US tech sell-off outweighs earnings as rate concerns persist

Market Commentary

US equities ended lower on Thursday as renewed weakness in semiconductor shares and rising geopolitical tensions overshadowed solid corporate earnings. The S&P 500 declined 0.50%, the Nasdaq 100 fell 1.50%, and the Dow Jones Industrial Average eased 0.20%. Investors continued to question whether elevated valuations among artificial intelligence (AI)-related chipmakers remain justified.

Micron Technology and AMD dropped more than 5% each, while SanDisk fell over 12%, Broadcom lost about 5%, and US-listed shares of SK Hynix plunged more than 13%. The weakness spread across Big Tech, with Alphabet declining more than 4% following reports that it had delayed the release of its Gemini 3.5 Pro AI model. Meta Platforms, Nvidia and Amazon also closed lower. Meanwhile, UnitedHealth exceeded earnings expectations and raised its 2026 earnings outlook, while Netflix reported quarterly revenue of $12.56 billion, up 13% year-on-year.

The 10-year US Treasury yield rose towards 4.60% as resilient retail sales, lower jobless claims and higher oil prices reinforced expectations that the Federal Reserve may need to maintain a restrictive monetary policy, with markets continuing to price in the possibility of another rate hike later this year. The US dollar strengthened against most major currencies as investors assessed resilient US economic data while continuing to monitor escalating tensions between the US and Iran.

European markets finished broadly flat as concerns over energy-driven inflation offset positive corporate developments. The STOXX Europe 600 and Euro STOXX 50 ended little changed. Luxury stocks remained supported after Richemont's earnings data release, with LVMH and Hermès each gaining 1.50%, while Publicis advanced 3% after raising its full-year guidance. Higher gas prices weighed on utilities and companies linked to AI infrastructure, while London's FTSE 100 gained 0.50%, supported by strong performances from industrial companies including Rotork and Diploma despite weaker UK economic growth data.

Asian markets came under pressure as technology shares extended recent losses. China's Shanghai Composite fell 1.85% and the Shenzhen Component lost 1.97% after weaker economic growth data and continued concerns over technology valuations. Japan's Nikkei 225 dropped 2.79%, led lower by semiconductor and technology stocks as investors weighed rising oil prices, persistent geopolitical tensions and the outlook for global interest rates.

South African equities ended marginally higher on Thursday, with the JSE All Share Index rising 0.04%. The JSE Top 40 closed broadly flat, slipping 0.02%, as gains in financial and industrial shares were largely offset by continued weakness in resource stocks. The Financial 15 Index advanced 0.84%, while the Industrial 25 Index added 0.16%. Resource shares remained under pressure, with the Resource 10 Index declining 1.04% and the Metals and Mining Index falling 1.15%. The rand weakened against the US dollar and the euro during the session but held steady against the British pound. By 21h20 SAST, it traded at R16.41 against the US dollar, R22.10 against the British pound and R18.76 against the euro.

Commodity markets were softer. Brent crude oil eased to $84.10 per barrel, while precious metals also retreated. Gold declined to $3 982.25 per ounce, silver fell to $55.64 per ounce, and platinum edged lower to $1 633.35 per ounce.