JSE slips amid Middle East conflict fears

The JSE was weaker on Wednesday afternoon, with investors fixated on the Middle East amid retaliation by Iran for a US-ordered assassination of military commander Qassem Soleimani.

Asian markets and European markets also pulled back as the attack by Iran on US military bases in Iraq rattled markets.

Investors sought safety in safe-haven assets such as US treasuries and gold, to the benefit of some local miners.

Earlier, the Shanghai Composite was down 1.22%, Hong Kong’s Hang Seng 0.83% and Japan’s Nikkei 225 1.57%. 

In Europe, the FTSE 100 was down 0.24%, France’s CAC 40 0.39% and Germany’s DAX 30 0.57%.

The gold price topped $1,600 an ounce for the first time in almost seven years following the attacks on the military bases, and uncertainty regarding a possible escalation has prompted a wait-and-see attitude among many investors.

So far, market participants have taken a range of moves as they re-assess the geopolitical risks facing their portfolios, from making short-term bets to taking out hedges to protect against price movements to retreating to the sidelines to wait it out, Bloomberg reported.

Gold was up 0.16% to $1,462.355/oz and platinum 0.25% to $896.94. Brent crude was flat at $64.30 a barrel. 

“Intra-day volatility has picked up dramatically in gold and oil markets thanks to rising geopolitical tensions in the Middle East,” said London Capital Group head of research Jasper Lawler.

“The flight to safety by investors has seen gold rise above $1,600/oz for the first time since 2013. If tensions do die down between the US and Iran, as we expect they should, then inevitably gold will give back some of its recent gains.”

At 12.26pm, the JSE all share was down 0.24% to 57,245.63 points and the top 40 0.21%. Banks dropped 0.82% while gold miners added 2.31%. 

Analysts believe that markets might recover losses after US President Donald Trump tweeted earlier that no casualties had been reported yet, and that he would make a statement later on Wednesday. Analysts have noted that any lack of US casualties drastically reduces chances of further escalation.

Iran’s foreign minister said that Iran is not seeking to escalate the situation but will defend itself against any aggression.

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