Global markets mixed as rate expectations drive sentiment

US equities traded lower on Friday as stronger-than-expected employment data raised concerns that interest rates could remain elevated for longer or even prompt another hike at the Federal Reserve’s (Fed) September 2026 meeting. The Dow Jones Industrial Average fell 272 points and the S&P 500 declined by 0.40%, while the Nasdaq Composite rose by 0.20%. The August employment report showed the US economy added 162 000 jobs, more than double consensus expectations and the strongest monthly gain since March, while the unemployment rate held steady at 4.10%.

Equity investors rotated into more defensive areas, while rate-sensitive and discretionary names came under pressure. Lululemon fell heavily after cutting guidance, adding to weakness in consumer discretionary, while artificial intelligence (AI)- and memory-related stocks such as SanDisk and Micron showed relative resilience. Overall, the session reflected a renewed tension between a resilient US labour market and the prospect of tighter financial conditions for longer.

European equities ended modestly higher as investors continued to weigh the outlook for economic growth against a backdrop of elevated interest rates. The Euro STOXX 50 rose 0.20% to 6 396, while the STOXX 600 gained 0.20% to 650. The UK’s FTSE 100 was flat, Germany’s DAX climbed 0.12%, and France’s CAC 40 slipped 0.09%.

Technology stocks provided support, with ASML climbing more than 3% after a volatile week as optimism around AI infrastructure continued to filter through from the US. Nokia advanced 3.10%, while Nvidia gained 2.60%. Volkswagen was among the strongest performers, rising 6.60% after announcing further job cuts as it looks to reduce costs amid weaker demand in Germany.

Banks were mixed as global bond markets remained volatile; expectations of a US rate hike strengthened following the stronger-than-expected jobs report, although longer-dated eurozone government bond yields moved lower. BNP Paribas and ING finished higher, while UniCredit and Santander declined. Despite Friday’s gains, European equities ended the week lower, with the Euro STOXX 50 down 1.40% and the STOXX Europe 600 losing 0.80%.

Asian equities ended mostly higher, taking cues from Wall Street’s technology-led gains and slightly eased concerns around US interest rates. The improved sentiment helped several regional markets recover from recent losses, although mainland Chinese shares moved against the broader trend. Japan’s Nikkei 225 rose 1.26% to 65 020.94, ending a five-session losing streak, with semiconductor and technology stocks among the main contributors as investors returned to growth-focused shares. In Hong Kong, the Hang Seng Index climbed 1.79%, recovering strongly after four consecutive sessions of losses, supported by technology, automotive and property stocks. Mainland China was the exception, with the Shanghai Composite slipping 0.30% to 3 930.12 as investor sentiment remained more cautious. The session reflected a modest improvement in risk appetite across the region, with technology stocks once again providing much of the momentum.

South African equities were mixed on Friday, with the FTSE/JSE All Share Index gaining 0.03% to close at 116 725.80, up 37.98 points on the day, as local investors remained relatively resilient despite ongoing global economic uncertainty and elevated oil prices. Financials gained 0.69%, providing some support, while the energy sector also performed well, with the FTSE/JSE Energy Index gaining 555.93 points. The Top 40, Resources, Industrials, and Metals and Mining indices all lagged. Even so, the JSE managed to close the week on a positive footing, despite continued pressure from higher oil prices and a challenging global backdrop. At around 20h05, the rand strengthened against the dollar to R15.96, traded at R21.57 against the British pound and rose 0.32% against the euro to end at R18.54.

Commodities ended the week in the red, with silver leading losses by dropping 1.71%, while gold fell 1.32% to close at $4 413.95 per ounce. In contrast, Brent crude edged up 0.22% to $95.73 per barrel.