The announcement by the US that a ceasefire between the US/Israel and Iran was introduced last Tuesday brought some calmness to prospects for global economic woes and inflation (stagflation).
Image: CN-STR / AFP
According to the IMF, the global economic outlook for 2026 has weakened significantly due to the ongoing Middle East conflict, specifically the war involving Israel, the US, and Iran.
While global growth was initially projected to be steady, it is now under severe pressure from the largest energy supply disruption in history.
The announcement by the US that a ceasefire between the US/Israel and Iran was introduced last Tuesday brought some calmness to prospects for global economic woes and inflation (stagflation).
Although much skepticism remains, especially around the opening of the Strait of Hormuz, as only a handful of vessels have passed through the Strait since the ceasefire was announced on Tuesday night, with the Islamic Republic demanding that shipping companies pay enormous tolls for safe passage.
Trump accused Iran of breaching the terms of the ceasefire by not allowing ships to transit the waterway, further casting doubt on the effectiveness of the deal.
Despite these fragile stand-down attacks on each other the oil prices decreased sharply last week. Brent oil decreased from $109 per barrel (pbl) to $94 pbl on Friday.
This led to positive sentiment on financial markets that the war may be stopped in weeks to come.
Share prices across the world increased sharply as investors returned to more risky assets. The world MSCI index increased by 3.66% last week.
In the US on Wall Street, the Dow Jones industrial index gained 3.0% and the S&P500 closed 3.6% higher for the last week.
On Friday it was announced that in March 2026, the US annual inflation rate accelerated to 3.3%, marking the highest rate in two years.
This increase was primarily driven by rising gasoline and energy prices, with monthly consumer prices rising by 0.90%. Core inflation, excluding volatile food and energy, stood at 2.5%.
South African financial markets continue to recover.
In reaction to the world sentiment, a stronger Rand exchange rate and the gold and platinum prices increased last week by 2.6% and 5.6% respectively, share prices on the JSE recovered sharply. The ALSI shot up by 2.5% to 119 025. This is recovery of 8 955 from its lowest level of 110 070 (9.90%) on 20 March 2026.
The Rand exchange rate recovered sharply last week as the currency appreciated by 57 cents from R16.98/$ to R16.41/$. This now only 43 cents weaker that the R15.98/$ on 27 February, the day before the attack on Iran.
Sharp improvement in expected fuel prices.
Given the sharp decrease in the Brent oil price and the sharp appreciation of the Rand/$ last week the under-recovery in petrol and fuel prices turned sharply around last week.
Whereas the under- recovering for petrol was R7.88/liter the previous Friday, it halved to R3.33/liter on Thursday last week and the under recovery for diesel improved from R17.48/liter to R10.79/liter last Thursday.
One must remember that the government is subsidising the prices for petrol and diesel by R3.00 per liter currently and if the price for petrol may turn to over recovery again the government may first increase the fuel levy before the lower prices will find its way to the public’s pockets.
Prospects for the coming week.
This coming week financial markets will still be dominated by the events of the ongoing conflict in the Middle East, especially if the fragile ceasefire continues. On the economic front The US will release its producer price inflation (PPI) on Tuesday and China will announce its economic growth rate for Q1 2026 on Thursday. Domestically, STATSSA will publish South Africa’s mining production data for February on Tuesday.
Chris Harmse is the consulting economist of Sequoia Capital Management and a senior lecturer at Stadio Higher Education.
Image: Supplied
Chris Harmse is the consulting economist of Sequoia Capital Management and a senior lecturer at Stadio Higher Education.
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