US inflation weighs on global equities as technology shares slide

US equity markets came under pressure on Wednesday as investors assessed September’s inflation data, rising oil prices and further corporate earnings reports. At 21h21 SAST, ShareNet indicated that the S&P 500 fell 1.10%, while the Nasdaq Composite declined 1.78%. The Dow Jones Industrial Average proved slightly more resilient, slipping 0.26% to close at 51 536.79.  

Technology stocks led the broader decline, with the information technology sector losing 2.64%, weighed down by semiconductor and artificial intelligence (AI)-related shares. Communication services also weakened, falling 1.77%, as investors reassessed the outlook for growth stocks amid renewed concerns about interest rates, which added to the pressure, with the US consumer price index (CPI) rising by 0.60% month on month in September, taking annual inflation to 3.70%. The figures heightened concerns that persistent price pressures could prompt the Federal Reserve to consider further monetary tightening, pushing Treasury yields higher and increasing the likelihood of an interest rate hike. According to a CNBC report, the 10-year Treasury yield rose by more than six basis points to 5.28%, while the 30-year yield gained more than two basis points to 5.59%. 

Bank shares also came under pressure as investors digested quarterly results and regulatory developments. Bank of America fell sharply following reports of weaker profits and a regulatory fine exceeding US$1.2 billion over shortcomings in its anti-money-laundering safeguards, while Morgan Stanley declined by 3.80%. Results from JPMorgan Chase, Goldman Sachs and Citigroup also drew attention to the outlook for trading and dealmaking. 

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 rate 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 R21.44 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 per barrel. Precious metals declined as stronger-than-expected US inflation data lifted the US dollar and reinforced expectations of further Federal Reserve 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%.