Global markets mixed amid AI jitters and Fed uncertainty

US stocks staged a strong rebound on Friday, with the Dow climbing 1.20%, the S&P 500 rising 1.10% and the Nasdaq advancing 0.80%. The gains came after New York Federal Reserve President John Williams indicated that a near-term rate cut remains possible, as labour market softness now poses a greater risk than elevated inflation. Markets responded by lifting the probability of a 25 basis-point December rate cut to around 70%, up sharply from 44% a week ago. Adding to market optimism, reports suggested US officials have begun preliminary discussions on whether to allow Nvidia to resume sales of its H200 AI chips to China. Despite Friday’s rally, Wall Street finished the week lower, with the S&P 500 down 2%, the Dow off 1.90% and the Nasdaq down 3.20%, reflecting ongoing volatility in AI-linked names.

In Europe, stocks closed lower as renewed pressure on AI and tech sectors interrupted a short-term rebound. The STOXX 50 fell 1% and the STOXX 600 slipped 0.40%. Flash PMI data presented a mixed picture: while overall Eurozone activity was supported by services, Germany’s manufacturing sector remained weak, and services growth slowed. For the week, the STOXX 50 lost 2.30% and the STOXX 600 dropped 1.50%, echoing declines across Asian and US markets.

Chinese equities also extended their losses, dragged down by technology and AI-linked shares in a broad global selloff. Mainland markets fell to two-month lows, with the Shanghai Composite down 2.45% and the Shenzhen Component off 3.41%. Investors reacted to global concerns over an AI bubble and stronger-than-expected US employment data, which reinforced expectations that the Federal Reserve will hold off on cutting rates in December.

Locally, the FTSE/JSE All Share Index closed around 109 641 points, down about 2%, following global trends as tech and AI sector jitters weighed on sentiment. The rand traded near R17.29 to the US dollar, pressured by risk-off sentiment from international markets. Over the week, the JSE mirrored global patterns, retreating alongside Asia, Europe, and US equities.

Commodities also reflected market caution. Oil prices slipped on concerns about weaker tech-driven demand and broader economic uncertainty, while stronger US employment data suggested that the Federal Reserve may delay rate cuts, further weighing on energy outlooks. Gold edged lower as a firmer dollar and reduced expectations of imminent rate cuts dampened its safe-haven appeal.