Markets fall as US inflation beats forecasts

Market Commentary

US equities fell from record highs on Tuesday after April inflation data reinforced expectations that the Federal Reserve (Fed) will keep interest rates elevated for longer. The S&P 500 and Dow Jones each declined around 1%, while the Nasdaq dropped 2% as hotter-than-expected inflation and rising energy costs weighed on sentiment.

US annual inflation accelerated to 3.80% in April 2026, up from 3.30% in March and above forecasts of 3.70%, marking the highest level since May 2023. The increase was driven by energy prices, which surged 17.90%, with gasoline rising 28.40% and fuel oil jumping 54.30%. Core inflation rose to 2.80%, its highest since September and above expectations of 2.70%, while monthly core prices increased 0.40%.

Technology stocks were broadly weaker, with Nvidia, Tesla, Amazon and Alphabet all down more than 1%, while Broadcom and AMD fell around 2%. Hims & Hers dropped 15% after missing earnings expectations. The US 10-year Treasury yield remained above 4.40%, reflecting persistent inflation pressures and geopolitical risk, with markets expecting the Fed to hold rates steady through the year.

European equities closed sharply lower as energy-driven inflation concerns intensified. The Eurozone STOXX 50 fell 1.40% to 5 815 and the STOXX 600 dropped 1.10% to 606. Banks and insurers led losses, with Santander, BNP Paribas and ING down around 2.30%, while Munich Re fell 6.30% after earnings. Siemens Energy declined 5.70%, while Prosus and ASML dropped 5.80% and 3.10%, respectively. The FTSE 100 slipped 0.20%, with banks falling between 1% and 4% and Vodafone dropping over 7%, though Shell and BP rose on elevated oil prices.

Asian markets ended mixed, with the Hang Seng Index down 0.20% to 26 347 as Tencent, Pop Mart and Xiaomi declined. Japan’s leading economic index rose to 114.5 points in March 2026, its highest since April 2022, though unemployment increased to 2.70% and consumer confidence weakened.

South Africa’s unemployment rate rose to 32.70% in 1Q26, with employment falling by 345 000 and broader labour underutilisation rising to 46.30%.

Commodities were mixed. Brent crude rose above $107 per barrel on Middle East supply fears, while gold fell below $4 690 per ounce amid US dollar strength. Silver declined more than 2%, whereas platinum rose above $2 100 per ounce due to structural supply constraints.