JSE Slides as Global Tensions Ripple Through Markets, While SA Faces Diplomatic and Economic Strain
South Africa’s financial markets retreated on Thursday as global geopolitical tensions, diplomatic friction with major powers, and domestic economic risks converged to unsettle investor sentiment. The Johannesburg Stock Exchange (JSE) closed firmly in the red, while policymakers held interest rates steady amid rising inflation concerns and new data pointed to deepening structural challenges in the economy, including a booming illicit tobacco trade.
Markets under pressure as ALSI reverses gains
The JSE’s All Share Index fell 1.28% to close at 112,847 points, reversing gains from the previous session. The index opened at 113,203 and traded within a relatively narrow range of 111,320 to 113,203, reflecting cautious trading throughout the day.
Despite the decline, the ALSI remains up 7.13% year-to-date, signalling that the broader upward trend has not yet been derailed. However, shorter-term performance tells a weaker story, with the market under pressure over the past month and quarter.
Losses were broad-based, with resource stocks leading the downturn. The Resource 10 index dropped 2.09%, tracking declines in commodity prices and continued volatility in global markets. Financial stocks also slipped, with the Financial 15 index down 0.96%, while industrials lost 0.98%.
Large-cap stocks bore the brunt of the selling. The Top 40 Tradeable index declined 1.40%, highlighting sustained pressure on heavyweight counters. Mid-cap and small-cap stocks fared slightly better, with losses of 0.37% and 0.63% respectively, while the SA Property index fell 1.15%.
Among individual movers, a handful of consumer and industrial shares bucked the trend. Hosken Consolidated Investments rose 3.85%, while retail giants Shoprite and Boxer gained 3.75% and 3.28%, respectively. Energy and resource-linked counters such as Thungela Resources and Sasol also posted modest gains.
Mining stocks saw some profit-taking during the session, with Valterra easing 3.19%, Impala Platinum slipping 3.18%, and Anglo American down 3.32%. Meanwhile, technology heavyweight Naspers declined 2.88%, contributing to the broader index’s softer close.
Sector performance painted a mixed picture. Defensive segments showed resilience, with finance and credit services rising 1.84% and personal care, drug and grocery stores gaining 1.62%. Chemicals added 1.51%, while tobacco and broader consumer staples also edged higher, indicating selective buying in less cyclical sectors.
Commodity markets were mostly lower. Gold fell 1.59%, and silver dropped 3.74% from the previous day, while platinum and palladium declined more than 2%. In contrast, Brent crude oil surged 4% to $107 per barrel, driven by ongoing supply disruptions linked to conflict in the Middle East.
Globally, markets delivered a mixed performance. Japan’s Nikkei edged lower, while the Nasdaq in the United States posted gains. European indices, including France’s CAC 40 and Germany’s DAX, were subdued.
Cryptocurrencies also came under pressure, with Bitcoin falling 2.95% and Ethereum declining more than 4%.
Diplomatic setback deepens US-SA tensions
South Africa’s strained relationship with the United States has escalated further, with France withdrawing an invitation for the country to attend a Group of Seven (G7) summit in June.
The summit, scheduled to take place in Évian-les-Bains from 15 to 17 June, will bring together leaders of the world’s richest economies. According to the South African presidency, the invitation was rescinded following sustained pressure from the United States.
Presidency spokesperson Vincent Magwenya confirmed the development, stating that the French government communicated the decision directly to Pretoria.
While French officials have not publicly elaborated, earlier indications suggested that Kenya would attend the summit instead of South Africa, alongside other invited nations including India, South Korea, and Brazil.
The move marks another blow to South Africa’s international standing and highlights deteriorating ties with Washington since the return of US President Donald Trump to the White House.
Relations have been strained by a series of disputes, including US criticism of South Africa’s land reform policies, its diplomatic ties with Iran and Hamas, and broader geopolitical alignment. Trump previously boycotted a G20 summit hosted by South Africa in Johannesburg and has indicated that South African officials will not be invited to future engagements in the United States.
Reserve Bank holds rates but warns of turbulence ahead
Against a backdrop of global uncertainty, the South African Reserve Bank kept interest rates unchanged, holding the repo rate at 6.75% and prime at 10.25, a move widely expected by economists.
However, the central bank struck a more cautious tone, warning that rate hikes may follow if conditions deteriorate. Escalating conflict in the Middle East has driven oil prices higher, raising concerns about inflation and economic stability.
Fuel prices in South Africa are expected to surge, with petrol projected to rise by over R5 per litre and diesel by R10—among the steepest increases on record. This could push inflation to around 4.5% in the near term.
Governor Lesetja Kganyago described the situation as a supply shock, with the SARB increasingly wary of second-round inflation effects. Two scenarios were outlined: a shorter conflict leading to at least one rate hike, or a prolonged crisis requiring multiple increases.
Illicit cigarette trade drains billions from fiscus
According to the Transnational Alliance to Combat Illicit Trade (TRACIT), illegal cigarettes make up 50% to 75% of the market, with some packs selling for as little as R5. The surge is largely linked to the Covid-19 tobacco sales ban, which fuelled black-market networks that remain active.
The trade is estimated to cost the country about R28 billion a year in lost taxes, with many cigarettes consumed but never declared.
SARS has attempted to clamp down, but enforcement is hindered by systemic challenges, including alleged corruption and collusion. Commissioner Edward Kieswetter has acknowledged the extent of the problem.
Experts warn that tackling the illicit trade will require sustained enforcement and broader systemic reform.
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