a government-endorsed grey market, with many sent to destinations like Russia, Central Asia, and the Middle East.
- This comes as Chinese automakers are looking to unlock Africa’s underdeveloped potential, with a focus on electric and hybrid vehicles, as restrictions on exports to the United States and Europe send them on a global quest for new markets. BYD, Chery Auto, and Great Wall Motor want to leverage low prices to advance where others have struggled and use an expansion in South Africa as a stepping stone in a continent-wide strategy.
- China is poised to drive a surge in AI innovation, with over 100 DeepSeek-like breakthroughs expected within the next 18 months, according to Zhu Min, former deputy governor of the People’s Bank of China. Speaking at the World Economic Forum in Tianjin on Tuesday, Zhu said these developments could “fundamentally change the nature and tech foundation of the entire Chinese economy”. A former deputy MD at the IMF, Zhu attributes this coming transformation to China’s vast engineering talent, large consumer market, and supportive government policies. The US continues to view China as a major competitor in the AI space.
- Nvidia CEO Jensen Huang has started selling company stock under a plan that allows him to offload up to $865 million worth by the end of the year. According to an SEC filing on Monday, he sold $14.4 million in shares between 20 and 23 June. Huang, currently the world’s 12th richest person with a $126 billion fortune, almost entirely made up of Nvidia shares, has sold more than $1.9 billion worth to date, according to Bloomberg Billionaires Index data. Nvidia’s shares rose 4.3% to an all-time high on Wednesday, having now gained 63% from an April low.
- Novo Nordisk (a holding within the Fundsmith Equity Fund) is aggressively pursuing early-stage partnerships to bolster its next-generation obesity pipeline as it faces mounting competition from Eli Lilly. The company recently signed a $812 million licensing deal with biotech firm Deep Apple and is investing in experimental drugs like CagriSema and amycretin. Yesterday, news emerged that Novo had signed a deal with WeightWatchers to boost access to its Wegovy obesity drug. These moves reflect Novo’s ambition to regain its edge in the fast-evolving obesity market, estimated to reach $150 billion globally. However, Novo’s shares fell as much as 3.5% on Monday after trial results for its experimental obesity drug CagriSema fuelled investor concerns about its competitiveness against rival Eli Lilly’s pipeline.
- Tesla shares climbed 8.2% on Monday after the automaker rolled out its long-promised driverless taxi service to a handful of riders, a modest debut for what Elon Musk sees as a transformative new business line. Uncharacteristically low-key, Tesla relied largely on word of mouth and media coverage ahead of the robotaxi launch. The first robotaxi trips were limited to a narrow portion of Tesla’s hometown of Austin on Sunday, with an employee sitting in the front passenger seat of each vehicle to monitor for safety. The carmaker hand-picked a friendly group of retail investors and social-media influencers to serve as initial riders and live-streamed their trips.
- As at Thursday’s close the S&P 500 was 2.9% up for the week.
Local News
- S&P Global Ratings has revised South Africa’s economic growth forecast for 2025 downwards following a gain in GDP of only 0.1% in the first quarter. It amended its growth projection for South Africa to 1.1% from 1.3%. This growth forecast is in line with the South African Reserve Bank’s latest projection of 1.2% this year, which is expected to rise to 1.8% by 2027.
- Data released by Statistics South Africa on Tuesday showed formal sector employment dropped in the first quarter, with 74,000 jobs lost. This was partly attributable to political and policy uncertainty globally, as geopolitical tension and trade wars escalated, and domestically, where budget delays and policy debates called into question the stability of the coalition government. In March, 95,000 jobs were lost, mostly in the construction, mining, community services, and trade sectors. A surprise in the figures was a net gain of 2,000 jobs in the manufacturing sector, which has been a declining sector for several years. Employment in the transport industry remains unchanged.
