Equities lower on rising rates and tech weakness

Market Commentary

US equities extended losses on Tuesday as rising Treasury yields—driven by renewed inflation concerns linked to Middle East tensions—kept sentiment under pressure. The S&P 500 and Nasdaq 100 fell 0.50%, while the Dow Jones dropped more than 400 points, with higher yields reinforcing a rotation away from growth and risk assets. Large-cap technology and semiconductor stocks continued to pull back after a strong run, as positioning normalised, with Seagate down roughly 10% week-to-date and Amazon, Tesla and Meta each falling up to 2%. Utilities provided partial offset, with names such as Dominion Energy extending gains and NextEra holding firmer after recent volatility.

The same macro backdrop shaped a more cautious tone in Europe, where equities ended mixed as markets balanced persistent inflation risks from elevated energy prices against broadly steady earnings. The Euro STOXX 50 finished flat at 5 851 points, while the STOXX 600 edged 0.20% higher to 611. Higher oil and gas prices continued to cloud the inflation outlook, while rising yields weighed on banks including UniCredit, BBVA and Intesa Sanpaolo, each down around 1%, leaving the region largely range-bound.

In contrast, Chinese equities outperformed as sentiment improved on easing geopolitical risk after reports that a planned US strike on Iran had been called off following Gulf intervention. The Shanghai Composite rose 0.93%, and the Shenzhen Component gained 0.26%, with technology stocks leading gains ahead of earnings from US chipmaker Nvidia. Sentiment was further supported by comments from Nvidia CEO Jensen Huang, indicating that China will allow imports of US AI processors. Focus now turns to China’s loan prime rate decision, expected to remain unchanged at 3% (1Y) and 3.50% (5Y).

South African equities ended mixed in line with broader global signals, with the FTSE/JSE All Share Index down 1.10% as resources lagged on higher oil prices and softer sentiment, while financials and select industrials provided support on earnings-related flows. The rand edged slightly firmer, supported by relatively attractive domestic yields, while local bonds remained underpinned by elevated interest rates despite global risk aversion.

Commodities traded mixed on Tuesday, with precious metals easing while energy remained elevated amid ongoing geopolitical uncertainty. Gold slipped below $4 500/oz as investors booked profits, while Brent crude remained elevated but eased slightly toward $110/bbl, staying supported by persistent supply-risk concerns in the Middle East.