Markets mixed as oil rises and AI optimism persists

US equities ended the day weighed down by higher oil prices and renewed Middle East tensions following the expiration of the US-Iran memorandum of understanding. The Dow Jones Industrial Average fell 273 points, the S&P 500 declined 0.50% and the Nasdaq Composite edged down 0.20%, as gains in parts of the technology sector helped limit broader losses.

Investors are now turning their attention to upcoming results from major US retailers, which should offer a clearer read on the resilience of consumer spending. Meanwhile, oil prices moved higher as the US and Iran appeared no closer to reaching an agreement, adding to concerns about inflation and the outlook for interest rates.

Technology stocks remained volatile as investors continued to assess whether substantial investment in artificial intelligence (AI) will translate into durable earnings growth. Semiconductors outperformed, with the PHLX Semiconductor Index rising almost 2%, while the Software and Services segment lagged. A stronger revenue outlook from AI company Anthropic also supported demand for memory and data-storage stocks. Micron rose 4.10%, while Intel gained 1%. Sandisk also advanced strongly, climbing 9%. Nvidia was the sole Magnificent Seven stock to finish higher, with investors already looking ahead to the chipmaker's results next week.

In Europe, equities closed lower on Monday as renewed geopolitical tensions, higher energy prices, weaker renewable power generation in parts of central Europe, and rising bond yields also weighed on investor sentiment. The Euro STOXX 50 slipped 0.10% to 6 530, the STOXX Europe 600 declined 0.20% to 656, while France’s CAC 40 fell 0.66%. Germany’s DAX 40 also dropped 0.18% and the UK’s FTSE 100 eased 0.28%.

Higher government bond yields added to the equity pressure, particularly banks and consumer-sensitive sectors. Santander, Deutsche Bank, LVMH and Adidas were among the weaker performers, falling between 1% and 3.40%. Technology stocks offered some support, with ASML gaining 2.60% as investors tracked gains in US artificial intelligence (AI) stocks following strong results from Anthropic. Argenx also rose 1% after reporting positive trial results for its Vyvgart treatment data.

Asian markets ended higher, as stronger performances in China and Hong Kong offset gains in parts of the region. In Japan, the Nikkei 225 rose 0.74% to around 69 220 points, supported by continued demand for AI and technology stocks despite weaker-than-expected domestic growth data. Hong Kong’s Hang Seng Index gained about 1.48%, recovering from recent losses, while China’s Shanghai Composite advanced 1.35%, supported by strength in blue-chip and export-focused companies. Investors continued to balance softer US economic data against concerns about elevated energy prices and potential supply disruptions.

Back home, South African equities rose on the back of resource shares. The FTSE/JSE All Share Index gained 0.54% to 114 672.93 points, while the Top 40 added 0.69%. The Resources 10 Index jumped 3%, with Metals and Mining advancing 3.40%, while Industrials declined 0.83% and Financials slipped 0.34%. The rand firmed 0.15% against the US dollar to R16.22 and 0.22% against the British pound to R21.94, while trading at R18.78 against the euro.

Commodity markets closed firmly at 21h46 SAST with Brent crude oil rising 2.54% to $90.77 per barrel. Gold gained 0.98%% to trade at $4 419.36 per ounce, while silver rose 1.95% to $65.93 per ounce and platinum advanced 1.58%.