Higher yields, AI concerns weigh on US equities while geopolitical tensions escalate

US equities ended Monday’s session mixed, with weakness in semiconductor stocks outweighing gains across broader sectors: the S&P 500 fell 0.30% and the Nasdaq declined 1%, while the Dow rose by 140 points. Artificial intelligence (AI) infrastructure stocks led the declines as investors continued to question whether heavy spending on chips and related infrastructure will generate sufficient returns, although interest in upcoming IPOs from large-language-model developers provided some support.

Broadcom fell 2.60%, Micron dropped 5.80%, AMD declined 3.50%, Intel slipped 3.10%, and Sandisk lost 6.40%. Meanwhile Nvidia fell 2.90% ahead of its results on Wednesday. Energy prices eased but remained elevated after the US pledged to isolate Iran economically, reinforcing concerns about inflationary pressures from high energy costs, substantial deficit spending and Treasury bond-buyback efforts. Credit services stocks recovered from last week’s losses, with Visa gaining 3.10% and Mastercard rising 3.30%.

The US dollar index edged up to 99.0 but remained near three-month lows, while the US expanded secondary sanctions targeting entities and countries maintaining business ties with Iran.

European markets closed mostly lower. The Euro STOXX 50 fell 0.10%, while the STOXX Europe 600 was flat. Germany’s DAX 40 declined 0.11% to 26 107, while France’s CAC 40 fell 0.37% to 8 453. London’s FTSE 100 bucked the trend and gained 0.40%, supported by mining shares, although energy stocks came under pressure as oil prices eased.

Asian markets ended mostly lower on Monday, with Chinese technology shares weighing on sentiment. The Shanghai Composite fell 0.59%, while Japan’s Nikkei 225 declined 0.70% to 65,528 ahead of Nvidia’s earnings announcement. Hong Kong’s Hang Seng Index lost 1.89%, pressured by a sharp fall in Alibaba after the company announced a sizeable share placement. Investors continued to monitor elevated global bond yields, tensions in the Middle East and the outlook for the global technology sector. 

South African equities ended lower on Monday. The FTSE/JSE All Share Index declined 0.88% to 116 712.04 points, while the Top 40 Index fell 0.90%. Resources lost 0.53% and Metals and Mining closed 0.63% lower, while Industrials 25 declined 1.24% and financials fell 1.15%. The rand weakened 0.10% against the US dollar to R16.03 but gained 0.03% against the British pound and 0.04% against the euro.

Commodity markets were mixed. Brent crude oil declined by 2.20% to $92.31 per barrel, while gold surrendered some of its earlier advance on Monday but continued to trade near $4 640 an ounce, its highest level since 14 May. Technical buying helped sustain the rally, which was supported by a weaker US dollar.