Making Sense of Market Volatility
How geopolitics, commodities and central banks shaped the second quarter of 2026.
Global markets pulled back in June following May’s rally. Investor sentiment was affected by three key developments: the easing of US-Iran-Israel tensions, which unwound the oil shock and pushed commodities lower; weakness in AI and semiconductor-related shares; and renewed uncertainty surrounding US Federal Reserve leadership.
Commodity markets proved to be the quarter’s biggest swing factor. Brent crude fell 19.9% in June as the US-Iran-Israel ceasefire eased concerns over supply disruptions. Precious metals also came under pressure, with both gold and platinum declining over the month, weighing heavily on resource markets and commodity-linked currencies. Copper, however, remained resilient, supported by long-term demand from electrification and the growing power requirements of AI data centres.
Central banks across the globe also adopted a more hawkish stance, despite lower energy prices. Sticky core inflation remained the dominant concern, forcing investors, who began the year expecting coordinated rate cuts, to quickly recalibrate for a higher-for-longer interest rate environment.
Under newly appointed Chair Kevin Warsh, the US Federal Reserve has proved markedly less dovish than many had anticipated. While keeping its benchmark rate unchanged, the Fed lifted its year-end policy rate projection to 3.8%, triggering renewed volatility across fixed income markets.
Meanwhile, the European Central Bank and Bank of Japan have continued tightening policy in response to persistent inflationary pressures. Across emerging markets, central banks from South Africa to Indonesia also raised interest rates to support their currencies and limit capital outflows against a resilient US dollar.
The outlook remains shaped by commodity volatility, inflation risks and ongoing geopolitical uncertainty. While lower oil prices may provide some relief to consumers and ease future inflationary pressures, the sharp reversal in precious metals highlights how quickly sentiment can shift and how exposed local markets remain to global commodity cycles. Domestically, inflation continues to track above the SARB’s new target range, suggesting monetary policy is likely to remain restrictive, particularly if rand weakness or energy volatility persists.
Against this backdrop, Mazi remains focused on what we can control. We continue to take a disciplined and selective approach to capital allocation, favouring businesses with attractive valuations, strong balance sheets and sustainable cash flows. Diversification and downside protection remain central to our investment philosophy, allowing us to navigate uncertain times while positioning our portfolios to capture opportunities as they emerge.
