As we step into the last quarter of 2026, we see a mixed picture when it comes to equity returns. The JSE All Share index is down 6.3% year to date, the S&P500 is up 12% and the Eurostoxx 50 is up 8.4%. It is ironic to think that after the JSE started the year strong, it drifted into negative territory while equities in the U.S. did the opposite, just as they started the war against Iran on 28 February. It must be said that the heavy lifting is being done by big tech companies in the States while nothing is contributing to growth in SA. Even over the last three years SA (All Share) is not looking too good.
It is clear that the gold rush of 2025 has reversed and with the war in Iran, commodities is not the priority. On the other hand, companies driving the AI buildout is going the other way. In recent weeks we have seen a lot of chatter about the safety concerns around the exponential increase in AI intelligence and the call for better safety standards to be implemented. This resulted in a meeting at the White House hosted by Donald Trump with the CEO’s of the most important AI companies to sign a Memorandum of Agreement to make AI safe for humanity.
Gold is currently trading at $4175 and Brent Crude Oil is at $97. The Rand is above R16.60/$ and Bitcoin bounced back to around $85 000. We can expect elevated inflation levels to remain for as long as the supply of oil is a problem. We have seen interest rates in the U.S. and SA going up. We are also seeing the price of diesel and petrol going up and for as long as the war in Iran rages on, gold will remain volatile at best. The saving grace for you as an investor in the American market, is the fact that their economy remains strong, and even though prices and debt levels are going up, unemployment sits at only 4.1%.
Guessing what the markets will look like at the end of the year is a bit tricky. We have elections in both SA and the USA, and if oil stays close to $100 for an extended period, inflation and interest rates will remain stubbornly high. It seems like the safe trade currently and probably for the next two years will be big tech companies in the U.S.