Oil climbed above $115 a barrel on Wednesday, October 28, while Asian technology stocks surged after South Korea's SK hynix posted explosive earnings, as markets absorbed the results of Israel's general election and the threat of a wider confrontation with Iran.
Brent crude rose 1.5 percent to $115.61 per barrel by early morning South African time, while West Texas Intermediate gained 1.2 percent to $101.14. The rally came as Israeli election results rolled in with Prime Minister Benjamin Netanyahu's Likud and the opposition running neck and neck, according to IOL's market report.
For South Africans, the numbers land at a painful moment. Every dollar added to the oil price feeds straight into the petrol pump, into food transport costs, and into a household budget already straining under some of the highest fuel taxes on the continent. The global money markets may be celebrating chipmakers in Seoul, but the working class of Mamelodi, Umlazi and Mitchells Plain will feel this story at the tank, not the trading floor.
Netanyahu vows to work with Trump against Iran
Even before the final count, Netanyahu moved to claim the election, vowing to form a new coalition. He added that he could work with US President Donald Trump to eliminate what he called the existential threat posed by Iran.
His challenger, opposition candidate Gadi Eisenkot, said the country had chosen change and that he would seek to form a new administration.
The oil market read the uncertainty for what it is: the possibility that Netanyahu's war against Iran continues, and with it the risk to Gulf supply. That is precisely why Brent crossed $115. As Euronews reported, investors kept close tabs on the election results because they could determine the future of Netanyahu's campaign against Iran, and by extension the security of the world's energy supply lines.
Let us be honest about the geography of this anxiety. The nations that consume the most oil and drive the speculation are not the nations that will pay the heaviest price. When Western capitals and Tel Aviv escalate their standoff with Tehran, it is African economies, still priced in dollars and still dependent on imported refined fuel, that absorb the shock first and hardest. South Africa imports crude; we do not set its price.
SK hynix profit soars 632 percent on AI demand
The other engine of Wednesday's market action came from the technology sector. SK hynix, the South Korean chipmaker at the centre of the artificial intelligence boom, said its third-quarter operating profit soared 632 percent to US$62.8 billion, roughly R1.05 trillion, driven by explosive demand for its advanced semiconductors.
The company has now posted record revenue and operating profit for six straight quarters. Its shares jumped almost nine percent on the news, and rival Samsung, which reports Thursday, gained more than eight percent. Together they pushed Seoul's Kospi index up 6.1 percent to 5,983.53.
Analyst Stephen Innes of SPI Asset Management put the result bluntly:
While Wall Street argues over whether the AI arms race can keep financing itself, SK hynix has just reminded the market that somebody on the other side of all that capex is receiving the cheque.
The optimism spilled across the region. Japan's Nikkei 225 rose 1.3 percent to 64,067.10, with chipmaker Kioxia soaring more than 10 percent. Taipei climbed on the back of TSMC, while Hong Kong, Shanghai, Sydney, Singapore and Wellington all finished higher. The gains tracked a rise of more than one percent on the Nasdaq in New York, as AFP reported.
Anthropic's filing and the AI money machine
The chip rally did not come from nowhere. On Monday, Anthropic, the company behind the Claude AI assistant, filed for an initial public offering revealing that first-half revenue surged roughly 1,300 percent, while flagging heavy capital spending ahead.
On Tuesday, Broadcom announced a US$63 billion financing structure alongside Citi, Blackstone and Morgan Stanley to build new capacity for Anthropic.
Chris Weston of Pepperstone said the AI trade had received a healthy shot in the arm from the filing, with its incredible revenue growth and substantial commitments to future infrastructure investment reinforcing the longer-term opportunity across the AI supply chain.
What the AI boom means for Africa
There is a lesson in Seoul's 6.1 percent surge that African policymakers should study closely. South Korea built its semiconductor industry through deliberate state investment, industrial policy and the protection of national champions. It did not wait for foreign capital to discover its potential. It built the factories, trained the engineers and kept the profits at home.
Today the world's most profitable companies are those that control the physical infrastructure of artificial intelligence: the chips, the data centres, the energy supply. Africa, which holds some of the youngest populations and fastest-growing workforces on earth, risks being reduced once again to a consumer and a data source in an economy designed elsewhere. The minerals beneath our soil feed this boom; the value added belongs to others.
South Africa's own mineral wealth, from platinum used in electronics to the manganese and copper that wire the data centres, is already flowing into this supply chain. The question our government and our continental partners must answer is when we stop exporting raw inputs and start demanding a stake in the industries they power.
Markets wait on the Federal Reserve
Traders are also watching Washington. The US Federal Reserve announces its policy decision later on Wednesday, and while it is expected to hold rates after last month's hike, its post-meeting statement and comments from Fed boss Kevin Warsh will be pored over for clues about future moves. Markets currently expect a hike in December.
A tighter US monetary policy means a stronger dollar, and a stronger dollar means a weaker rand and costlier imports for South Africa. Microsoft and Alphabet report results later on Wednesday, with Amazon, Apple and Intel following on Thursday.
Frequently asked questions
Why did oil prices rise on Wednesday?
Brent crude rose above $115 a barrel because Israel's election results left the political direction of Netanyahu's confrontation with Iran uncertain, keeping supply risks in the market.
How much did SK hynix profit grow?
SK hynix reported a 632 percent jump in third-quarter operating profit to US$62.8 billion, about R1.05 trillion, on record demand for its advanced semiconductors.
How does higher oil affect South Africa?
South Africa imports crude oil priced in dollars, so higher oil and a stronger dollar push up petrol prices, transport costs and food inflation for households.