Markets rebound as yields ease and Fed signals pause

US equities rebounded on Thursday as a pause in the recent rise in Treasury yields helped lift sentiment, particularly towards more economically sensitive sectors. The S&P 500 and Nasdaq 100 both gained more than 1%, while the Dow Jones rose 624 points, despite weakness among semiconductor stocks. Sentiment was further supported by comments from Federal Reserve (Fed) Governor Christopher Waller, who indicated that further rate hikes may not be necessary if underlying inflation continues to moderate, marking a more dovish tone than his earlier warnings about inflation risks.

Treasury yields subsequently eased, even as markets remained alert to signs that Japanese authorities could intervene again to support the yen. Among individual stocks, Microsoft rose 2.70%, Meta gained 3% and Oracle and Palantir jumped 5.70% and 7.70%, respectively. Chipmakers were mixed, with Nvidia and Intel each gaining 1.80%, while Broadcom fell 2.70% despite reporting 221% year-on-year revenue growth in its latest fiscal quarter. Hewlett Packard Enterprise added 5% despite reporting results below expectations. Gains among financial heavyweights also supported the Dow, with JPMorgan rising 1.60%, Goldman Sachs gaining 3.30% and Morgan Stanley adding 2.50%.

Asian markets ended mixed and largely flat on Thursday, after a volatile session driven by concerns over potential US technology and semiconductor tariffs. Japan's Nikkei 225 slipped 0.17% to 64 214.48 points, while China's Shanghai Composite was almost flat and Hong Kong's Hang Seng fell 0.54%. Markets saw sharp swings during the day as investors assessed the potential impact of further US tariffs on the technology sector, but sentiment steadied towards the close as the initial uncertainty eased.

European equity markets recovered, ending a three-session run of losses as easing bond yields helped improve investor sentiment. The Stoxx Europe 600 rose 0.49% to close at 649.10, while the EURO STOXX 50 gained 0.32% to finish at 6 382.59. The FTSE 100 advanced 0.70% to close at a near one-week high of 10 832, while Germany's DAX 40 rose 0.60% and France's CAC 40 edged 0.10% higher. The recovery was supported by a stabilisation in bond markets, with government bond yields easing from recent multi-year highs and taking some pressure off equities. Investors also considered steady eurozone composite PMI data ahead of further economic indicators from the US.

The South African rand strengthened modestly on Thursday, helped by a softer US dollar and firmer gold prices, as investors looked ahead to the US jobs report for clues on the Fed's next policy move. The rand's gains came alongside a broader improvement in local markets, with the JSE All Share Index and FTSE/JSE Top 40 rising 1.40% and 1.44%, respectively. Mining and other large-cap shares were among the stronger performers, supported by positive company updates and generally improved investor sentiment. Several major South African companies reported solid earnings and operational performances, helping to underpin the broader equity market.

Local government bonds also benefitted from the more supportive global backdrop, with the yield on the benchmark 2035 bond falling 7 basis points to 8.58%. A weaker US dollar and firmer gold prices provided additional support for local assets, particularly given South Africa's significant role in global gold production. The latest PMI survey showed that private-sector activity expanded slightly in August.

Commodity markets were broadly steadier as oil and gold prices consolidated after a volatile start to the week. Crude oil paused following a sharp three-session rally driven by renewed US–Iran tensions around the Strait of Hormuz. Brent crude traded around $96.11 per barrel, while WTI held near $91.40, with prices easing slightly after comments from US President Donald Trump reduced concerns about a prolonged military campaign. Gold recovered strongly, rising to around $4 492 an ounce after falling to more than three-week lows. The rebound was supported by a softer US dollar and lower Treasury yields, while more dovish signals from Fed officials reduced expectations of further aggressive interest-rate increases.