JSE under pressure as oil surge weighs on markets

South African markets came under renewed pressure on Monday as rising oil prices, weaker global equities and a softer rand heightened concerns about inflation and interest rates. The FTSE/JSE All Share Index fell 1.41% on Monday to 113,536 points, while the Top 40 index lost 1.57%.

The decline followed a weaker session on global markets, where investors reacted to sharply higher oil prices and rising bond yields.

On Wall Street, the Dow Jones Industrial Average fell 0.29%, the S&P 500 declined 0.48% and the Nasdaq dropped 0.56%. Technology and semiconductor stocks were among the biggest casualties as investors assessed warnings from leading artificial intelligence executives about the pace of AI development.

The Philadelphia semiconductor index fell 5.9%.

Oil remained the dominant macroeconomic concern. Brent crude had settled at about $105.68 a barrel on Monday after approaching $110 during the session, while West Texas Intermediate ended near $101.

The rand was also under pressure, trading at about R16.29 to the dollar on Tuesday morning as higher oil prices increased concerns about South Africa's import bill and inflation.

The local market therefore opened Tuesday against a difficult international backdrop, with investors watching oil prices, the rand and expectations around the US Federal Reserve's interest-rate decision later in the week.

The combination of expensive energy, higher global bond yields and weaker technology shares is likely to keep risk appetite subdued in the near term.