- The third meeting of the G20 sherpas began on Wednesday under South Africa’s Presidency, with the notable absence of the US, which has maintained an antagonistic stance towards the multilateral forum. Washington’s decision to stay away from the meetings is despite an undertaking by Trump that the country would participate in G20 events, including the G20 leaders’ summit scheduled for November. As the current chair of the G20, South Africa has outlined trade equity, development financing, and institutional reform as central pillars of its agenda for the summit.
- Following President Cyril Ramaphosa’s firing of DA Deputy Minister of Trade, Industry and Competition Andrew Whitfield yesterday, DA leader John Steenhuisen called on him to apply the same standard to ANC ministers facing corruption allegations. The DA has demanded that Ramaphosa dismiss Ministers Thembi Simelane, Nobuhle Nkabane, Deputy Minister David Mahlobo, and others by tomorrow or face unspecified political consequences. While no official reason was given for Whitfield’s dismissal, the DA believes it was due to an unapproved party-related trip. Steenhuisen said he was not given a chance to speak with Whitfield before his removal.
- The Public Service Commission this week revealed that government is sitting on a backlog of more than R16 billion in unpaid leave benefits owed to almost 190,000 public sector employees. According to the entity, the money is linked to more than nine million days of vacation leave that were accumulated before 1 July 2000, when the policy still allowed employees to keep unused leave and convert it into cash later. Leave no longer roles over and must be taken by June. The contingent liability only refers to a payout that would be triggered if employees retire, resign, or die.
- The South Africa’s Revenue Service (SARS) is on the hunt for cutting-edge AI technology and data analytics to improve its efficiency and recover an estimated R800 billion in uncollected taxes, according to BusinessLIVE. As part of this effort, SARS is exploring advanced “digital twinning” AI systems that mimic human decision-making, detect risks in real time, and integrate with existing platforms while maintaining transparency and oversight. Backed by a R7.5 billion tech upgrade budget, SARS aims to boost annual revenue by R20 to 50 billion by improving compliance, targeting the illicit economy, using third-party data, and expanding the tax base.
- Despite being interdicted from doing so, SARS deducted R5.07 billion of the R5.1 billion it planned to take from the fuel levy payments it makes to the Road Accident Fund (RAF). This amount is the diesel refund amount SARS has agreed to pay Eskom. Moneyweb reported on 17 June that RAF had applied for a contempt of court order against SARS because of its alleged failure to adhere to an interim interdict obtained by the fund in the High Court in Pretoria on 26 March 2025 to stop it from making deductions.
- Platinum prices have skyrocketed in recent months, bringing a wave of relief to the struggling mining sector and buoying hopes for a potential turning point in the industry. After three years of stubbornly low prices, platinum soared to its highest level in more than a decade last week as the metal’s shrinking supply gradually worked its way into the market. The metal is now on track to record its best year since 2009, having gained 48% since the end of December. A Bank of America survey in June showed that local investors were changing their tone on platinum, with local fund managers shifting their position on platinum from underweight to overweight.
- JSE- and A2X-listed e-commerce and tech investment group Naspers on Monday reported a 20% rise in revenue to $7.2 billion and a 46% increase in core headline earnings, a key profitability metric, for the year ending March. The strong performance was driven by innovation and increased adoption of AI, which the company called an “indispensable tool” for future growth. Naspers is ramping up its AI investment, with a strategy aimed at boosting productivity, accelerating innovation, and building a high-impact portfolio powered by data and customer insights.
- Dis-Chem founder Ivan Saltzman has distributed most of his stock in the group to two of his sons, Dan and Mark as he winds down his career. This comes as he prepares the next generation of the family to be significant shareholders of his R27 billion group for years to come. On Friday, Dis-Chem said Dan and Mark individually now own a beneficial interest in the company of 12.62% (previously zero). Dan and Mark do not sit on the group’s board, nor do they serve in any executive positions, although their new shareholding is likely to see a board reshuffle.
- As at the time of writing, the rand was 0.4% stronger against the dollar, and the ALSI was 1.15% up for the week.
Sources: Dynasty, Reuters, Bloomberg, Business Report, BusinessLIVE, CNN, NYT, WSJ, ITWeb, Moneyweb, etc.
