Global equities mixed on cautiously hawkish signals, energy surge and geopolitical risk

Market Commentary

US equities closed mixed on Wednesday as the Federal Reserve held rates steady but struck a cautiously hawkish tone, while investors positioned ahead of earnings from large cloud and artificial intelligence (AI)-linked companies. The S&P 500 ended flat, with cyclicals dragging the Dow Jones Industrial Average down 0.50%, while tech strength lifted the Nasdaq by 0.50%. Dissent from regional Fed policymakers reinforced lingering inflation concerns and limited expectations of near-term easing.

Corporate earnings added dispersion within equities. Visa (+8%) and AbbVie (+3%) rallied on strong results, while defensives came under pressure amid elevated geopolitical risk. In large-cap tech, Microsoft rose 4% but later slipped in after-hours trading despite beating expectations for both cloud and AI-related revenue, while Alphabet gained over 3% on strong cloud performance and AI momentum. Amazon was broadly unchanged after-hours despite a clear earnings beat, while Meta Platforms fell 7% as investors questioned the scale of its rising AI-related capital spending.

The risk-off tone was more pronounced in Europe, where equities extended losses for an eighth consecutive session as higher energy prices revived inflation concerns and tightened monetary policy expectations. The STOXX Europe 50 fell 0.40% to 5 814 index points, and the STOXX Europe 600 dropped 0.70% to 602. Sentiment was further pressured by US actions maintaining restrictions on Iranian tanker flows through the Strait of Hormuz, prolonging supply disruptions and supporting oil prices. Financials and industrials led losses, with Munich Re, Allianz and Siemens down 2% to 3% and Deutsche Bank off nearly 3% despite earnings beats, as higher credit provisions weighed. Mercedes-Benz and Iberdrola also fell post-results. Airbus and Adidas outperformed, gaining 5.10% and 8.30% on strong guidance.

Asian markets diverged, with China outperforming. The Shanghai Composite Index rose 0.71% to 4 108 points, its highest level in over a month, while the Shenzhen Component Index gained 1.96% to 15 121, led by heavyweight strength. BYD advanced 3.86% after a 1Q26 beat, while Contemporary Amperex Technology rose 4.05%. Gains were also seen in Zhongji Innolight (+2.55%), Midea Group (+1.07%), and PetroChina (+1.31%). Geopolitics remained a key driver across risk assets. Washington intensified scrutiny of China–Iran financial links, sanctioning a major refiner and warning Chinese banks of secondary sanctions risks, while China’s Politburo reiterated a 'proactive' fiscal stance and 'appropriately loose' monetary policy, signalling policy continuity rather than fresh stimulus.

In South Africa, the JSE All Share Index and Top 40 both declined as global risk aversion deepened. Local sentiment was further undermined by higher oil prices, caution ahead of the US policy decision, and concerns around potential tightening by the South African Reserve Bank. The rand weakened more than 1% to around 16.74 against the dollar, reflecting broad dollar strength and elevated volatility.

Commodity markets reflected the same geopolitical impulse. WTI crude oil surged 6.91% to $106.83 per barrel on supply disruption fears linked to Iran, while gold slipped 0.91% to $4 553.63 per ounce as safe-haven demand eased ahead of the Fed decision despite persistent geopolitical risk.