Middle East Conflict Continues to Drive Markets

The conflict between the United States and Iran entered its eleventh consecutive day, with US Secretary of State Marco Rubio reiterating that Washington remains willing to negotiate, although he questioned Tehran’s commitment to meaningful discussions. At the same time, Houthi threats against Saudi-linked shipping have heightened concerns over trade through the Red Sea, adding to existing risks surrounding the Strait of Hormuz. These developments have kept global energy markets on edge, with Brent crude trading above $91 per barrel as investors remain concerned that further disruptions to regional shipping routes could tighten global oil supplies. While diplomatic channels remain open through international mediators, there is currently little indication that either side is prepared to compromise.

Markets Await Several Key Global Events

Beyond geopolitical developments, investors are monitoring a number of important international events that could influence market sentiment over the coming days.

Attention is focused on high-level talks between US Secretary of State Marco Rubio and Chinese Foreign Minister Wang Yi in Manila, where discussions are expected to include preparations for a possible summit between the two presidents later this year. Investors will be looking for signs that relations between the world’s two largest economies remain stable, as any deterioration could reignite trade tensions. Meanwhile, technology investors are awaiting second-quarter earnings from Alphabet and Tesla, with markets increasingly demanding evidence that heavy investment in artificial intelligence is translating into stronger earnings. In Europe, the European Central Bank is widely expected to leave interest rates unchanged tomorrow, although investors will closely analyse President Christine Lagarde’s comments for clues on whether additional policy tightening remains likely later this year.

Private Sector Reform Gains Momentum in South Africa

Locally, attention remains focused on structural reforms aimed at improving the country’s economic performance.

The report argues that Transnet’s decision to award a 25-year private-sector concession for Cape Town’s multipurpose terminal represents an important step towards improving efficiency within South Africa’s logistics network. By requiring the successful operator to finance, refurbish and manage the terminal while remaining accountable for operational performance, the concession introduces stronger commercial discipline into a system that has traditionally lacked meaningful consequences for poor performance. If managed transparently and competitively, the arrangement could reduce logistics costs, improve export efficiency and enhance the competitiveness of South African producers.

In contrast, the governance challenges facing the Public Investment Corporation continue to raise concerns. The resignation of six non-executive directors has intensified scrutiny of governance standards, investment oversight and political influence within the institution. The report argues that stronger governance, greater competition among investment managers and clearer accountability would improve the management of public assets while reducing concentration risk.

Rand Awaits Inflation Data and SARB Decision

The rand continues to trade near the weaker end of its recent range as investors await today’s Consumer Price Index release and tomorrow’s SARB policy announcement.

The local currency remains under pressure from several external factors, including higher oil prices, a firmer US dollar, rising US Treasury yields and ongoing geopolitical uncertainty. These developments have contributed to tighter global financial conditions and reduced investor appetite for emerging market assets. Markets expect today’s inflation figures to show that price pressures remain elevated, largely reflecting higher energy and food costs. A stronger-than-expected inflation outcome would reinforce expectations that the SARB maintains a restrictive monetary policy stance, supporting the rand through improved carry attractiveness.

Bond Investors Position for Higher Rates

South African bond markets remain cautious ahead of this week’s SARB decision.

Demand at the latest government bond auction weakened for a second consecutive week as heightened geopolitical tensions reduced investor appetite for higher-risk emerging market assets. Nevertheless, South Africa’s improving fiscal outlook continued to provide some support for local bonds, while investors concentrated their demand in shorter-dated securities that offer attractive carry with lower duration risk. Rising oil prices and higher global bond yields have reinforced inflation concerns, leading markets to become increasingly comfortable with the prospect of another 25 basis point interest rate increase from the SARB.

Forward Rate Agreements have continued moving higher as investors factor in greater inflation risks arising from higher oil prices and a weaker rand. Market pricing now reflects growing confidence that the SARB will raise rates this week, with the direction of oil prices likely to remain a key driver of interest rate expectations going forward.

Oil Rally Continues as Supply Risks Intensify

Oil prices continued to strengthen overnight as geopolitical tensions showed little sign of easing.

Brent crude traded above $92 per barrel while WTI rose above $85 per barrel, supported by ongoing military action between the United States and Iran, threats to shipping in both the Red Sea and the Strait of Hormuz, and attacks affecting energy infrastructure around the Black Sea. The report notes that although crude prices may continue fluctuating within an $80 to $90 range under normal conditions, any sustained disruption to regional shipping routes could easily push Brent above $100 per barrel.

Agricultural commodity markets also strengthened, particularly wheat, as escalating conflict in the Black Sea region and deteriorating crop conditions raised concerns about global grain supplies.

Gold Benefits from Renewed Investor Demand

Gold prices recovered strongly, climbing back above $4,100 per ounce as investors returned to exchange-traded funds following the recent pullback in prices.

Although elevated US Treasury yields continue to limit the upside for precious metals, renewed ETF inflows and continued central bank purchases are expected to provide underlying support should the Federal Reserve pause before resuming interest rate cuts next year. Morgan Stanley expects gold prices could reach $4,450 per ounce during the fourth quarter.

Industrial metals also performed well, with copper reaching its highest level since early June. Tightening Chinese inventories, stronger domestic demand and expectations of increased infrastructure spending have improved the outlook for copper despite ongoing geopolitical uncertainty.

US Maintains Hard Line on Iran

The United States has ruled out any immediate negotiations with Iran, with President Donald Trump stating that meaningful discussions will only occur once Tehran demonstrates a willingness to engage constructively.

At the same time, the US administration is preparing another round of tariffs affecting numerous trading partners, including Canada, Mexico, the European Union and Taiwan. While these measures are intended to support domestic manufacturing, they also risk adding further inflationary pressure to the global economy.

Today’s Economic Calendar

Today’s primary focus will be South Africa’s June Consumer Price Index, which is expected to increase by 4.70% year-on-year, up from 4.50% previously. Investors will also monitor South African retail sales, UK inflation data, Japan’s trade balance and US mortgage application figures for additional insight into global economic conditions.

Chart of the Day — Gold and ETF Holdings

Today’s chart illustrates that although gold prices have retreated from earlier highs as higher oil prices have strengthened expectations of tighter monetary policy, holdings in gold-backed exchange-traded funds have remained comparatively resilient. This suggests institutional investors continue to view gold as an important portfolio hedge despite elevated interest rates and ongoing geopolitical uncertainty.

Bottom Line

Geopolitical tensions continue to dominate financial markets, keeping oil prices elevated and supporting the US dollar while increasing global inflation risks. For South Africa, today’s inflation data and tomorrow’s SARB interest rate decision are expected to set the tone for the rand and domestic bond markets. With higher energy prices adding to inflationary pressures, markets increasingly expect the SARB to deliver another 25 basis point rate increase, even as policymakers remain mindful of the impact tighter monetary policy will have on economic growth.

Daily Market Report – 22 July 2026