AI shares rebound as investors weigh US midterm election risks

US equities were mixed on Tuesday, as a recovery in artificial intelligence-related and technology shares helped lift the S&P 500 by 0.40% and the Nasdaq by 0.70%, while the Dow Jones Industrial Average moved 197 points lower. Chipmakers recovered some of their recent losses, with Nvidia gaining 2.30%, Advanced Micro Devices advancing 3.60% ahead of its quarterly results, and Broadcom and Micron rising 3.10% and 2.60%, respectively. Gains also extended to major technology companies, including Microsoft (2.70%), Meta (2.40%) and Oracle (6%). Apple lost 1.90% after warning that higher memory-chip costs could weigh on holiday-quarter margins, while Palantir declined 1.60% amid slower growth in US commercial contract value. Investors were also watching the US mid-term elections, with Democrats favoured to regain the House of Representatives, although control of the Senate remained uncertain.

The US 10-year Treasury yield rose to 4.96%, following stronger-than-expected labour-market data from the JOLTS report. The figures pointed to continued resilience in employment, potentially giving the Federal Reserve greater scope to raise interest rates if inflation remains a concern. Bond markets were also sensitive to the possible election outcome. A divided Congress could constrain further fiscal expansion, although it would not resolve the underlying budget deficit. Separately, the US Treasury reduced its fourth-quarter borrowing estimate by US$10 billion to US$618 billion, reflecting a higher-than-expected opening cash balance.

Crude oil recovered slightly to near US$97 a barrel after falling by more than 7% in the previous session. Developments in the US-Iran conflict remained in focus, with Qatar continuing its efforts to bring the two sides closer to an agreement. Reports of limited US defensive strikes against Iranian missile sites, alongside renewed threats of possible military action, added to uncertainty over the diplomatic process. The decline in oil prices also followed President Donald Trump’s announcement that a US$4 billion aid programme for Israel would end by year-end.

European equities ended lower, with the Euro Stoxx 50 and Euro Stoxx 600 each losing around 0.50%. Basic resources and retail shares led the declines, while oil and gas stocks also weakened. The UK and Spain underperformed, with the FTSE 100 falling 1% to a three-week low as mining and energy shares came under pressure. Germany’s DAX and France’s CAC 40 recorded smaller declines. Bayer advanced after raising its 2026 profit outlook, while Philips gained following better-than-expected earnings. Investors remained cautious ahead of the US election results.

Asian markets were mixed. The Shanghai Composite fell 0.82%, as renewed measures to support China’s equity market failed to restore investor confidence. Technology shares were among the weaker performers. Hong Kong’s Hang Seng Index, by contrast, rose 0.60%, supported by technology services, retail and consumer-related stocks. Japan’s Nikkei 225 did not trade on Tuesday because the Tokyo Stock Exchange was closed for Culture Day (Bunka no Hi), a national public holiday.

South African equities also ended lower. The JSE All Share Index declined 0.23% to 109 275.30, while the Top 40 fell 0.24%. Resources lost 0.56%, Metals and Mining declined 0.26% and financials slipped 0.04%. The rand weakened against the major currencies, with the US dollar gaining 0.13% to R16.63, the pound rising 0.17% to R22.31, and the euro advancing 0.12% to R18.61.

At 22h44 SAST, Brent crude fell 0.45% to US$104.30 a barrel. At 21h58 SAST, gold declined 0.71% to US$3 919.51 an ounce, silver lost 2.40% to US$49.41 and platinum fell 2.57% to US$1 416.85.