Tech up as AI confidence returns

Market Commentary

Technology stocks led US markets higher as investors rekindled interest in the artificial intelligence (AI) theme despite recent volatility. The Nasdaq Composite gained just over 1%, suggesting market participants are prepared to back AI-linked names after earlier concerns about stretched valuations. The S&P 500 rose 0.7%, while the Dow closed at a record high of 53 056.

Attention now shifts to a busy few days for the semiconductor sector. Samsung will publish its second-quarter trading update, providing fresh insight into demand for AI-related chips. Later in the week SK Hynix is expected to proceed with its planned US listing, a transaction valued at roughly $29 billion and one of the largest equity offerings on record. SpaceX’s inclusion in the Nasdaq 100 is also due, a move likely to prompt significant trading as index‑tracking funds rebalance.

Investors will also watch the release of the Federal Reserve’s (Fed) latest meeting minutes on Wednesday. The record of the first policy meeting chaired by Kevin Warsh will be scrutinised for further signals on the outlook for US interest rates.

European equities ended lower on Monday, under pressure from consumer staples and pharmaceutical names. The Euro STOXX 50 slipped 0.20% to 6 398, while the STOXX Europe 600 fell 0.40% to 650. At 17h41 SAST, UK’s FTSE 100 was down 0.26% and Germany’s DAX was up 0.21%.

Consumer‑focused stocks were among the weakest performers: Anheuser‑Busch InBev fell 4%, L’Oréal lost more than 1%, and Inditex dropped over 2%. Luxury groups also came under pressure, with LVMH and Hermès each easing about 1%. By contrast, banking stocks outperformed: Deutsche Bank, ING and Intesa Sanpaolo each gained more than 1%, while defence names such as Rheinmetall advanced 3.50% amid renewed buying interest. Eurozone sovereign bond yields continued to climb in a yield‑curve steepening move as investors maintained expectations of a hawkish European Central Bank, despite recent signs that inflation may have peaked.

Asian markets were mixed. Japanese equities showed a varied performance as lower oil prices and supportive global sentiment helped sustain confidence, though weakness in technology and semiconductor shares weighed on the Nikkei 225. The Shanghai Composite slipped, while the Hang Seng rose nearly 1%.

The yen resumed its depreciation against the US dollar, keeping markets alert to the possibility of intervention by Japanese authorities. Even though OPEC+’s decision to raise production has helped push crude prices lower, easing concerns over energy costs and supporting sentiment, and movements in AI‑ and semiconductor‑related stocks continued to exert a strong influence on the direction of the Nikkei.

South Africa’s 10‑year government bond yield remained close to 8.34%, near its lowest level since April 2026, as improving global risk appetite supported demand for higher‑yielding emerging‑market assets. Easing tensions in the Middle East, together with fading expectations of further Fed rate rises, helped bolster appetite for South African bonds.

Lower global oil prices, the reopening of the Strait of Hormuz and an easing of geopolitical risks have also improved the domestic inflation outlook. Locally, fuel prices were reduced on 1 July 2026, and markets expect a further cut next month, a development that could help contain inflation and support the South African Reserve Bank’s case to leave rates unchanged at its upcoming meeting. The Johannesburg Stock Exchange closed mostly lower, with the All Share Index and Top 40 each down 0.31%. Resources fell close to 2% and Metals and Mining were over 2% lower, while Financials finished almost 1% higher.

At 19h19 SAST, Brent crude was down 0.51% at $71.75 per barrel, near its lowest levels since late February 2026 as maritime flows through the Strait of Hormuz steadily recovered. Precious metals weakened as well, with gold trading at $4 157.78 an ounce and silver down 0.75%.