European markets extend record run as global sentiment steadies

Market Commentary

Global markets ended the week on a firmer footing on Friday as investors looked past recent volatility in artificial intelligence (AI)-related technology shares and focused on a more supportive macroeconomic backdrop. US financial markets were closed for the Independence Day holiday, leaving European and Asian markets to set the tone amid lighter trading volumes.

European equities advanced to fresh record highs, supported by easing expectations of further monetary tightening and renewed strength in technology shares. The STOXX Europe 600 gained 0.70% while the Euro STOXX 50 rose 0.90%. Germany’s DAX added 0.90% to another record close, extending its winning streak to four sessions, while the UK’s FTSE 100 gained 0.30%, supported by utilities and mining stocks. Technology shares rebounded after a volatile week, with ASML rising 3.70%, while Siemens gained 2.50% and Schneider Electric added 1.50% as companies linked to AI infrastructure recovered.

Asian markets finished mixed but generally firmer as technology shares stabilised following recent losses. Japan’s Nikkei 225 rose 1.47%, recovering from the previous session’s decline as weaker-than-expected US labour market data reduced expectations of further Federal Reserve interest rate hikes. China’s Shanghai Composite gained 0.37%, with technology stocks rebounding after recent selling pressure, while broader support came from industrial and mining companies.

South Africa’s private sector returned to marginal growth in June, with the S&P Global South Africa PMI rising to 50.50 from 49.60 in May. Despite the improvement, output and new orders continued to contract as weak domestic demand, economic uncertainty and elevated price pressures weighed on activity. Business confidence fell to its lowest level since July 2021, although easing input cost inflation and continued employment growth provided some support.

South African markets ended the week higher, led by a strong rally in mining shares. The FTSE/JSE All Share Index gained 0.96%, while the Top 40 advanced 1%. Resource shares outperformed, with the Resources 10 Index rising 2.36% and the Metals and Mining Index adding 2.92%. The rand strengthened further to R16.22 against the US dollar.

Commodity markets remained supportive of the local resources sector. Gold gained 1.28% to $4 175.38 an ounce, silver rose 2.28% and platinum added 1.56%, while Brent crude edged 0.25% higher to $71.98 a barrel after recent declines.