Technology rebound lifts Wall Street as softer inflation eases rate concerns

Market Commentary

US equities closed sharply higher on Thursday as investors welcomed softer inflation data, stronger corporate earnings and a rebound in semiconductor shares. The S&P 500 gained 1.70%, the Nasdaq 100 surged 3.40%, and the Dow Jones Industrial Average advanced 614 points.

Technology stocks led the recovery after Wednesday's sell-off. Microsoft soared 15.50% after reporting its strongest cloud revenue growth since 2022, while Oracle gained 8.30% after expanding its Google Gemini artificial intelligence (AI) partnership. Semiconductor shares also rebounded strongly, with Micron rising 18.40%, AMD gaining 13%, Intel advancing 11.30%, and Sandisk jumping 26% as investors returned to AI-related stocks. These gains offset weakness in Meta, which fell 7.90% after issuing disappointing guidance, while Apple declined 1.40% ahead of earnings and Amazon gained 3.90%.

US inflation data pointed to moderating price pressures. The Personal Consumption Expenditure (PCE) Price Index declined 0.10% month-on-month in June, while annual headline inflation eased to 3.70% from 4.10%. Core PCE inflation edged lower to 3.30% from 3.40%. Meanwhile, the US economy expanded at an annualised rate of 1.50% in 2Q26, slowing from 2.10% in 1Q26 as weaker exports and government spending offset stronger consumer spending. The softer inflation data extended the US dollar's recent decline after the Federal Reserve's decision to leave interest rates unchanged, with markets further reducing expectations of an imminent rate increase.

European markets closed broadly higher as stronger-than-expected corporate earnings and resilient economic data supported sentiment. The STOXX Europe 600 gained 0.60%, while the Euro STOXX 50 advanced 1.30%. Germany's DAX 40 rose more than 0.50%, supported by a rebound in semiconductor shares, while France's CAC 40 gained 0.90% as Schneider Electric, Société Générale and Vinci delivered strong earnings. London's FTSE 100 edged slightly lower after the Bank of England left interest rates unchanged, although gains in Rolls-Royce, BAE Systems and Lloyds Banking helped limit losses.

Asian markets delivered a mixed performance. Japan's Nikkei 225 gained 0.71% as semiconductor shares rebounded following stronger guidance from Advantest, while China's Shanghai Composite declined 0.62% as investors continued reducing exposure to technology stocks despite Beijing reaffirming its commitment to supporting the economy.

South African equities closed firmly higher, supported by broad-based gains across resource, financial and industrial shares. The FTSE/JSE All Share Index advanced 1.30% to 111 872.70 points, while the FTSE/JSE Top 40 Index gained 1.40% to 103 758.71. Resource shares led the market higher, with the Resources 10 Index rising 3.24% and the Metals and Mining Index gaining 3.43%. Industrials added 0.19%, while financials advanced 1.01%. The rand strengthened against the major currencies, appreciating 0.98% against the US dollar trading at R16.50, 0.24% against the British pound at R22.22 and 0.46% against the euro to R19.02.

Commodity markets were mixed. At 21h07 SAST, Brent crude oil declined 1.82% to $89.09 per barrel. Gold gained 1.23% to $4 115.13 per ounce, silver advanced 2.83% to $59.27 per ounce, and platinum rose 4.34% to $1 671.90 per ounce.