Warsh strikes hawkish tone as Nvidia gains fade and global markets diverge

Global markets ended the week on a mixed note as investors weighed a more hawkish Federal Reserve (Fed) outlook against continued strength in the artificial intelligence (AI) investment cycle and developments in the Middle East. Fed Chair Kevin Warsh’s Jackson Hole speech added to expectations of a September rate hike, while markets continued to assess the implications of elevated inflation and higher energy prices.

US equities closed lower on Friday as chipmakers pared some of the strong gains recorded earlier in the week. The S&P 500 fell 0.20%, the Nasdaq declined 0.70% and the Dow Jones Industrial Average edged lower. Marvell fell 10.30% despite beating earnings estimates, while Nvidia declined 4.60%, with Broadcom and AMD also lower. Hyperscalers remained stronger, with Microsoft gaining 1.70%, Alphabet rising 1.50%, Amazon jumping 4% and Meta adding 1.20%.

Warsh struck a hawkish tone in his first major speech as Fed Chair, saying underlying inflation had not slowed meaningfully and reaffirming the central bank’s 2% target. The comments increased market expectations of a September rate hike, with money markets subsequently pricing in a near 50% chance of an increase. The US dollar index rose to 99.5, while the 10-year Treasury yield climbed to 4.73%.

European markets recovered on Friday. The Euro STOXX 50 gained 1% and the STOXX Europe 600 rose 0.60%, supported by gains in autos, luxury stocks and banks. Germany’s DAX 40 advanced 0.80% to a fresh record high of 26 570, while France’s CAC 40 gained 1% to 8 401. London’s FTSE 100 rose 0.30%, although the index ended August around 0.50% lower.

Asian markets were mixed. China’s Shanghai Composite fell 0.11% and the Shenzhen Component declined 0.68% amid renewed US-China trade concerns. Japan’s Nikkei 225 gained 0.41% to 66 405, while the broader Topix rose 0.72% as Nvidia’s outlook continued to support the AI investment theme.

South African equities ended marginally lower on Friday. The FTSE/JSE All Share Index declined 0.01% to 116 806.24 points, while the Top 40 Index fell 0.15%. Industrials gained 0.58%, while Financials declined 0.44%, Resources 10 lost 0.38% and Metals and Mining fell 0.47%. The rand weakened 0.32% against the US dollar to R16.00, 0.26% against the British pound to R21.74 and 0.27% against the euro to R18.64. South Africa’s 10-year government bond yield rose to around 8.70%.

Commodity markets were higher. Brent crude oil gained 2.58% to $90.11 per barrel, while gold rose 0.33% to $4 607.22 per ounce. Silver advanced 1.90% to $69.40 per ounce and platinum gained 0.59% to $1 855.25 per ounce as renewed tensions between the US and Iran raised concerns around energy supply.