Markets diverge as S&P reaches record high, while chip rally lifts Asia

Market Commentary

US equities ended mixed on Wednesday, though the S&P 500 carved out a fresh all-time high, extending the week's rally on hopes for an imminent US-Iran peace deal. The broad index rose 0.50%, with the Nasdaq Composite climbing 1.40% to January peaks, while the Dow Jones Industrial Average dipped 0.35%. Tech led gains – Broadcom +2.50%, Meta +0.80% after agreeing to deploy 1GW of custom AI chips via Broadcom tech – alongside Microsoft (+2.10%), Nvidia (+0.60%), Apple (+0.40%), and Tesla (+0.80%). Banks rose too: Bank of America +2.50% on stronger 1Q26 profits, Morgan Stanley +5% on record revenue, PNC +1% despite revenue shortfalls. Focus remains on Middle East developments, potential second-round US-Iran talks, Strait of Hormuz constraints, and looming earnings.

Asian markets closed higher as well, supported by robust chip demand and falling oil prices amid optimism for US-Iran peace talks that eased supply concerns. Semiconductor strength underpinned the advance, with Japan's Nikkei climbing 0.44%, Shanghai Composite slightly up 0.01%, and Hang Seng advancing 0.37%. Standouts included Samsung SDS, which soared 20.8% after KKR agreed to purchase $820 million in convertible bonds and serve as long-term strategic adviser.

Europe's major indices edged lower on Wednesday amid caution over Middle East tensions and mixed corporate updates. The Stoxx 50 dipped 0.70%, dragged by ASML Holding, which tumbled over 4% despite lifting its full-year sales forecast. The broader Stoxx 600 slipped 0.40%, with luxury stocks under pressure. Hermès plunged 8% as regional conflict curbed sales growth, while Kering shed 9% on weak Gucci performance. Investors stayed sidelined ahead of potential ceasefire extensions and peace talk progress.

Meanwhile, Germany's DAX 40 edged up marginally to 24 082.33, building on the prior day's rebound. London's FTSE 100 declined 0.28% as heavyweights weighed on sentiment. Rolls-Royce and GSK dropped more than 2%, Rio Tinto fell 0.80%, and Shell with BAT eased around 0.70%. AstraZeneca and BP slipped about 0.50%, while Burberry lost nearly 2% alongside luxury peers. Gainers included Barratt Redrow, up 3.80% after noting limited short-term conflict impact but flagging longer-term risks from rates and energy costs, alongside robust demand.

On the home front, the South African rand earlier hovered around a one-month high of 16.40 to the dollar before easing 0.31%. Escalating global strife and soaring fuel prices are clouding South Africa's inflation outlook, raising the risk of broader price pressures that could influence rate decisions. The JSE All Share Index and Top 40 closed 0.37% lower, with Resources down 1.27% and Metals & Mining plunging 1.73%.

Commodities were mixed. WTI crude futures oscillated around $92 per barrel on Wednesday, with volatility set to persist as traders parse Middle East developments for signs of de-escalation and resumed Strait of Hormuz traffic. The US military confirmed a complete halt to commercial flows to/from Iranian ports, though shipping data showed several Iran-linked vessels still transiting the strait. Brent crude edged up 0.49% to $95.25 per barrel, while gold and silver drifted 0.95% and 0.37% lower, respectively.