AI Stocks Sell-Offs Drag US, European Benchmark Indexes
Sell-side pressure in AI stocks dragged global equity markets lower, with US and European benchmark indexes nosediving amid declining investor sentiment.
A sharp reversal in sentiment around AI infrastructure spending drove a coordinated selloff across global equities, with US and European benchmarks particularly exposed, First National Bank (FNB) said in a brief on Wednesday.
The S&P 500 closed down 1.44%, and the NASDAQ dropped 2.21% as investors questioned whether recent AI investments by hyperscalers can deliver anticipated returns, pressuring semiconductor and memory chip makers.
The Dow Jones, while still under pressure, delivered a modest loss of only 0.09%. European indices followed suit, with the Euro Stoxx 50 closing 1.28% lower while the FTSE 100 fell slightly by 0.09%, partially shielded by defensive gains in healthcare and consumer staples.
In Asia, the Hang Seng Index is currently up 0.04% as bargain hunting and improved risk sentiment offset China-related caution, while the ASX 200 is trading 0.23% higher as investors assess recent inflation data.
By contrast, the Nikkei 225 is down 1.72% amid ongoing weakness in the tech sector.
The Johannesburg Stock Exchange (JSE) is set for a flat-to-positive open this morning as investors are likely to re-enter the market following yesterday’s sell-off, the Bank said. It noted that global futures traded without clear direction, and most Asian markets are trading higher this morning.
Tencent’s 3.42% gain offers a positive read-through for Naspers and Prosus, although this is partly offset by a softer session for Australian miners, with the ASX 300 Metals and Mining Index down 0.77%, signalling possible pressure on local resource counters.
Commodities add little conviction, as gold and platinum extend recent declines, pointing to further headwinds for precious metals and PGM miners. Against this backdrop, sector performance is likely to diverge.
The JSE fell sharply at the open on Tuesday and closed in negative territory, in line with global peers, despite recovery efforts amid a selloff in the global tech sector.
By market close, the JSE All Share Index was down 0.97% at 111 635 points, and the Top 40 was down 0.99% at 103 388 points as local investors digested fresh local data showing the Consumer Confidence declined more than expected in 2Q26.
Resources (-2.41%) were the biggest detractor on the day with declines in diversified miners and precious metal names, amid softer commodity prices. Industrials (-0.68%) also weakened on the day, while Financials were resilient and ended the session flat.
