Rand steady, oil surges as US-Iran tensions flare over long weekend

South African markets head into the new trading week against a backdrop of renewed hostilities between the United States and Iran, a stronger-than-expected US jobs print and a pullback in gold, after a choppy end to last week on Wall Street.

Brent crude pushed toward $97 a barrel on Monday, extending gains from last week after the US and Iran exchanged fresh strikes over the weekend.

Washington targeted three Iranian oil tankers in retaliation for ballistic missile attacks on US Navy vessels, while Tehran responded by striking tankers and other shipping linked to the US and said it would introduce a “restricted” maritime zone beyond the Strait of Hormuz in the coming days.

The renewed escalation keeps inflationary pressure firmly in focus for policymakers, with crude having already posted its strongest weekly gain since mid-July last week amid the ongoing conflict.

US markets closed out the week – and head into Monday's Labor Day holiday – on a soft note after Friday's non-farm payrolls report far exceeded expectations. The Dow Jones Industrial Average fell 271.86 points, or 0.51%, to close at 53,414.25, while the S&P 500 slipped 0.38% to 7,718.60 and the Nasdaq Composite eased 0.29% to 26,506.99.

The US economy added 162,000 jobs in August, nearly three times the 53,000 forecast by economists, with the unemployment rate holding steady at 4.1% and upward revisions to both June and July's figures. The stronger data reignited bets on a Federal Reserve rate hike this month, lifting Treasury yields and pressuring equities, even as some of the initial selling was pared back following relatively dovish remarks from Fed governor Christopher Waller.

Gold slips, dollar firms

Gold gave back some of its recent gains on the back of the robust jobs data, last trading around $4,398 an ounce on Monday morning as markets priced in roughly a 58% chance of a September rate rise.

That follows a sharp move on Friday, when bullion dropped more than 1% to around $4,420 an ounce as Treasury yields and the dollar rallied. Copper also eased, trading near $14,425 a tonne, having flirted with January's record high earlier in the year amid persistent supply constraints from major producers including Codelco and Freeport.

The rand traded in a relatively tight range against the dollar heading into the weekend, last changing hands around the R16.00 mark, having firmed to nearly its strongest level since March last week on the back of a softer dollar and firmer precious metals prices.

Locally, the JSE All Share Index closed at 116,687.82 points on Wednesday, up 1.40% on the day and some 16% higher than a year earlier, with precious-metals miners driving much of the index's recent strength.

The Capped All Share Index rose 4.6% in August – its second consecutive positive month – with miners contributing roughly five percentage points of that gain, while South Africa's big four banks added a further 10.6% over the first half of the year, helping cushion the index against periodic weakness in mining stocks.

Naspers and Prosus remained a drag on the index, both falling further in August amid weaker Chinese tech shares and currency swings tied to their exposure to Tencent. Locally, attention this week turns to South Africa's August inflation data, with speculation growing that the Reserve Bank could deliver a 25 basis point rate hike at its next meeting on 23 September to defend its inflation target range, following a stronger-than-expected US jobs print and the renewed run-up in oil prices.

SOURCES: TradingEconomics, CNBC, The Motley Fool, The Washington Post, Rio Times, Share Talk.