Chipmakers remain under pressure as easing Middle East tensions lift broader markets

Market Commentary

US equities closed mixed on Monday as semiconductor shares extended their recent sell-off ahead of this week's Federal Reserve (Fed) policy decision, key economic data releases and a busy corporate earnings calendar. The S&P 500 ended little changed, the Nasdaq 100 declined 0.30%, while the Dow Jones Industrial Average gained 263 points.

Nvidia dropped 5% after announcing a $500 billion artificial intelligence (AI) memory chip supply agreement with SK Hynix and guaranteeing $250 billion to support OpenAI's data centre expansion, renewing concerns over AI-related capital spending. Micron fell 2.20%, AMD declined 5.20%, Intel eased 0.70% and Sandisk lost 11%.

Meanwhile, easing concerns over financial conditions supported the Dow as the US and Iran paused military strikes over the weekend. President Donald Trump said negotiations with Iran were progressing, although he warned that military action could resume should talks fail. Crude oil prices fell towards $82 per barrel, Treasury yields declined, and expectations of a near-term Fed rate hike moderated. Apple, Meta, Amazon and Microsoft traded mixed ahead of earnings later this week.

European markets outperformed their North American counterparts as lower bond yields and easing energy prices supported investor sentiment. The STOXX Europe 600 rose 0.20% and the Euro STOXX 50 gained modestly, while the DAX 40 advanced more than 1% to its highest level in nearly three weeks. Financial shares strengthened, with Santander and BNP Paribas each rising more than 2%, while SAP surged 7.80% after launching the second phase of its €10 billion share buyback programme. Technology shares were mixed as concerns over AI-related spending continued to weigh on semiconductor companies, with ASML falling 8.40% and Infineon declining 4.50%. London's FTSE 100 rose 0.40% to its highest level since February, supported by stronger-than-expected earnings from Vodafone and AstraZeneca, although weaker oil prices weighed on energy producers and mining shares.

Asian markets closed higher, supported by easing energy prices and continued strength in China's semiconductor sector. The Shanghai Composite rose 1.15% as investors looked beyond the blockbuster listing of memory-chip manufacturer CXMT, while China's technology shares advanced amid expectations of continued policy support for semiconductor development. Japan's Nikkei 225 gained 0.50% as lower oil prices improved sentiment towards the energy-importing economy, although technology shares remained under pressure following the recent weakness in global chipmakers.

South African equities also ended the day firmer, with the FTSE/JSE All Share Index gaining 0.65% and the Top 40 rising 0.66%. Industrials led the gains, while Resources underperformed as lower oil prices weighed on the sector. The rand strengthened against the major currencies, appreciating to R16.76 against the US dollar, R22.27 against the British pound and R19.06 against the euro.

In commodity markets, Brent crude oil fell sharply, declining 8.27% to $88.78 at 19h27 SAST. Precious metals traded higher. At 20h14 SAST gold gained 0.61% to $4 077.49 per ounce, silver rose 0.39% to $58.39 per ounce, and platinum advanced 1.62% to $1 630.15 per ounce.