Markets mixed as AI chip pullback weighs on equities

Market Commentary

US equities were mixed on Wednesday as broad gains across traditional sectors were offset by steep losses among chipmakers and artifical intelligence (AI)‑focused large caps. The S&P 500 slipped 0.07% and the Nasdaq 100 fell 0.15%, pulling back from recent record highs. Nvidia and Intel each dropped about 3% and Qualcomm plunged 9% as investors reassessed the durability of gains in the AI infrastructure complex. By contrast, Micron extended its rally – jumping a further 19% after UBS tripled its price target.

The Dow climbed roughly 300 points to a fresh record, supported by defensive names: Amazon and Apple rose nearly 2%, while Eli Lilly, Coca‑Cola and Procter & Gamble added up to 3.50%.

European stocks closed slightly positive after steep losses the previous day, aided by a retreat in energy prices that eased pressure on European sovereign yields. The Eurozone's STOXX 50 rose 0.20% to 6 078, while the pan‑European STOXX 600 gained 0.10% to 628. The UK’s FTSE 100 extended an eight‑session winning streak.

Luxury and consumer names led gains: LVMH, Hermès, Adidas and L’Oréal added between 2.50% and 5.50%, delivering a strong day for high‑end brands. Banks also advanced, with Santander and Intesa Sanpaolo up about 1.50%. Energy stocks lagged, however, as TotalEnergies and Eni dropped more than 2% amid the weaker oil patch.

Asian equities closed mixed, with the Shanghai Composite declining 1.28% to 4 092.38, the Hang Seng slipping about 1.24%, and the Nikkei 225 remaining essentially flat. Technology and semiconductor stocks underperformed: Cambricon Technologies fell close to 5%, Hygon Information Technology declined nearly 6%, Semiconductor Manufacturing International Corporation (SMIC) lost 1.67%, Eoptolink Technology eased 1.14%, and Victory Giant Technology retreated 2.28%. The weakness came despite ongoing optimism around AI, that has supported regional tech highs.

South African equities closed mostly weaker, with the JSE All Share Index shedding 0.34% to finish at 115 426.89. The local market came under pressure from broad-based weakness in commodity-linked counters, as the Resources sector declined by 1.71%, while the Metals and Mining Index fell 1.54%. The softer performance in mining shares reflected weaker commodity prices and cautious global risk sentiment. In contrast, Industrials provided some support to the market, advancing 0.65% to close at 128 980.38.

Overall market sentiment remained cautious as investors continued to assess global economic conditions, interest rate expectations, and developments in commodity markets. The rand weakened against the dollar and euro but strengthened marginally to the pound.

Both crude oil benchmarks experienced a sharp sell-off, with WTI futures settling at below $90 per barrel, marking a decline of 4%. Brent crude also came under pressure, closing at $95.37 per barrel, down by over 4% as well. The move was driven largely by growing optimism over a potential US‑Iran diplomatic breakthrough and the prospect of the Strait of Hormuz reopening; two non‑Iranian supertankers transited the channel for the first time in a week.

Precious metals also came under pressure. Gold and platinum both declined by more than 1%, while silver recorded the sharpest losses, falling by just over 3%.