US Equities Sold Off, European Markets Diverge as Sentiment Shifts
Wall Street came under pressure as US equities sold off amidst earnings releases, while European markets diverged as investor sentiment shifted amid the Federal Reserve’s decision to keep rates intact.
Caution dominated global markets overnight as investors positioned themselves ahead of a dense schedule of macro releases while also assessing the outcome of the Fed’s policy announcement.
US equities traded bearishly, with the S&P 500 falling 1.52%, the Nasdaq Composite dropping 1.74%, and the Dow Jones shedding 2.19%, First National Bank (FNB) said in a brief on Thursday.
The market reacted to the US Fed decision to hold rates steady, but three dissents signalled support for tighter policy, driving 30-year Treasury yields to their highest level since 2007 and triggering a broad retreat among chipmakers and AI-linked names.
European markets diverged on Wednesday, with the FTSE 100 rising 0.34% to close near a record high, lifted by Shell and BP as Brent crude strengthened.
The Euro Stoxx 50 fell 0.6% as an 11% plunge in Hermès following a disappointing leather goods update and weakness in chip names weighed on the continent, with sentiment further dented by reports that President Trump threatened military action against Iran.
Asian markets are broadly lower this morning, tracking the soft overnight cues from Wall Street, with the Kospi down 0.87% and the ASX 200 off 0.82% as the Fed’s “hawkish hold” and a sharp rotation out of semiconductor names rippled through the region.
The Hang Seng slipped 0.03% as Zhongji Innolight fell sharply on its Hong Kong debut and Chinese chip stocks tumbled on valuation concerns, while the Nikkei 225 bucked the trend, rising 0.72% as strong earnings from Advantest and other corporates lifted sentiment.
The Johannesburg Stock Exchange (JSE) closed higher on Wednesday as market participants continued to digest the latest reporting season developments, with reports from large-cap mining companies and the US Federal Reserve’s decision to keep its benchmark rate unchanged driving sentiment.
The All-Share Index gained 0.49% to 110 440 points, while the Top 40 rose 0.49% to 102 328 points. Resources (+0.57%) gained, driven by a strong session in precious metals after Valterra Platinum surged as much as 9% following an interim dividend that beat analyst estimates by a wide margin.
Glencore’s solid production report highlighting the strength of its copper production also supported the broader mining complex. Industrials (+1.27%) led gains as they benefited from strength in the Technology Index (+3.49) and counters Naspers (+3.92%) and Prosus (+2.61%).
Financials (-0.11%) bucked the trend and closed marginally weaker as banks came under pressure amid the uncertain rate environment and continued foreign selling of South African bonds
The JSE is expected to open on a softer footing this morning as heightened geopolitical risks and ongoing uncertainty surrounding the AI sector weigh on sentiment, while investors continue to digest the United States (US) Federal Reserve’s (Fed) latest interest rate announcement.
Global futures are pointing in conflicting directions, with US equity futures trading firmer while European futures point lower ahead of a heavy data day.
The ASX Metals and Mining Index (-1.43%) tracked the broader Australian market lower, which may weigh on resource counters at the open.
Gold and platinum are both softer this morning, adding pressure to gold miners and precious metals counters on the JSE. Tencent edged up 0.26% in Hong Kong, lending a modest positive cue to Naspers and Prosus on the JSE. Global Markets Up as Investors Pile into Chipmakers on AI Trade Conviction
