US‑Iran détente boosts investor sentiment as AI lags

Market Commentary

US equity markets delivered a mixed performance on Monday as easing concerns over Middle East energy supply disruptions were offset by renewed pressure on large technology companies exposed to artificial intelligence (AI) spending. The S&P 500 fell 0.42%, while the Nasdaq dropped 1.12%. The Dow Jones Industrial Average remained positive, supported by gains in financial and industrial stocks.

Investor sentiment was buoyed by reports of substantial progress in negotiations between the US and Iran, with both parties signalling a commitment to reach a formal peace agreement in the coming months. Expectations of improved energy supply helped push oil prices lower, easing inflation concerns and providing additional support to risk assets.

Technology stocks painted a mixed picture. Semiconductors extended recent gains: Micron and Sandisk rose strongly amid continued optimism for long-term demand for AI infrastructure. By contrast, several large technology names came under pressure on concerns about rising AI capital expenditure, led by Alphabet and followed by declines in Amazon, Met, and Palantir. Financials outperformed, with major banks posting solid gains as investors responded positively to the brighter macroeconomic backdrop. SpaceX shares weakened after the announcement of a new bond offering, though the stock remains well-above its listing level. In healthcare, AbbVie advanced after agreeing to acquire Apogee Therapeutics in a cash transaction valued at approximately $10.90 billion.

European equities closed higher, with regional indices hitting fresh record levels as falling energy prices continued to underpin sentiment. The STOXX Europe 600 gained 0.70% to a new all‑time high, while the Euro STOXX 50 rose 0.40%, also closing at a record. Financials were among the strongest sectors as lower Eurozone sovereign yields improved expectations for lending activity; Santander, BBVA and Nordea recorded solid gains. Technology stocks also supported the rally as Infineon surged on renewed optimism around AI investment, while luxury names lagged after weaker guidance from Moncler and a string of sector downgrades weighed on sentiment.

In the UK, the FTSE 100 rose 0.52%, outperforming many European peers. Gains were led by banking and mining stocks as investors assessed the political and economic implications of Prime Minister Keir Starmer’s resignation.

Asia closed on a mixed note. The MSCI Asia Pacific Index fell 0.30% as caution prevailed. Japan’s Nikkei 225 bucked the regional trend, advancing 1.55% on strong financial stock performance, Hokuhoku Financial Group surged 5.60% and helped lift the market. Chinese equities posted robust gains, with the Shanghai Composite up 1.77%, while Hong Kong’s Hang Seng retreated 0.70% amid a more subdued risk appetite.

Local markets closed mostly in the green, with the JSE All Share Index and the Top 40 closing 0.11% and 0.16% higher, respectively. Resources led the gains, rising 2.66% and Metals and Mining climbed more than 3%. The rand strengthened slightly against the US dollar, trading at R16.40.

Commodities were mixed. Brent crude fell 3.12% to trade at $77.83 per barrel. Precious metals were firmer: gold rose 0.64% to $4 186.61 per ounce, while silver increased 1%.