Markets firm as oil retreat eases inflation worries

Global markets firmed over the past 24 hours as a pullback in oil prices eased some inflation concerns, while investors weighed a fresh round of central bank moves and the prospect of further interest-rate tightening.

For South Africa, the rand and local asset prices remain sensitive to the combination of elevated oil prices, US interest rates and geopolitical risk in the Middle East. The rand held broadly steady, while firmer commodity prices offered some support: Brent crude closed at Thursday's session around $104.65 a barrel, down 0.9%, gold rose 2.2% to about $4,357 an ounce, platinum gained 2.3% and silver 4.1%.

South Africa's repo rate remains at 7%, with consumer inflation at 4.3% in the latest data. Strength in gold and platinum supports mining counters and export earnings, while crude above $100 a barrel remains a significant risk for an oil-importing economy.

On Wall Street, US equities rebounded sharply on Thursday after the previous session's losses, with the Dow Jones up 0.6%, the S&P 500 up 1.1% and the Nasdaq up 1.7%, according to an Australian market update covering the overnight session.

Technology stocks led the recovery, aided by softer Treasury yields; the US 10-year yield stood at around 4.94% in Asian trading on Friday. The interest-rate outlook remains central to market sentiment, with investors weighing energy-driven inflation pressure against the effect of tighter policy.

European equities also strengthened on Thursday, with the Stoxx 600 up about 0.9%, Germany's DAX up 0.7% and the FTSE 100 up 1.2%, though the region remains exposed to the same energy and inflation pressures while oil stays above $100 a barrel.

Asian markets were broadly higher on Friday: Japan's Nikkei gained nearly 2% and South Korea's KOSPI rose more than 2%, after the Bank of Japan raised its benchmark rate to 1.25% – a 31-year high – in a decision that drew two dissenting votes and weakened the yen by about 0.7% to around 157.1 per dollar. Australia's ASX 200 was also higher, and Hong Kong's Hang Seng gained around 0.7%.

Brent fell roughly 1% to around $103.70–$104 a barrel amid reports of efforts to ease supply-disruption risks, though the Middle East conflict continues to threaten energy flows. Spot gold held close to $4,360 an ounce after the previous session's gain, and iron ore rose about 0.5% to around $96.30 a tonne. The dollar remained firm against major currencies as markets absorbed the latest central bank signals, and bitcoin traded around $76,500–$77,000, up modestly on the session.

For South African investors, the immediate picture combines strong precious-metals prices, easing but still-elevated oil, firm global equities and high US rates – a mix that supports the resource sector even as crude above $100 a barrel continues to threaten inflation, the trade balance and household purchasing power, while elevated global rates constrain emerging-market currencies and capital flows.

SOURCE: ABC News, Reuters, Discovery Market Indicators.