Markets steady as oil eases yield pressure, with US–China talks in focus

US equities recovered strongly on Thursday, reversing the losses recorded over the previous two sessions as a pullback in oil prices helped relieve pressure on Treasury yields. The S&P 500 gained 1.10%, the Dow Jones Industrial Average rose 316 points and the Nasdaq advanced 1.70%. Oil and fuel prices also retreated from their recent highs after Saudi Arabia indicated progress in restoring capacity through its East-West pipeline, helping to moderate the recent rise in wholesale energy costs.

Technology stocks were among the strongest performers, with Alphabet rising 1.30%, Microsoft 1.50%, Meta 1.30%, Amazon 2.10% and Oracle 5.10%. Semiconductor stocks extended their recovery, with Nvidia gaining 2.50%, Micron 5.50%, Advanced Micro Devices 6.40% and Intel 7.70%, following earlier concerns about artificial intelligence safety and the potential implications for capital spending. Financial stocks were more subdued.

The rebound followed Wednesday's 25-basis-point interest rate increase by the Federal Reserve (Fed), with projections from Federal Open Market Committee members indicating that another increase is expected this year. While lower oil prices and Treasury yields provided some relief for equities, markets continued to adjust to the prospect of further monetary policy tightening.

European shares rose as lower oil prices and a pause in the global bond sell-off improved investor sentiment after the Fed interest rate hike. The pan-European STOXX 600 and the Euro STOXX 50 both gained 0.90%, with most regional markets ending higher.

In the UK, the Bank of England remained in focus after holding interest rates steady while warning that rising energy costs could add to inflationary pressures. The blue-chip FTSE 100 advanced 1.20%, recording its strongest daily gain in more than two months, while Germany’s DAX rose by 0.77% and France’s CAC 40 gained around 0.57%. Travel and technology stocks led the broader gains, each rising by about 0.80%, while energy shares edged lower as crude oil prices continued to retreat.

Asian markets were mixed, with Japan’s Nikkei rising 0.33%, supported by a weaker yen and gains in export-focused shares. In contrast, Hong Kong’s Hang Seng Index fell 0.52%, while the Shanghai Composite declined 0.40%. The weaker performance in China and Hong Kong reflected continued concerns about China’s growth outlook, as well as the potential impact of higher global borrowing costs on export demand and investment.

Investors adopted a more cautious stance ahead of a fresh round of high-level US–China discussions. US Treasury Secretary Scott Bessent is due to meet Chinese Vice Premier He Lifeng this coming weekend for final preparations ahead of the 24 September meeting between Presidents Donald Trump and Xi Jinping in the US. While the talks could help ease tensions between the world’s two largest economies, uncertainty remains around tariffs, sanctions and wider geopolitical risks, including developments involving Taiwan and the Middle East.

South African equity markets recovered modestly, with the JSE All Share Index rising 0.53% as investors turned their attention to the upcoming South African Reserve Bank interest rate decision following recent pressure from global monetary policy developments. The Top 40 added 0.54%, led by gains in Metals and Mining, which rose 1.89%, followed by Resources 10 at 1.62%. The rand also strengthened against major currencies, trading at R16.27 to the US dollar, R21.73 to the British pound and R18.67 to the euro.

Precious metals bucked the trend with gold surging over 2% to close at $4 351.14 per ounce, while silver led gains climbing 3.81% higher. Brent crude oil, however, declined by 1.17% trading at $104.59 per barrel.