Markets mixed as geopolitics and AI drive divergence

Market Commentary

Brent crude slipped to around $98 per barrel on Tuesday, extending recent losses as markets balanced cautious optimism over a potential US–Iran agreement against persistent geopolitical risk in the Strait of Hormuz. Sentiment was guided by comments from US Secretary of State Marco Rubio, who cautioned that negotiations could still take several days, with unresolved issues including Iran’s frozen assets and guarantees over maritime passage through the key shipping corridor.

However, the diplomatic backdrop remained fragile. US military reports of self-defence strikes in southern Iran were met with claims from the Islamic Revolutionary Guard Corps that it had targeted an F-35 fighter jet and multiple drones following alleged airspace violations. Despite the escalation, regional actors including Saudi Arabia, Qatar and the UAE are reportedly pushing for continued diplomatic engagement with Washington, underscoring concerns that a broader conflict could disrupt energy flows through Hormuz.

Gold steadied near $4 500 an ounce after earlier weakness, as investors maintained a defensive stance amid uneven signals from both diplomacy and the battlefield, with safe-haven demand supported but not decisively extended.

In equities, US markets ended Tuesday mixed as investors refocused on Middle East developments alongside ongoing rate and earnings considerations. A tech-led bid persisted beneath the surface, with industrials and materials also firming, while energy and defensives lagged in line with softer oil prices. Micron Technology surged 19.30% after UBS raised its price target, pushing its market value above $1 trillion and reinforcing the ongoing AI-driven momentum trade. Alphabet, Broadcom and Tesla also advanced, while NVIDIA, Microsoft and Amazon eased lower. On the downside, Exxon Mobil fell 3.30% and Walmart declined 1.40%, reflecting sectoral rotation rather than broad risk aversion.

European equities, by contrast, closed weaker as investors scaled back optimism around US–Iran negotiations following renewed military strikes and rising volatility in energy markets. The STOXX 50 fell 1%, while the STOXX 600 slipped to 628 points, with sentiment pressured by higher energy prices and a rebound in sovereign bond yields after reports of US strikes on Iranian targets. Banks reversed recent gains, with Banco Santander, Deutsche Bank and UniCredit each declining between 1% and 2.40%, while technology also softened, led by a near 3% drop in ASML despite continued strength in global AI-linked demand. Ferrari was a notable underperformer, sliding more than 8% after unveiling its first fully electric vehicle.

Asian markets pushed higher to fresh record levels, extending Wall Street’s technology-led momentum. Japan and South Korea outperformed, supported by continued enthusiasm for artificial intelligence and semiconductors, while investors largely brushed aside geopolitical noise. The Nikkei 225 rose 1.30% to above 65 800, with the Topix up 0.30%, as risk appetite remained anchored in the global AI investment cycle despite lingering uncertainty in the Middle East.

South African equities, however, tracked a more subdued tone, closing mostly weaker as global risk sentiment wavered. The FTSE/JSE All Share Index edged down 0.05%, while the Top 40 slipped 0.10%, with the Industrial 25 leading losses with a 1.30% decline. The rand softened modestly in line with broader risk dynamics, with USD/ZAR at 16.39, GBP/ZAR at 22.04, and EUR/ZAR at 19.06, reflecting continued sensitivity to geopolitical developments and commodity price fluctuations.