US inflation pressures keep markets cautious as AI rally persists

Market Commentary

US equities were mixed on Wednesday, with technology shares outperforming broader market weakness as persistent inflation concerns competed with continued momentum in artificial intelligence (AI)-linked stocks. The S&P 500 and Nasdaq edged higher, while the Dow Jones fell 200 points as stronger producer inflation reinforced expectations that the Federal Reserve (Fed) will keep interest rates elevated for longer.

US producer prices rose 1.40% month-on-month in April, marking the sharpest increase since 2022. The data followed stronger-than-expected consumer inflation figures earlier in the week and reflected the broader economic impact of ongoing disruptions linked to the conflict in the Middle East and continued tanker blockades in the Persian Gulf.

Technology shares remained supported by AI-related optimism. Nvidia rose 2.50%, while hyperscalers gained in premarket trading after SoftBank reported strong gains tied to its private OpenAI stake. The yield on the US 10-year Treasury note climbed to 4.48%, its highest since July 2025.

European equities rebounded after four consecutive sessions of losses, supported by gains in technology stocks and steadier banking shares. The Eurozone STOXX 50 rose 1% to 5 870, while the STOXX 600 gained 0.70% to 611.

The FTSE 100 climbed 0.60%, led by banks and mining stocks. HSBC, Lloyds, Barclays, NatWest and Standard Chartered rose between 0.80% and 2.30%, while Rio Tinto, Anglo American and Glencore gained as copper extended its rally to an eighth consecutive session. Vistry Group fell around 9% after warning on profits.

Asian markets also advanced, with the Shanghai Composite rising 0.67% to 4 243 and the Shenzhen Component adding 1.67% to 16 090 ahead of the Trump–Xi summit. Technology stocks led gains, while the Nikkei 225 rose 0.84% to 63 272 as strong corporate earnings and AI demand supported sentiment.

In South Africa, the FTSE/JSE All Share Index, Top 40, Resource 10, and Industrial 25 all saw an increase, rising between 0.53% and 1.33%. The rand strengthened 0.79% against the US dollar to around R16.39/$, while also gaining 0.87% against the British pound to R22.17/£ and 0.96% against the euro to R19.20/€.

Commodity markets were mixed. Brent crude held near $106 per barrel after sharp recent gains linked to Middle East tensions and falling global inventories. Gold slipped to $4 680 per ounce, silver climbed toward two-month highs near $88 per ounce, and platinum traded above $2 100 per ounce near three-week highs.