Fresh off the September fuel price hikes that hit South Africans on Wednesday, oil prices have risen significantly once again this week, following the resurgence of hostilities between the United States (US) and Iran. which could put upward pressure on October fuel prices
The geopolitical tensions have severely affected oil supply through the strategic Strait of Hormuz throughout 2026, as higher oil prices heavily affect fuel prices in South Africa.
Bianca Botes, Managing Director at Citadel Global said that Asian markets showed some positive sentiment on Thursday, drawing inspiration from Wall Street's bounce, with the KOSPI index standing out by rebounding 1.51% from a near 4% decline the day before.
Japan's Nikkei followed suit, inching up by 0.34% to close at 64,542. The MSCI Asia Pacific Index, excluding Japan, also showed strength, benefiting from a combined regional 'risk-on' mentality and a notable decline in oil prices.
Brent crude prices surge
Brent crude traded at $95.49 per barrel on Thursday, a decline of 0.15% from Wednesday, although it remained approximately 20% higher compared to a month ago.
Brent crude increased by 25% in less than a month, and is now up more than 40% on a year-on-year basis.
Anchor Capital said in their market report for Thursday that the US Energy Information Administration (EIA) reported that US crude inventories fell by 4.45 million barrels in the week ended 28 August 2026.
Botes said, "Investors continue to gauge the potential repercussions of US military activities in Iran and the accompanying risks to Gulf oil supplies. Likewise, gold rallied to $4,427 per ounce, marking an increase of 0.89%. Its ascent has been largely driven by a weaker dollar and the easing of Treasury yields."
Botes added that initial jobless claims report from the US was expected to hover around 203,000, setting the backdrop for the highly anticipated Non-Farm Payrolls report scheduled for Friday.
"Expectations indicated a decline in hiring levels alongside an unemployment rate stabilising at 4.1%. In addition to the jobless claims, the US Institute for Supply Management (ISM) services Purchasing Managers' Index (PMI), Challenger job cuts, and the July trade balance would be released, along with statements from the Federal Reserve’s Christopher Waller. Meanwhile, European investors will keep a watchful eye on the final eurozone services PMIs, seeking affirmation of the region's growth trajectory," Botes said.
Turning to local matters, the South African rand displayed resilience on Thursday after a subdued session the previous day.
"The currency held steady against the dollar, which has drifted lower amid a firmer risk appetite, counterbalancing the recent hawkish stance from the Federal Reserve," Botes said.
On Thursday, the rand traded at R16.05 to the dollar, R18.61 to the euro, and R21.65 to the British pound, representing a notable improvement over the past month.
Bond yields track higher
Meanwhile, Nolan Wapenaar, Head of Fixed Income/Co-CIO, Anchor Capital said that Bond yields have been tracking higher.
"That was the story of August 2026. Depending on which bonds and which data sets you are looking at, yields are now at their highest level in two decades. Higher yields affect everything from government debt-service costs and corporate borrowing to equity valuations and household finances.A few investors have reached out asking whether we should be more concerned. For now, my answer remains fairly simple: keep on keeping on. That does not mean ignoring what is happening. It means trying to distinguish between the headlines and the underlying economics," Wapenaar said.
Wapenaar added that there is a bearish sentiment towards bonds at present, fuelled in part by headlines around deficits, inflation and government borrowing.
"That sentiment can persist for considerably longer than fundamental investors might expect. Fixed income’s approach toward irrational markets is not to compete with stupidity. We would rather make fundamental investments in measured size and accept that, for periods, the market may not reward us," Wapenaar said.
He said that the bond market is often described as “the smartest market in the room.”
"My only word of caution is that we have a new US Fed chair, Kevin Warsh, who appears willing to experiment with a different policy style. It is certainly plausible that he will make a policy mistake and that we will see both a technical recession and a market correction. Combine that possibility with the narrowness of what has been working and the stretched US consumer balance sheets, and the consequences could be meaningful and painful," Wapenaar said.
ashley.lechman@nationalmg.co.za