Global equities retreat as AI concerns and inflation risks weigh on markets

US equities were mixed, with a downward bias. The S&P 500 ended near the flatline, while the Nasdaq declined 0.30% and the Dow Jones Industrial Average lost around 180 points. Semiconductor stocks weighed on the market amid concerns about competition and artificial intelligence (AI)-related investment, while mixed bank earnings and weaker healthcare stocks added to uncertainty.

According to Reuters, semiconductor heavyweights extended their recent losses after Chinese memory chipmaker ChangXin Memory Technologies (CXMT) advanced a new memory architecture that could challenge leading US and South Korean producers. Broadcom chief executive Hock Tan also warned that excessive spending by AI laboratories could deliver poor returns, reinforcing concerns about the sustainability of AI-related investment. Micron Technology fell 4.60%, SanDisk lost 1.70%, Lam Research declined 3.20% and Applied Materials dropped 7.20%.

Healthcare stocks also came under pressure, with Johnson & Johnson falling 5.60% on weaker sales. UnitedHealth edged 0.30% lower despite upgrading its profit outlook. Financial stocks were mixed. Citigroup fell 5.30% despite strong revenue, while Wells Fargo slipped 2.60% following its earnings report. Goldman Sachs shed 0.10% despite stronger equity-trading revenue, and JPMorgan edged 0.30% lower as weaker fixed-income trading and higher costs offset an increase in its net interest income forecast.

Apple rose 0.60% after reaching an intraday record high of $348.15, bringing its market capitalisation close to $5 trillion. More broadly, expectations of a strong third-quarter earnings season have helped support equities despite concerns about the US conflict with Iran, rising bond yields and inflation risks linked to higher oil prices. LSEG data show analysts expect S&P 500 earnings to grow by more than 30%, driven largely by AI-related technology companies.

European equities finished Tuesday’s session lower, as weakness in AI-related infrastructure and industrial heavyweights weighed on sentiment. The Euro Stoxx 50 lost 0.60% to 6 170, while the broader Stoxx Europe 600 slipped 0.20% to 635. ASML was the largest laggard, dropping 4.20% ahead of its results later this week. The decline followed a broad sell-off in semiconductor shares after China’s CXMT announced a memory-technology breakthrough that it said could challenge leading South Korean and US producers.

Luxury stocks also came under pressure. LVMH Moët Hennessy Louis Vuitton SE ended marginally lower after reporting a 5% year-on-year decline in third-quarter fashion and leather goods revenue, reflecting softer demand in China. The update led several analysts and brokers to cut their recommendations on Hermès, whose shares fell 2%. Banks provided some support, however, with UniCredit and Nordea both gaining close to 1%.

In London, the FTSE 100 closed 0.06% lower after two consecutive sessions of advances. Concerns over the durability of the AI-driven rally intensified following the US market open, with chipmakers’ weakness offsetting solid results from several large US banks. London’s relatively modest technology weighting helped the index hold up better than many of its European counterparts.

Asian equities closed mostly lower, as technology and semiconductor stocks came under heavy selling pressure following an overnight decline in US tech shares and heightened tensions in the Middle East. Samsung Electronics fell 6.80% and SK Hynix lost 9.10%, reflecting mounting concerns about competition and investment in the AI sector. The Shanghai Composite closed 0.07% lower, while Japan’s Nikkei 225 declined 1.82%, extending its losing streak to four sessions, with Kioxia Holdings down 13.30%, TDK losing 4.10% and Advantest falling 2.90%. Hong Kong and mainland Chinese markets also declined as concerns about AI spending and advances by Chinese memory chipmaker CXMT added to pressure on technology shares. The Hang-Seng rose modestly by 0.19%.

South African equities gained momentum at close of the session, supported by a stronger rand and higher commodity prices. The rand firmed by around 0.35% to R16.50 against the US dollar, while firmer commodity prices supported resource and mining shares despite weaker domestic manufacturing data. The JSE All Share Index rose 0.60% to 109 408.15, while the Top 40 gained 0.59% to 101 562.36. The Financial 15 advanced 1.24% to 24 896.80, the Industrial 25 gained 0.49% to 119 200.01 and the Resource 10 rose 0.23% to 119 202.04.

Brent crude oil traded between an intraday high of $106.27 and a low of $104.36 before settling near $105.87 a barrel. Prices eased as the US administration temporarily lifted certain fuel sanctions following Russia’s agreement to supply diesel to global markets, offering some relief on the supply front. However, risks to energy infrastructure and shipping routes in the Persian Gulf and wider Middle East continued to support prices. Meanwhile, US West Texas Intermediate (WTI) futures edged higher later in the session, widening the spread between the two benchmarks to more than $11 a barrel. Precious metals weakened, with gold down 0.17% to $4 164 an ounce and silver falling 1.67% at 21h09 SAST.