US equities recover as AI concerns weigh on global markets

US equities rebounded on Tuesday, with the Dow Jones Industrial Average rising 1.20%, while the S&P 500 and Nasdaq gained 0.50% each. Banks, asset managers and healthcare shares led the recovery following the previous session’s losses, with Eli Lilly, Merck and Johnson & Johnson each advancing by more than 4%. However, concerns about the cost of financing artificial intelligence (AI) infrastructure persisted after South Korean AI developer Elice fell 32% following its initial public offering.

The US dollar index weakened to 101.5, its lowest level in about three weeks, while the US 10-year Treasury yield fell nearly 5 basis points to 5.09%. Weaker housing data, including a 5.20% decline in September 2026 housing starts and pending home sales at a record low, added to pressure on yields. Markets widely expect the Federal Reserve to leave rates unchanged next week, although a 25-basis-point increase is anticipated in December.

European equities closed lower as technology and industrial shares offset gains elsewhere. The Euro Stoxx 50 declined 0.40% to 6 124, while the Stoxx Europe 600 eased 0.10% to 639. ASML fell 2.20%, while Siemens Energy and Schneider Electric were also among the weaker performers amid continued concerns about the financing requirements of AI infrastructure. Pharmaceutical shares provided some support, with Sanofi gaining 3% and Argenx rising 6%. Germany’s DAX slipped marginally to 25 304, while France’s CAC 40 lost 0.40% to 7 838. In the UK, the FTSE 100 closed slightly lower as weakness in banking, mining and energy shares outweighed gains in healthcare stocks. UK payroll employment increased by 13 000 in September 2026, while the unemployment rate eased to 4.70% in the three months to August.

Asian markets were mixed. China’s Shanghai Composite gained 0.12%, with 3Q26 economic growth of 4.50% supporting the case for the People’s Bank of China to leave its benchmark lending rates unchanged. Hong Kong’s Hang Seng Index fell 1.30% as technology and retail shares weakened, with trading resuming after Monday’s public holiday. Japan’s Nikkei 225 declined 1.30% to 64 075, reaching a one-month low as technology shares remained under pressure from concerns over AI spending and higher borrowing costs.

South African equities recovered on Tuesday. The JSE All Share Index rose 1.29% to 110 399.23, while the Top 40 gained 1.27%. Financial shares led the major sectors, with the Financial 15 index advancing 1.94%; industrials rose 1.50% and resources gained 0.43%. The rand strengthened 0.17% against the US dollar to R16.40, but weakened 0.36% against the pound to R21.94 and was marginally weaker against the euro at R18.42.

Attention now turns to Wednesday’s domestic economic releases. Finance Minister Enoch Godongwana is due to present the medium-term budget policy statement, while Statistics South Africa will release September 2026 inflation and retail sales data. Economists expect annual inflation to rise to 4.70% from 4.40% in August, while retail sales growth is forecast to slow to 3% in August from 3.40% in July.

At 21h17 SAST, Brent crude traded at US$109.21 a barrel, down 0.31%. Gold fell 0.46% to US$4 120.65 an ounce, while silver rose 1.18% to US$57.76 and platinum gained 0.52% to US$1 656.75.