PDSNET Market Snapshot

The news from various sources that the US is preparing to send thousands of marines and large quantities of military hardware to the Middle East is unsettling markets around the world. Combined with Iran’s efforts to disable oil production in adjacent countries in the Persian Gulf, these 2 factors have caused the S&P500 to fall 1,5% on Friday last week and brought it closer to a correction (generally accepted as 10% below the high point). 

The evidence is that Trump and America are getting ready to put boots on the ground in Iran with the idea of the protecting shipping passing through the Strait of Hormuz. The Iranian coastlines on the Persian Gulf and the Gulf of Oman will be very difficult to control and protect because they are overlooked by the Zagros mountains and the Central Iranian range. These mountains, which have many cave systems, will be ideal cover from which small groups of Iranian commandos can constantly harass the invaders in the coming months.  

In these troubled times the JSE Overall index has so far fallen 14,3% - twice as much as the 7,2% fall in the S&P500. This is as you would expect given that South Africa is a leading emerging market and our currency reflects the general worldwide shift towards risk-off. The imminent rise in our petrol price on 1st April could be as much as 25% or R5 per litre. This will push our inflation rate up and probably cause local interest rates to rise.

What is surprising in this scenario is that markets and especially Wall Street have not fallen further. This is because the tech companies in the US are still attracting enormous investor interest and there has been substantial “buying of the dips”. The general opinion of overseas analysts is that shares will bounce back from this correction before the end of this year.

Is this a reasonable assumption? In our view the short answer to the question is, “Yes”. Trump is well known for backing down and not sticking to anything when the pressure on him rises. In this case he is already coming under enormous pressure from both external sources and internally where his popularity has never been as low. With the mid-term elections due in November, he must be increasingly aware of the dire consequences of losing both the House and the Senate.  If he puts boots on the ground in Iran now, he will certainly still be getting a steady flow of body bags back from Iran by November. And we believe it is unlikely that his efforts will make the Strait of Hormuz safe for shipping. But he is Trump and therefore totally unpredictable.

In these troubled times, there are relatively few companies which are not touched in some way by what is happening in the Middle East, and especially by the rising oil price. Mobile Telephone Networks or MTN as it is known is one of those companies. It describes itself as a “...pan-African mobile operator with the strategic intent of leading digital solutions for Africa's progress”.

In its most recent results for the year to 31st December 2025 the company reported service revenue up 22,9% and data revenue up 37,7%. Fintech revenue rose 30% and the company reported a 5,6% increase in total customers to 307,2 million.

Technically, the share was in a sideways market from March 2024 until the beginning of 2025. It then entered a strong new upward trend. Consider the chart:

We added MTN to the Winning Shares List (WSL) on 15th January 2025 at a price of 9729c. Since then, it has risen to 19155c – or about 88%. While it has certainly felt some of the fall-out from the Iran war, its business is in Africa which should be largely unaffected.

So, we see this sell-off on the JSE as a buying opportunity to pick up high-quality shares at bargain prices. MTN is one of those shares, but others include Clicks which has now fallen even further due Trump’s war, but which was already heavily oversold.

Buying shares at a time like this can be scary, but remember our maxim:

“If you don’t feel the risk, then you are probably not going to make any money”.

Your ultimate protection in all of this is, of course, as always, your stop-loss strategy.  

Are we teetering on the edge of a major bear trend? After Friday the 13th of March 2026's S&P500 close at 6632, Wall Street is now down 5% from its all-time record closing high of 6978.6 on the 27th of January 2026. This down-move is similar to the 5% correction which occurred in the first three weeks of November last year and it is evident that there is still considerable bullish sentiment in Wall Street, just waiting for their moment to buy the dip .

Into this mix, Oracle (ORCL) delivered strong Q3 FY2026 results on March 10, 2026, beating estimates with $17.2 billion in revenue, driven by a 243% surge in AI infrastructure demand. This demonstrates that the underlying strength of the AI boom in the US is still alive and well. If the war situation in Iran can be resolved, it is clear that the stock market will continue up to new record highs very quickly. Consider the chart:

The chart shows the November correction and what some technicians are now suggesting is a head-and-shoulders formation. In our view, the formation is not particularly convincing, but after Friday’s move there can be no doubt that the index has broken strongly down.

