Global Equities Markets Bearish on AI Safety Concerns
Global equities markets were significantly bearish due to negative sentiment in AI, semiconductors linked stock following recent concerns over AI safety.
Wall Street closed lower, with mixed performance from the European markets. Stockbroking and portfolio management subsidiary of First National Bank (FNB) said in a brief that AI safety concerns and higher sovereign yield pressured risk appetite.
Traders reported that semiconductor selloffs drove the S&P 500, NASDAQ, and Dow Jones to close 0.48%, 0.56% and 0.29% lower, respectively. Elevated oil prices compounded interest rate pressures ahead of an expected Federal Reserve hike this week.
The same forces weighed on European AI infrastructure and banking shares, leaving the Euro Stoxx 50 down 1.02%, while the FTSE 100 closed 0.44% higher as oil stocks and defensive names provided support.
Asia-Pacific trade is subdued this morning. The ASX 200 is trading 1.03% lower as Wall Street weakness, domestic cost pressures, and expectations of prolonged Reserve Bank tightening weigh on sentiment.
Chinese data added another restraint, with weak investment, slower retail sales and higher unemployment reinforcing concerns over the recovery. The Hang Seng Index is currently down 0.23%, while the Nikkei 225 is trading 0.13% higher.
The Johannesburg Stock Exchange (JSE) is set for a softer open this morning as global futures edge lower with most Asian markets trading lower amid renewed pressure from rising developed-market bond yields.
With the US 10-year yield at a 19-year high and its Japanese counterpart at a 30-year peak, tighter financial conditions are reinforcing concerns over regional growth, while weak Chinese investment and higher unemployment add to the strain.
Tencent’s 2.83% advance nevertheless provides a positive read through for Naspers and Prosus. On the resources side, a 2.28% fall in the Australian mining index, alongside iron ore at a three-week low, points to pressure on JSE miners.
The JSE closed lower on Monday, with the All Share Index falling 1.41% to 113 536 points, while the Top 40 declined 1.57% to 106 066 points. Resources led losses, tumbling 3.51%, while Financials shed 1%, and Industrials advanced 0.35%, providing some support to the broader market.
Investors monitored developments in the Middle East, where Saudi Arabia’s shutdown of its East-West pipeline helped lift oil prices and heightened concerns over global oil supply disruptions.
The spike in oil prices also fuelled fresh inflation concerns, contributing to the US 10-year Treasury yield rising above 5% for the first time since 2007 and weighing on risk appetite across emerging markets.
As such, non-yielding precious metals counters (-4.12%) were among the worst performers, as the higher yields and stronger dollar reduced gold’s appeal despite elevated geopolitical tensions.
