Strong US jobs data weigh on global equities

Market Commentary

US equities closed lower on Friday as stronger-than-expected labour market data reinforced expectations of higher interest rates and extended weakness in technology shares. The S&P 500 fell 1.40%, while the Nasdaq 100 declined 2.80% and the Dow Jones Industrial Average lost around 300 points. The US economy added 172 000 jobs in May 2026, significantly above expectations, while the unemployment rate remained unchanged at 4.30%.

The stronger labour market backdrop increased expectations that the Federal Reserve (Fed) may raise interest rates later this year. Technology and artificial intelligence (AI)-related shares remained under pressure, with Broadcom falling 4%, extending losses from the previous session, while Micron declined 4% and Nvidia lost 2%. In contrast, defensive stocks provided some support, with Visa, Procter & Gamble and UnitedHealth all gaining more than 1%.

The yield on the US 10-year Treasury note rose to 4.54%, while the two-year Treasury yield climbed to 4.16% as markets moved to fully price in a quarter-point Fed rate hike by year-end. The US dollar index strengthened to around 99.5, supported by the resilient labour market data and continued demand for safe-haven assets amid ongoing uncertainty surrounding US-Iran negotiations.

European equities also moved lower. The Euro STOXX 50 fell 0.40% and the STOXX Europe 600 ended marginally below the flatline as investors assessed the implications of higher interest rate expectations and continued geopolitical uncertainty. Technology-related shares led losses, with Infineon, Adyen and Nokia all falling more than 7%. The euro weakened to below $1.16, reaching its lowest level since early April as stronger US data supported the dollar.

The FTSE 100 edged higher, outperforming broader European markets. Defensive shares led gains, with AstraZeneca, GSK, Unilever, and British American Tobacco rising between 2% and 2.50%. Mining shares came under pressure, however, with Anglo American, Antofagasta, and Fresnillo all falling more than 5%. The Sterling weakened to below $1.34 as investors rotated into the US dollar following the payrolls report.

Asian markets were weaker. Chinese equities fell to multi-week lows as technology shares declined following Broadcom’s subdued AI outlook, while Japan’s Nikkei 225 lost 1.31% as investors continued to reduce exposure to technology stocks despite improving domestic economic indicators.

Locally, the FTSE/JSE All Share Index fell 1.05%, led by sharp losses in resource shares. The Resource 10 Index dropped 4.35% and the Metals & Mining Index slumped by 5.34%. The rand weakened significantly, trading at R16.60 against the US dollar.

Commodity markets were also weaker. Brent crude fell below $94 a barrel as investors monitored developments in US-Iran negotiations. Gold dropped below $4 370 per ounce, while silver fell below $70 and platinum declined to around $1 800 per ounce.