Most of the problem comes from the jump in the oil price which has seen North Sea Brent rise to above $100. This is very good for Russia and Putin, while being very bad for Trump. The US Secretary for Defence, Pete Hegseth, seems to think that the problem is easily solvable, but we believe that it may be extremely difficult.    

Normally, about 20% of the world’s oil passes through the Strait of Hormuz. This narrow sea passage is relatively easy to attack and control, and it is Iran’s only strong pressure point in its war with Israel and America. Its navy and air force have now been systematically eliminated by strategic bombing. The new leader of Iran, Mojtaba Khamenei, has specifically said that he will not allow any ships to pass through and that he will use the rising oil price to put pressure on Trump.

The problem is that to open the Strait will require boots on the ground in Iran. The Israeli/US forces will have to clear a corridor at least 30km wide along the Iranian coast adjacent to the Strait to prevent the firing of missiles and drones against passing ships. They cannot do this from the air. Having boots on the ground means incurring casualties.

Trump probably began this war in order to draw attention away from his problems with the Epstein files. He has however landed himself with a new problem – the rising price of petrol in America. His approval ratings have fallen to an all-time low and the November mid-term elections are looming large. The price of petrol has risen by 20% since the start of the war. On the other hand, his tax cuts will begin to impact in April resulting in refund cheques being paid after the tax-filing season ends.

On Feb. 7, 2026, Chasity Verret Martinez won a special election to fill a vacant seat in the Louisiana House. Martinez is a Democrat who took 62% of the vote in a district that had given Donald Trump a 13-percentage-point victory in the 2024 presidential race. And her win came a week after Democrats seized a Texas Senate district that had supported Trump even more strongly.

While these results are not conclusive, they are a strong indication that the Republicans will lose their control of the House and may even lose the Senate in November. Trump knows that, if he loses both Houses, he could easily be looking at impeachment – so suddenly control over the shipping passing through the Strait of Hormuz becomes critical.

How should you as a private investor respond to this situation? Our advice is not to panic but to monitor your stop-loss levels closely and act on them when broken. We believe that the situation will be resolved and that some degree of normalcy will return sooner or later. When and if that happens, we expect stocks around the world to bounce.

Trump’s decision to bomb Iran and kill the Supreme Leader of over 200 million Shia Moslems was taken without the consideration and approval of Congress and without the cooperation of other Western countries. It is the typical act of a dictator and has embroiled America in what looks like an unplanned war situation. This may prove to be very difficult to conclude on any reasonable basis, and especially without a significant cost both in money and American lives.

Combined with other disturbing economic data, this has taken Wall Street out of the sideways pattern that it has been in since late last year and put it into a correction. The S&P500 index has so far fallen 3,4% from its all-time record high of 6978.6 on 27th January 2026. Consider the chart:

Part of the problem is the increasingly negative data coming out of the US economy, especially in the labour market. The most recent US jobs report showed that the US economy lost 92 000 jobs in February 2026.

Disturbingly, the steadily deteriorating monthly jobs numbers are an indication either that either the economy may be headed into recession or that the spread of artificial intelligence (AI) technologies is putting a large number of Americans out of work. Consider this chart published on Friday last week by CNBC:

https://www.cnbc.com/2026/03/06/february-2026-jobs-report.html

This shows a pattern of falling job creation going back to the beginning of 2022 and becoming steadily more negative in recent months. Combined with this, the unemployment rate has also been edging up and came in at 4,4% in February. This is somewhat higher than the unemployment rates below 4% which characterised the end of Joe Biden’s presidency, painting a concerning picture.

In our view, the productivity benefits of new technologies like AI should, in the medium term, more than compensate for the inevitable loss of jobs. In effect, the US economy is adjusting rapidly to a radically disruptive force which is reshaping the business environment and causing a sharp re-allocation of capital. Some businesses will benefit and others will disappear for ever.

In the longer term, once the dust settles, the economy should emerge stronger and that is why we believe that this is probably a correction rather than a new bear trend – but you will notice that what looks like a correction right now could develop into a head-and-shoulders formation if the record high of 6978.6 on the S&P is not broken when the market recovers.

At the moment, the positive news coming out of the tech sector is being off-set by the bad news on the political front and Trump’s war in Iran. If we are lucky, the war in Iran will be resolved on some basis - probably because he will probably back down in the face of increasing pressure both at home and abroad. If this happens in a relatively short time, the market will turn its attention back to the rapid progress of new technologies and hopefully recover to make a further new all-time record high in due course.