Markets retreat as oil sell-off offsets AI optimism

Market Commentary

Crude oil prices fell almost 4% on Friday to around $69 per barrel, its lowest level since the end of February 2026, after shipping through the Strait of Hormuz recovered following progress in US‑Iran peace negotiations. Saudi Arabia resumed loading tankers at its Ras Tanura terminal, and other Gulf producers increased supply, easing concerns over regional exports. Despite the improved supply outlook, geopolitical risk persisted after US President Donald Trump accused Iran of violating the ceasefire by launching drones towards vessels in the Strait of Hormuz. Brent crude ended the week down more than 10%, its largest weekly decline in a month.

While oil came under pressure, precious metals moved higher, with gold gaining 1.60% to $4 090.26 and silver rising 2.38%.

US equities ended lower, with the S&P 500 slipping 0.05%, the Nasdaq 100 falling 1.10% and the Dow Jones Industrial Average losing 44 points. Technology stocks led the declines as investors locked in profits following Thursday's artificial intelligence (AI)‑driven rally. Micron dropped 6.70%, while Nvidia and Broadcom fell 1.60% and 3.70%, respectively. The Dow also came under pressure after Alphabet replaced Verizon in the index. Losses were limited by a sharp decline in oil prices, which eased inflation concerns and strengthened expectations that the Federal Reserve may not need to keep interest rates higher for longer.

European equities closed lower, weighed down by weakness in banks, carmakers and AI‑related companies. The Euro STOXX 50 fell 0.90% to 6 212, ending the week 1.20% lower, while the STOXX Europe 600 declined 0.70% to 635.5, leaving it broadly unchanged over the week. The sell‑off in US semiconductor stocks spilled over into Europe as investors became more cautious on the AI trade. Infineon fell 4.30%, ASML lost 1%, and Siemens Energy dropped 5.60% amid concerns over AI infrastructure spending.

Banking stocks also came under pressure, with Deutsche Bank falling 2.70%, and BNP Paribas and BBVA each losing nearly 2%, despite expectations that lower oil prices could reduce inflationary pressures and lessen the need for further rate hikes by the European Central Bank (ECB). Volkswagen declined 3.90% following reports it may cut up to 100 000 jobs and close four factories as part of a major restructuring. The FTSE 100 also edged lower, while Germany's DAX 40 fell 1.30% to 24 671, its lowest level in two weeks, ending a two‑day winning streak.

Asian equities retreated sharply on Friday. Japan's Nikkei 225 fell close to 4%, as heavyweight chipmakers SK Hynix and Samsung Electronics came under pressure after recent strong gains. Hong Kong's Hang Seng declined 1.70%, with Alibaba extending its losses amid renewed concerns over AI valuations, while the Shanghai Composite dropped 2.19%. The broad‑based sell‑off reflected growing caution towards AI‑related stocks after their recent rally, with investors closely watching sentiment in the US technology sector and the potential impact of margin pressure on semiconductor companies.

South African equities mostly closed lower. The benchmark FTSE/JSE All Share Index dropped 0.60% to close at 110 230.96 points, while the blue‑chip JSE Top 40 Index fell 0.71% to settle at 101 893.99 points. Metals and Mining, however, gained 1.54% and Resources rose 0.83%.