Global financial markets faced a turbulent session as investors navigated a convergence of pressures: a sharp pullback in technology stocks, a decline in oil prices during the session followed by an overnight rebound driven by escalating US-Iran hostilities, and cautious positioning ahead of key US inflation data. While most sectors of the US equity market managed modest gains, semiconductor and artificial intelligence-related shares bore the brunt of the selling, and risk sentiment across Asia and Europe reflected the broader uncertainty gripping markets worldwide.
US equity markets
Tech and semiconductors lead declines
US equities ended the session in negative territory, despite a reasonably constructive picture beneath the surface. The S&P 500 fell 0.3% while the Nasdaq declined 1.0%, as weakness in the technology sector overshadowed gains elsewhere. Semiconductor and AI-related companies were among the hardest hit, with Super Micro Computer, Qualcomm and Dell Technologies all registering notable losses. The Philadelphia Semiconductor Index dropped around 2%, reflecting sustained pressure on growth-oriented segments of the market.
Despite the headline declines, market breadth told a more balanced story. Nine of the S&P 500’s eleven sectors finished in positive territory, with real estate leading gains as bond yields moved lower. Defensive sectors also attracted buyers as risk appetite softened.
Fed policy and inflation in focus
Investor attention centred on the outlook for monetary policy ahead of the release of the May Consumer Price Index. The benchmark 10-year US Treasury yield fell to 4.52% as markets positioned cautiously. Recent economic data continued to suggest that the labour market is slowing gradually rather than deteriorating sharply, reinforcing expectations that the Federal Reserve can afford to keep interest rates unchanged in the near term.
Energy shares came under pressure as WTI crude oil dipped below $90 per barrel following early indications of potential progress toward reopening the Strait of Hormuz. However, this relief was short-lived, as reports of escalating Iran-related tensions prompted investors to adopt a cautious overall stance, weighing encouraging economic fundamentals against the persistent risk of geopolitical disruption.
Global and regional markets
This section covers the latest developments across Asian, European and currency markets, along with movements in oil and the latest geopolitical developments affecting investor sentiment.
Asian markets
Asian equities fell broadly, with the MSCI Asia-Pacific ex-Japan index slipping 0.6%. Japan’s Nikkei declined 0.9% while South Korea’s KOSPI dropped 2%, led by losses in technology shares. Investors turned increasingly cautious ahead of the US inflation release and shifted their assessment of near-term rate expectations.
US equity futures
US equity futures edged lower overnight, with S&P 500, Nasdaq 100 and Dow futures each declining between 0.2% and 0.3%, as fresh US strikes on Iran weakened hopes for a near-term peace deal and heightened geopolitical uncertainty.
European equities
European markets were mixed, with the Stoxx 600 and Euro Stoxx indices edging slightly lower as investors balanced easing geopolitical signals against uncertainty over upcoming ECB communications. Technology names underperformed once again, with ASML, Infineon and STMicroelectronics all weaker. Pharmaceutical company GSK slipped after announcing a $10.6 billion acquisition of Nuvalent, adding to cautious risk-off trading across the region.
Currencies
The US dollar index held near the 100 level following a sharp intraday rebound, supported by safe-haven demand amid renewed Middle East tensions and firmer inflation expectations. EUR/USD traded at 1.1546, reflecting modest euro resilience despite the dollar’s underlying support as markets awaited further direction from US inflation data and the Federal Reserve’s policy signals.
Oil markets and geopolitics
Oil prices recovered approximately 2% overnight, recouping part of the prior session’s losses as renewed US-Iran hostilities reignited concerns over Middle East supply disruptions. Sentiment was further supported by industry data showing a larger-than-expected drawdown in US crude inventories, pointing to tighter near-term market conditions. Geopolitical tensions intensified after the US launched strikes against Iranian military targets following the downing of an American helicopter near the Strait of Hormuz. Iran reportedly retaliated by targeting US bases in the region, reducing hopes for a near-term resolution and adding to broader market uncertainty.
China economic data
China’s consumer inflation rose 1.2% year-on-year in May, coming in slightly below expectations and reflecting subdued domestic demand. Producer price inflation, however, accelerated to 3.9%, its strongest reading since August 2022, driven by higher energy and input costs. Economists expect consumer inflation to ease further in the months ahead despite rising factory-gate pressures.
Individual stock movers
Technology and semiconductors
SpaceX has reportedly attracted more than $250 billion in investor demand for its planned IPO, more than three times the $75 billion it aims to raise, with pricing expected Thursday and strong interest from long-only funds and major institutions noted.
