The Great Friday Shakeout: Did the Bull Run for Shares and Metals Just End?

After a month of seemingly unstoppable gains, South African and global markets received a brutal reality check on Friday. In a single trading session, the JSE All Share Index plummeted 4.15%, its worst one-day drop in a year, erasing a significant chunk of its recent record-breaking rally. The trigger? A simultaneous and spectacular collapse in commodity prices that left precious metalsthe darlings of the past six monthsin a state of shock.

The numbers are stark. Gold tumbled 9.3% to $4,874 an ounce. Platinum cratered 19.42%. Silver was hammered, down a staggering 28.2% for the day. This wasn’t a mild correction; it was a rout, dragging the rand down with it and forcing investors to ask: is this the end of the bull run?

The Speculative Whiplash: From Fed Calm to Trump’s Fed Pick

Analysts point to a classic case of speculative whiplash. The selloff began just a day after a surge in metal buying, driven by the US Federal Reserve’s decision to hold interest rates steady. The mood soured dramatically with President Donald Trump’s nomination of Kevin Warsh as the next Fed Chair.

Warsh is viewed as likely to align with Trump’s preference for lower rates, potentially threatening the Fed’s prized independence as an inflation hawk. This political shift, coupled with fleeting optimism that the US government might avoid a shutdown, sparked a rush into the US dollar and a massive “profit-taking” exodus from overbought commodities.

The Rand and the Real-World Ripple Effect

The rand, often a passenger in such commodity-driven storms, followed suit. After strengthening to R15.74/$, it weakened sharply to R16.12/$ by Friday’s close, wiping out the week’s gains. This volatility has immediate consequences. The earlier prospect of a petrol price drop in February has now dimmed considerably. While an over-recovery buffer remains, a continued weak rand and higher oil prices could see motorists facing sharp increases by March.

The South African Reserve Bank’s cautious stance, holding the repo rate steady, proved powerless against these global speculative tides, underscoring the vulnerability of local markets to external shocks.

The Week Ahead: Finding a New Floor

After a week of wild swings, the focus shifts to whether this is a healthy correction or the start of a deeper downturn. All eyes will be on key data: US non-farm payrolls on Friday, interest rate decisions from the Bank of England and European Central Bank, and global Purchasing Managers’ Index (PMI) releases.

The meteoric rise in shares and metals was always due for a pause. Friday’s violence suggests that pause may be severe and driven by a recalibration of global risk, centered on the future of US monetary policy. For local investors, the message is clear: buckle up. The era of easy, one-way gains is over, and the market is now searchingvoluntarilyfor a new, more nervous equilibrium.