Global markets advance as easing inflation concerns lift investor sentiment

Global markets advanced on Tuesday as easing inflation concerns, lower US Treasury yields and renewed optimism around artificial intelligence (AI) supported investor sentiment. US equities reached fresh record highs, supported by strong corporate earnings and lower oil prices amid reports that the US and Iran could reach an agreement to reopen the Strait of Hormuz. The S&P 500 rose by 1.80%, the Nasdaq 100 advanced 3.30%, and the Dow Jones Industrial Average added 907 points to a fresh record high.

Technology shares led the gains after Palantir surged by 29% posting its strongest daily gain in more than two years after delivering exceptional 2Q26 results, while Caterpillar rose 5.50% after beating earnings expectations. Semiconductor stocks also rallied, led by Intel (10.80%), Marvell (13%), Micron (7.60%), and Broadcom (6.60%). Investor attention also turned to upcoming results from AMD and SpaceX, which are expected to provide further insight into AI-related demand and compute capacity. Meanwhile, lower fuel and natural gas prices helped ease inflation concerns after Qatar indicated progress towards a short-term agreement between the US and Iran.

US Treasury yields declined as lower energy prices reduced expectations of further monetary tightening. The yield on the 10-year Treasury note eased to 4.65% from 4.75% in the previous session, while the US dollar index hovered around 100. Markets also assessed softer economic data, with job openings declining to 7.36 million in June, the trade deficit narrowing, and factory orders unexpectedly falling 0.30% for a second consecutive month. These developments reduced the implied probability of a September Federal Reserve rate increase to 57%, with attention now shifting to the ADP employment report and Friday's nonfarm payrolls.

European markets also advanced, supported by easing inflation concerns, stronger corporate earnings and renewed demand for AI-related shares. The STOXX Europe 600 gained 0.80% and the Euro STOXX 50 rose 1%. Germany's DAX 40 climbed to another record high, while France's CAC 40 extended its winning streak for a fourth consecutive session. London's FTSE 100 underperformed its European peers, rising 0.30%, as weakness in energy stocks offset gains in mining shares.

Asian markets closed positively on Tuesday. China's Shanghai Composite added 0.30% and the Shenzhen Component rose 3.25% as semiconductor and AI-related shares rebounded. Japan's Nikkei 225 gained 0.32% as technology stocks recovered, although gains were tempered by continued weakness in financial shares and concerns that a stronger yen could weigh on exporters.

South African equities ended higher, supported by gains in resource and financial shares. The FTSE/JSE All Share Index rose 1.40% to 114 256.28 points, while the Top 40 Index gained 1.56%. Resource shares outperformed, with the Resources 10 Index advancing 2.96% and the Metals and Mining Index rising 3.10%. Financials gained 1.42%, while Industrials added 0.34%. The rand strengthened against the major currencies, appreciating 0.80% against the US dollar to R16.39, 0.69% against the British pound to R22.04, and 0.67% against the euro to R18.89.

Commodity markets were mixed. At 19h20 SAST, Brent crude oil declined 5.29% to $79.34 per barrel. Gold rose 0.84% to $4 086.99 per ounce at 20h21 SAST, while silver gained 2.69% to $59.74 per ounce, and platinum climbed 8.03% to $1 756.80 per ounce.