During the first week of the US/Israel attack on Iran, the All Share index lost 11 872 points in the first week.
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Financial markets record biggest downturn in four years. Financial markets across the board experienced their fourth black swan movement over the last five years last week after the sudden attack of US and Israel on Iran the on Saturday February 28, 2026. A black swan event is an unpredictable, rare occurrence with a severe, widespread impact that is often wrongly rationalised in hindsight as having been foreseeable.
The Covid-19 Virus event hit the world in 2020 with devastated effects on every economy in the world. The sudden unexpected Ukraine-Russian conflict outbreak at the end of February, had the same negative effect on the global economy and financial markets within the first six months up to February 2022. The implementation of tariffs by US President Donald Trump at the beginning of 2025 is seen by many as another unforeseen occurrence. From January to April 2025, the overall average effective US tariff rate rose from 2.5% to an estimated 27%, the highest level in over a century.
The Iran war of 28 February follows the same ‘Black Swan” trend. At the outbreak of the Russian-Ukraine conflict at the end of February 2022, The JSE All Share index was at a new record level of 77 110 points after it had a strong bull run of 22.6% the previous six months. During the first week after the Russian-Ukraine war, the All Share index lost 6.8%, and within six months wiped out all the gains of the six months run before the conflict.
The brent oil price shot up within the first two weeks of the conflict from $89 per barrel to $117. Last week the brent oil price increased by $21 per barrel (30.0%) from $70 the previous Friday to $91 over the weekend. In South Africa, just after the outbreak of the Russia/Ukraine war, the petrol price in Gauteng jumped by R6 60 cents per liter between February 2022 and July 2022. The price for diesel shot up by R7.36 over the same time. The inflation rate increased within five months up to July 2022 from 5.7% to 7.8% or with 36.8%. Fuel prices however recovered quickly again within the six months from July 2022 to January 2023 to the same level as before the Russian-Ukraine war outbreak.
During the first week of the US/Israel attack on Iran, the All Share index lost 11 872 points in the first week, also from a record elevated level of 128 455 points on Friday 27 February to 116 583 points or 9.2%. This tumble appeared despite the gold price losing a mere $136 per ounce or 2.6%, whilst the platinum price also hit extremely hard, losing more than 6.5% last week. and platinum
The Rand exchange rate has depreciated strongly Given the strong increase in oil prices, as well as foreign investors flight to the US dollars as a haven asset, the Rand depreciated sharply last week. At the close of the previous Friday (27 February) the currency traded on R15.94/$, only to weaken by 61 cents (3.8%) to R16.55/$ at the close Friday evening. At one stage during intra-trade on Friday the currency tested levels beyond R16.80/$. Against the Pound the Rand depreciated last week by 74 cents (3.3%) to R22.21/£ and against the Euro by 41 cents to R19.23/€.
Global markets
US stocks, in the same manner as South Africa equity prices, pulled back for the second consecutive week. The Dow Jones industrial index last week traded down by -3.03%, and the S&P500 index by 2.02%. in the UK, the FTSE 100 tumbled last week by more than 5.0% and in Europe the Euro stocks 50 was sold down by 6.61%. In Hong Kong, the Hang Seng index lost 3.1%, whilst the MSCI world index drop last week by 3.3%.
Bloomberg on Friday commented that: “Investors are piling into US bond-market products that protect against inflation — pushing some valuations to the highest levels in nearly a year — as the Mideast war sparks a surge in energy prices.”
Share prices in the US also came under pressure as the Labour Department announced last Friday that the job market shredded 92 000 jobs in February (against the expectation of creating R56 000 new jobs). The unemployment rate ticked up from 4.3% to 4.4%.
Prospects for the coming week
This coming week, apart from the devastating expectations of surging oil prices, precious metal prices to continue and the Rand to appreciate further, StatsSA on Tuesday will release South Africa’s GDP economic growth rate for quarter four 2025. It is expected that the real GDP growth rate (quarter-on-quarter and annualised) was 1.8% and the GDP growth rate for 2025 will be 1.6%, as was forecasted by treasury in its budget documents.
StatsSA will also publish the latest mining production data and the Reserve Bank the current account balance during Q4 2025. On global markets the US will announce its inflation rate for February. It is expected that the increase in its CPI was 2.5%, against 2.4% in January. Together with the disappointing jobs number in February, changes of decreases in the US Federal bank rate, given the Iranian situation is getting more likely.
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.
*** The views expressed here do not necessarily represent those of Independent Media or IOL.
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