Global markets mixed as rising yields weigh on equities

US equities ended a volatile week on a mixed note, with major indices slipping on Friday as a sharp rise in bond yields weighed on sentiment. A strong technology rally earlier in the week, however, helped cushion the losses. The Dow Jones Industrial Average fell about 0.40% on Friday, leaving it down roughly 1.50% for the week and on course for a third consecutive weekly decline. The S&P 500 slipped 0.20% on the day and was heading for a weekly loss of around 0.30%, while the Nasdaq Composite edged 0.10% lower but remained on track for a modest weekly gain, supported by earlier strength in technology and semiconductor shares.

Investor sentiment was unsettled by the 10-year Treasury yield at just over 5%, while ongoing geopolitical tensions added to concerns about inflation and economic growth. Technology and semiconductor shares outperformed on optimism over earnings and forward guidance. However, some large technology companies funding their capital-expenditure programmes through increased borrowing came under pressure, with Oracle, Microsoft and Palantir falling between 1% and 3%. Chipmakers recovered some ground after recent concerns about artificial-intelligence (AI) security risks had prompted investors to question the pace of spending on data centres and semiconductors. Banks, utilities and materials stocks lagged. Berkshire Hathaway also attracted attention after Warren Buffett announced that he would step down as chairman and become chairman emeritus.

European equities also ended lower. The Euro STOXX 50 fell 1.50% to 6 229, its lowest level in almost two months, while the STOXX Europe 600 declined 1.20% to 635.30. In London, the FTSE 100 fell 1.50%, giving back gains after two consecutive sessions of advances as investors considered recent central-bank policy decisions and lower oil prices. Germany’s DAX and France’s CAC each declined 1.49%.

Banks were among the weakest performers across the region. HSBC fell by more than 1.50%, while Barclays and Lloyds Banking Group each lost about 2.50%. Santander, BNP Paribas and Deutsche Bank all declined by more than 3%. German carmakers were also under pressure, with Mercedes-Benz, Volkswagen and BMW each falling by about 5%. Unilever lost around 0.50%, while Rolls-Royce dropped more than 2%. European technology shares proved more resilient, supported by renewed strength in global AI infrastructure stocks. ASML gained 1.50%, while Infineon rose 2.50%.

Energy prices moved higher in continental Europe as tensions surrounding the conflict in Iran intensified. Saudi Arabia warned that it might not have sufficient oil supplies to meet the needs of European refineries next month. In London, however, weaker oil prices weighed on energy stocks, with Shell falling 0.90% and BP declining 1.10%.

Asian equities ended the week on a firmer footing, recovering from earlier losses as sentiment improved across the region. Japan’s Nikkei 225 gained 1.38%, ending the session close to 65 000. Investors digested the Bank of Japan’s decision to raise its policy rate by 25 basis points to 1.25%, its highest level in more than three decades. Semiconductor and other technology shares were among the stronger performers, supported by continued enthusiasm about AI-related demand. Hong Kong’s Hang Seng Index rose 0.59%, recovering from its mid-week weakness as mainland Chinese investors continued to buy Hong Kong-listed shares through the Stock Connect programme. In mainland China, the Shanghai Composite advanced close to 1%. Investors remained focused on the prospect of further US–China trade discussions, while expectations that Chinese lending rates would remain supportive also helped market sentiment.

South African equities ended the week on a weaker note, with the JSE All Share Index falling 1.01% to close at 113 002.48. The decline followed a brief recovery earlier in the week, supported by improving local consumer confidence, and took the index’s monthly loss to around 2.48%. The index remains 7.19% higher than it was a year ago. The rand was relatively stable, edging stronger to around R16.26 at 20h00 SAST against the US dollar, as investors remained cautious ahead of domestic inflation data and the South African Reserve Bank’s upcoming interest-rate decision.

In commodities, crude oil prices traded at around $102.20 a barrel as markets assessed the potential impact of disruptions to Saudi supplies. Saudi Aramco indicated that it would be unable to meet the full requirements of some European refineries. Meanwhile, China’s exports of refined oil products rose 12.70% year on year in August. A further easing of export controls in September could allow Chinese refiners to take advantage of stronger margins in overseas markets. Oil prices were on track for a third consecutive weekly gain, although Brent crude traded 1.20% lower at $103.56 a barrel. Precious metals advanced, with gold rising 1.20% to $4 392.58 an ounce and silver gaining 2.38% to $66.75 an ounce. Palladium led the gains, rising 1.45%.