Super Micro Computer fell more than 9% in after-hours trading after announcing a $7 billion capital raise comprising a $5 billion public offering and a $2 billion at-the-market equity programme, with investors citing dilution concerns despite a $39 billion order pipeline.
Taiwan is considering tighter export controls on AI chips destined for China, potentially banning sales above certain performance thresholds and criminalising unauthorised exports in line with US policy, aiming to prevent advanced technology from reaching Chinese entities.
Samsung Electronics is reportedly evaluating plans to build an advanced semiconductor packaging facility in Gwangju, with a possible announcement later this month. The move would reinforce its position in the AI chip supply chain and address growing demand for high-bandwidth memory.
China is reportedly planning to invest approximately 2 trillion yuan ($295 billion) over the next five years to construct a nationwide network of interconnected data centres, led by government agencies and state-owned firms including China Mobile and China Telecom.
Apple will not launch its upgraded AI-powered Siri in the European Union after failing to meet interoperability requirements under EU rules. Apple reportedly sought an exemption but was denied. The Commission said the decision was Apple’s and that regulations do not prevent future product launches if compliance is achieved. Separately, Morgan Stanley noted that more than 850 million existing iPhones are unable to run Apple Intelligence features, while over 1.3 billion lack support for advanced Siri capabilities, largely due to hardware and memory limitations required for on-device AI processing.
Wolfe Research raised its revenue, capital expenditure and earnings forecasts for both Alphabet and Amazon, citing stronger-than-expected AI-driven cloud growth at Google Cloud and AWS, while maintaining Outperform ratings on both companies.
Goldman Sachs expects a strong fiscal third quarter from Micron Technology, raising its revenue and earnings forecasts on tighter memory chip supply and robust demand, while sharply increasing its price target despite maintaining a Neutral rating. The bank sees further upside from DRAM pricing, customer supply agreements and progress in next-generation HBM4 memory chips.
The US added major Chinese companies including Alibaba, Baidu, BYD and NIO to a list of firms allegedly linked to China’s military, restricting US government procurement and escalating tensions in the broader US-China technology rivalry.
Financial services
UniCredit said its stake in Commerzbank has risen to 37.7%, or 40.9% including derivatives, following additional share tenders under its €40 billion hostile takeover bid, though Commerzbank disputes the acceptance data.
Wells Fargo guided for a noticeable rise in net interest income this quarter and expressed confidence in achieving its full-year target of approximately $50 billion, citing outperforming loan growth, resilient consumers and expanding opportunities in investment banking, particularly in equity capital markets and advisory services.
Swiss lawmakers are reportedly considering relaxing proposed capital rules for UBS Group, potentially reducing the bank’s regulatory burden by billions of dollars, with the revised proposal reducing the Common Equity Tier 1 capital backing requirement for foreign subsidiaries from 100% to 70-80%.
Bank of America reiterated a Buy rating on MercadoLibre with a $2,400 price target, highlighting long-term earnings potential from its fast-growing credit card business, where balances reached $6.6 billion, despite near-term margin pressure.
Consumer and industrials
Starbucks CEO Brian Niccol indicated the company could potentially double its international store base from approximately 22,000 locations while adding at least 5,000 more in the US, highlighting growth opportunities in underserved central regions. Starbucks currently operates over 41,000 stores globally across 89 markets.
Emirates announced plans to win back travellers affected by the Iran conflict through enhanced customer support, safety assurances and flexible travel arrangements rather than fare reductions, while maintaining its schedules, hoping for a strong summer season, and lobbying for fewer airspace restrictions.
Roblox may be allowed back into Russia after the company reportedly provided assurances to comply with Russian laws, with the country’s Digital Ministry and communications regulator having asked law enforcement agencies to support the move, signalling a potential policy shift that could restore broader platform access.
Valeo signed a memorandum of understanding with Calyos to develop and industrialise high-performance chip cooling solutions, targeting rising thermal management demands in AI-driven data centres as chip and rack power requirements continue to increase.
Analyst ratings and sector moves
Morgan Stanley downgraded European defence shares to Equal Weight from Overweight, citing limited near-term catalysts, weaker momentum and potential Russia-Ukraine ceasefire discussions. Shares including Indra, Rheinmetall and Dassault fell. Meanwhile, the bank upgraded Metals and Mining and Capital Goods sectors, highlighting AI opportunities and positive prospects for copper and gold.
Upcoming economic events and earnings
Wednesday’s calendar includes US May CPI inflation data, where annual inflation is expected to rise to 4.2%, alongside the Bank of Canada’s interest rate decision. Markets will also monitor US oil inventory figures, a 10-year Treasury auction and the federal budget statement. Earnings are scheduled from Oracle Corporation, Chewy and Core & Main.
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