Wall Street retreats as AI heavyweights weigh on US markets

US equities ended lower on Thursday after a muted start to the session. The S&P 500 fell 0.91%, the Nasdaq declined 1.55% and the Dow Jones Futures and Industrials slipped by around 143 and 94 points, respectively. Technology stocks led the losses amid concerns over elevated artificial intelligence (AI) valuations and mixed earnings results. Microsoft tumbled more than 10% on signs of slowing cloud growth, Tesla eased 1.20% after reporting its first annual revenue decline of 3%, and Oracle fell 3.10% following the launch of its AI platform for life sciences. Meta defied the broader trend, surging nearly 9% after issuing stronger-than-expected sales guidance. Elsewhere, IBM rallied 7.40% and Caterpillar gained 4.10% on upbeat results, while Honeywell rose 3.70% despite uneven performance. Apple edged 0.30% higher ahead of its post-market earnings release.

South Africa’s 10-year government bond yield dipped below 8% for the first time since March 2018, underscoring sustained investor appetite for local assets. At its first meeting of the year, the South African Reserve Bank (SARB) kept the repo rate unchanged at 6.75%, following a 25-basis point (bps) cut in November 2025. While the decision was widely anticipated, it was not unanimous, with two members favouring a further 25bps reduction. Policymakers balanced improving inflation dynamics against ongoing domestic pressures, including electricity tariffs, alongside global geopolitical risks.

The SARB revised its 2026 inflation forecast down to 3.30% from 3.50%, with inflation expected to have peaked at 3.60% in December and to reach the revised 3% target by 2028. Growth projections were left unchanged at 1.40% for 2026 and 1.90% for 2027. The bank’s quarterly projection model points to gradual easing, with the repo rate seen at 6.31% by year-end and 6.05% by the end of 2027. Most economists now anticipate at least 50bps of rate cuts this year, potentially starting in March.

In contrast, precious metals retreated as profit-taking set in and a firmer US dollar weighed on dollar-denominated commodities. Platinum futures slipped back towards $2 600 per ounce after peaking earlier in the week, while silver fell more than 6% to around $110 per ounce. Gold also declined by over 4% to roughly $5 140 per ounce, receding from its recent all-time high of $5 600 despite earlier support from waning confidence in US assets. Energy markets were more subdued, with Brent crude closing near $82 per barrel as renewed demand concerns, ample supply and a cautious global growth outlook capped recent gains.

The US dollar’s recovery reduced bullion’s appeal to international investors, while softer equity markets triggered broader liquidations across risk assets following earlier exuberance. Precious metals had previously been buoyed by economic uncertainty and geopolitical strains, exacerbated by President Donald Trump’s dismissal of the dollar’s four-year lows, alongside tariff warnings and criticism of the Federal Reserve (Fed).

US equities ended lower on Thursday after a muted start to the session. The S&P 500 fell 0.70%, the Nasdaq declined 1.60% and the Dow Jones slipped by around 80 points. Technology stocks led the losses amid concerns over elevated artificial intelligence (AI) valuations and mixed earnings results. Microsoft tumbled more than 10% on signs of slowing cloud growth, Tesla eased 1.20% after reporting its first annual revenue decline of 3%, and Oracle fell 3.10% following the launch of its AI platform for life sciences. Meta defied the broader trend, surging nearly 9% after issuing stronger-than-expected sales guidance. Elsewhere, IBM rallied 7.40% and Caterpillar gained 4.10% on upbeat results, while Honeywell rose 3.70% despite uneven performance. Apple edged 0.30% higher ahead of its post-market earnings release.

European markets also closed weaker, weighed down by disappointing earnings from several major corporates. The STOXX 50 slipped 0.70% to 5 892, while the broader STOXX 600 eased 0.20% to 607. Germany’s DAX 40 dropped 2.10% to 24 309, marking its steepest daily decline since September 2025 and underperforming regional peers. The FTSE 100 bucked the trend, closing 0.16% higher, supported by energy and industrial metals stocks. Shell and BP advanced 2.50% and 1.50%, respectively, as heightened geopolitical tensions between the US and Iran lifted oil prices.

German multinational software corporation and the world's largest vendor of enterprise resource planning (ERP) software, SAP, stumbled 16% , its sharpest single-session decline since 2020, after fourth-quarter cloud revenue missed expectations and the company flagged slower backlog growth this year. Nokia shed more than 3% following its results, while Infineon fell nearly 4% amid weaker demand for AI infrastructure. In contrast, ABB surged 8.50% on strong earnings, and Roche climbed 2.70% after delivering 5% earnings growth, despite currency headwinds. Sanofi was little changed after missing revenue forecasts.

Asian markets finished modestly higher, with Japan’s Nikkei edging up 0.03%, Shanghai gaining 0.10% and the Hang Seng rising 0.41%.