Global equities weaken on energy risks, AI concerns and geopolitical tension

Market Commentary

European equities extended losses for a seventh consecutive session on Tuesday, with the Euro STOXX 50 down 0.30% to 5 843 index points and the STOXX Europe 600 off 0.30% to 607, as persistent energy supply risks and mounting stagflation fears continued to erode sentiment. The backdrop was dominated by sustained disruption in global energy flows tied to US–Iran tensions, which kept imported energy prices elevated and reinforced concerns over growth resilience in energy-importing economies.

That macro pressure filtered through into cyclicals and industrials, with ASML and Siemens Energy both falling more than 3%, as AI-linked infrastructure names came under pressure after reports that OpenAI missed internal targets—prompting renewed scrutiny of the sustainability of AI-driven capex cycles. Broader corporate weakness was also evident, with Air Liquide down 3.20% after a revenue miss despite higher investment guidance, while Bayer declined 4.60% following a split US Supreme Court decision in its Roundup litigation.

US equities similarly traded lower as growth and technology shares bore the brunt of rising macro uncertainty. The S&P 500 slipped 0.40%, and the Nasdaq Composite fell 1%, while the Dow Jones Industrial Average ended largely flat as defensive names offset tech losses. A weak AI demand read-through from OpenAI triggered a selloff in semiconductors, with Nvidia, Broadcom, AMD, Intel and Oracle all lower, while mega-cap peers Meta Platforms, Microsoft and Alphabet also softened ahead of earnings. Offsetting some of the index weakness, Coca-Cola rose 3.50% on strong results, and Starbucks later reported improved traffic, raised guidance, and beat revenue expectations.

In Asia, Chinese equities also weakened as geopolitical uncertainty and regulatory headwinds weighed on sentiment. The Shanghai Composite Index slipped 0.19% to 4 079 points, and the Shenzhen Component Index fell 1.10% to 14 830, with markets reacting to ongoing US–Iran diplomatic uncertainty and concerns over potential escalation risks linked to the Strait of Hormuz. Technology stocks underperformed, led by Zhongji Innolight after reports that authorities ordered Meta Platforms to unwind its acquisition of Manus AI, underscoring tighter scrutiny of AI governance and cross-border tech exposure. Elsewhere, Contemporary Amperex Technology fell after announcing a large discounted equity raise despite securing a multi-year storage deal, while policymakers reiterated a focus on energy security and economic resilience via the Politburo of the Chinese Communist Party.

South African markets tracked the global risk-off tone, with the FTSE/JSE All Share Index falling 1.86% to 114 400 as profit-taking set in after recent record highs and weakness broadened across resources and financials. Despite equity pressure, commodity-linked support remained visible: SAFEX maize prices firmed in line with a 3.82% rise in Brent crude to $109.56/bbl, while the rand held steady near R16.54/USD, cushioned by relatively supportive terms of trade even as risk appetite deteriorated.

In commodities, energy markets remained the key transmission channel for global volatility, with WTI crude oil holding near $100 per barrel for a seventh consecutive session, reaching its highest level since early April. Prices stayed elevated despite the United Arab Emirates’ exit from OPEC, as any perceived supply relief was outweighed by continued disruptions in the Strait of Hormuz tied to ongoing US–Iran tensions. Although a ceasefire has largely held since early April, reciprocal restrictions have effectively reduced oil flows through the Strait of Hormuz—a critical chokepoint that handles around 20% of global oil trade—to near zero, keeping global supply conditions tight and leaving energy markets highly sensitive to any further escalation.

Bullion remained firmly supported by the same macro drivers, with US spot gold edging up 0.10% to $4 594 per ounce, extending a 3.82% monthly advance as investors continued to seek protection against geopolitical instability and currency softness. Central bank accumulation and expectations of a more patient Federal Reserve policy stance added structural support, with prices broadly consolidating well above year-ago levels despite intermittent volatility linked to US–Iran developments.