US inflation fuels rate-hike concerns as global equity markets diverge

US equity markets came under pressure on Wednesday as investors assessed hotter-than-expected September 2026 inflation data and continued volatility in the artificial intelligence (AI) infrastructure sector. The S&P 500 fell 1.10%, the Nasdaq Composite declined 2% and the Dow Jones Industrial Average moved 49 points lower.

Technology stocks led the broader decline, with semiconductor shares extending this week’s losses amid concerns about the ability of equipment manufacturers to meet demand and growing competition from China. ASML said it could not meet the current demand for semiconductor fabrication equipment, while Chinese competitors released new products with similar capabilities as those of US and South Korean firms. Nvidia shed 3.20%, Broadcom declined by 3.10%, Micron fell 4.10% and Advanced Micro Devices lost 5.70%.

Beyond the technology sector, inflation data added to concerns about the interest-rate outlook. The US consumer price index (CPI) rose by 0.60% month on month in September 2026, taking annual inflation to 3.70%. The figures heightened concerns that persistent price pressures could prompt the Federal Reserve (Fed) to consider further monetary tightening. According to a CNBC report, the 10-year Treasury yield rose by more than 6 basis points (bps) to 5.28%, while the 30-year yield gained more than 2bps to 5.59%.

Bank shares also came under pressure as investors digested quarterly results. Bank of America fell 4.80% after both equity and fixed-income trading revenues missed estimates. Morgan Stanley closed 2.70% lower despite beating forecasts for equity-trading revenue, while BlackRock added 0.70% after stronger asset-management inflows boosted fee revenue. 

In contrast, European equities closed higher, supported by positive corporate earnings and robust results from major tech companies. The Euro STOXX 50 and STOXX Europe 600 each gained 0.50%, reaching 6 195 and 638 points, respectively. ASML advanced 1.20% after exceeding earnings and revenue expectations and issuing a positive fourth-quarter sales outlook. However, technology-sector sentiment remained fragile amid higher interest rates and competition from China. Infineon fell 1.20%, while Siemens Energy lost 5.50%. 

Asian markets remained sensitive to developments in the global technology sector, particularly concerns about competition in semiconductor manufacturing and the sustainability of AI-related investment. Investors continued to assess the potential implications for chipmakers and the wider technology supply chain. Japan’s Nikkei declined 0.05% to 67 744.29, while the Shanghai Composite slipped 0.88% and Hong Kong’s Hang Seng edged down 0.13%. 

The South African markets ended lower on Wednesday, with the All Share Index declining 0.82% to 108 515.44. The Top 40 fell 0.85% to 100 698.08, while the Resource 10 dropped 2.29% to 116 473.74. The Industrial 25 declined 0.08% to 119 106.36, and the Financial 15 lost 0.22% to 24 842.00. The JSE Metals and Mining index was among the weakest performers, falling 2.75% to 119 706.54. The rand weakened 0.72% against the US dollar to R16.61, 0.19% against the British pound to R21.90 and 0.27% against the euro to R18.52. 

Commodity prices were broadly weaker. However, at 21h05 SAST, Brent crude rose by 0.32% to trade at $106.03 per barrel. Precious metals declined as stronger-than-expected US inflation data lifted the US dollar and reinforced expectations of further Fed interest rate hikes. Gold fell by 1.28% to $4 103.29 an ounce, while silver dropped by more than 6% and platinum declined by over 3%.