Wall Street declines as strong US data fuels uncertainty around Fed rate cuts

US stocks closed lower on Thursday, extending losses for a third consecutive session. The S&P 500 declined by 0.70%, the Nasdaq fell by 1%, and the Dow Jones slipped by approximately 110 points. Investor attention remained firmly on whether the Federal Reserve will proceed with another interest rate cut next month, despite fresh data indicating ongoing resilience in the US economy and labour market. Revised figures showed GDP growth for the second quarter at 3.80%, up from the previously reported 3.30%. Initial jobless claims dropped to their lowest level since July, durable goods orders rose unexpectedly, and the goods trade deficit narrowed more than anticipated.

The UK’s FTSE 100 lost 0.40%, weighed down by declines in AstraZeneca, which fell 2%, and HSBC, which dropped 1.40%. ConvaTec was the worst performer, plunging 5% to its lowest level since January after the US announced investigations into imports of robotics, industrial machinery, and medical devices. Mining stocks posted mixed results: Rio Tinto gained over 3%, Glencore added nearly 1%, and Anglo American edged up 0.30%, supported by firmer copper prices. However, Antofagasta slipped 1.50%, giving back some of Wednesday’s sharp rally.

Across Europe, equities closed sharply lower, mirroring the downturn in global markets amid renewed concerns over prolonged higher interest rates and growing trade tensions with the United States. The Eurozone’s STOXX 50 fell by 0.60% to 5 435, while the broader STOXX 600 declined by 0.70% to 550. European bond yields climbed sharply following stronger-than-expected US economic data, which tempered expectations for two further rate cuts by the Federal Reserve this year. Credit-sensitive sectors came under pressure, with notable losses from Ferrari, Adidas, Stellantis, and Saint-Gobain, all of which dropped more than 2%.

In Asia, Japan’s Nikkei 225 rose by 0.27% to close at 45 755, while the broader Topix index added 0.47% to reach 3 185. This marked the third consecutive day of gains, as local investors shrugged off the tech-driven sell-off on Wall Street. US stocks had closed lower for a second session overnight, amid concerns about record-high valuations in the technology sector, the complexity of interdependencies in AI, and continued uncertainty around the Federal Reserve’s policy outlook.

Meanwhile, China’s Shanghai Composite Index edged down by 0.01% to 3 853, while the Shenzhen Component rose by 0.67% to 13 446 - its highest level since February 2022 - buoyed by strength in high-growth technology stocks. Market sentiment was supported by China’s ongoing push into artificial intelligence, with Alibaba announcing plans to launch its first data centres in Brazil, France, and the Netherlands as part of a broader strategy to accelerate global AI expansion.

Domestically, South Africa’s main stock market index, the SA All Share (SAALL), declined by 0.83% to 105 803 points, tracking the weakness seen across global markets.

In commodities, WTI crude futures fell back below US$65 per barrel as traders booked profits following a recent rally to a three-week high. Gold prices hovered just below US$3 740 per ounce, easing for a second session after touching a record high of US$3 790, as stronger economic data continued to support expectations of higher interest rates.