This week’s global markets commentary covers the key developments shaping investor sentiment, including movements in US equities, energy markets, currency markets, and the latest macroeconomic data releases.
US equities pull back after a strong run
American equity markets closed lower on Wednesday, snapping a period of solid recent gains. The Dow Jones Industrial Average dropped 1.2%, the Nasdaq Composite fell 0.9%, and the S&P 500 declined 0.7%.
The energy sector was the standout performer, buoyed by a sharp rise in crude oil prices. However, technology, financials, and consumer discretionary stocks weighed on the broader indices. Smaller-cap US equities also underperformed as investors grew cautious over rising energy costs and ongoing geopolitical tensions in the Middle East.
The session’s weakness was driven by two key forces: a lack of progress in US-Iran diplomatic negotiations, and an escalation in regional hostilities. Brent crude approached $98 per barrel, while government bond yields moved higher. Adding to the cautious mood, stronger-than-expected economic readings, including resilient services activity and robust private-sector hiring, reinforced the view that the Federal Reserve is unlikely to pivot toward interest rate cuts in the near term.
Despite the pullback, the broader macroeconomic backdrop continues to reflect steady growth and a resilient labour market. Investors should nonetheless be prepared for further bouts of volatility as markets absorb recent gains and ongoing geopolitical developments.
Latest global market and economic developments
Asian equities decline on risk-off sentiment
Asian equity markets fell on Thursday as investors adopted a cautious, risk-off stance. Uncertainty surrounding the US-Iran situation and weakness in global technology shares were the primary drivers. Japan’s Nikkei and South Korea’s KOSPI posted the steepest regional declines, pressured by profit-taking in chipmakers. Markets across Australia, Hong Kong, Singapore and China also finished in negative territory.
US futures weaken on Broadcom earnings disappointment
US equity futures moved lower overnight, led by technology and semiconductor shares after disappointing earnings and forward guidance from Broadcom. Nasdaq futures underperformed, while S&P 500 futures also declined. Dow futures were broadly unchanged. In after-hours trading, Broadcom dropped sharply, pulling Intel, AMD and Micron lower alongside it as profit-taking across the chip sector accelerated.
European markets fall on tariff and inflation concerns
European equities closed weaker, with the Euro STOXX 50 losing 0.7% and the STOXX 600 declining 0.5%. Tariff concerns and Middle East tensions fed into broader inflation worries. Banks were among the hardest-hit sectors, with UniCredit, BBVA and Deutsche Bank posting notable declines. Luxury goods stocks, including LVMH, also fell. ASML and Inditex bucked the trend, with both advancing on the back of sector strength and earnings.
Currency and commodity market movements
US dollar strengthens; oil prices edge lower
The US dollar index held near a two-month high of around 99.4, underpinned by stronger labour market data and expectations of a prolonged period of higher interest rates from the Federal Reserve. ADP and JOLTS figures both pointed to resilience in the jobs market ahead of the key nonfarm payrolls report. EUR/USD was quoted at 1.1605 as the dollar’s strength was compounded by geopolitical risk and inflation concerns.
Oil prices retreated slightly in Asian trading, with Brent and WTI both edging lower as investors locked in profits following recent gains. While Middle East uncertainty continued to underpin sentiment, losses were contained by a sharp fall in US crude oil inventories and strong export volumes, pointing to tighter overall supply conditions.
US-Iran tensions remain a key market risk
President Trump stated that Iran has agreed not to pursue the development of nuclear weapons, while also cautioning that Tehran could reverse course and suggesting the possibility of a future meeting with Supreme Leader Mojtaba Khamenei. Despite this, fresh military exchanges between the US and Iran have complicated ceasefire efforts. Negotiations remain suspended, Iran’s nuclear programme continues to be a source of contention, and the Strait of Hormuz remains a critical geopolitical flashpoint for global energy markets.
OECD cuts global growth forecast
The OECD has lowered its global growth outlook, warning that the U.S.-Iran war could cause far greater economic damage if a peace deal is not reached swiftly. A sustained disruption to the Strait of Hormuz could push global growth below 2%, stoke inflation, reduce investment and employment, and have a disproportionate impact on developing economies.
Equities on the move
Technology and semiconductors
Broadcom reported second-quarter revenue that fell short of consensus estimates and kept its long-term AI outlook unchanged, sending shares down over 13% in after-hours trading. AI chip revenue guidance came in slightly below expectations, though the company maintained strong growth projections. Investors appeared to focus on the earnings shortfall and the increasingly high bar set by market expectations across the semiconductor space.
TSMC reaffirmed confidence in multi-year growth, citing robust AI demand and rising requirements for advanced semiconductor capacity. The chipmaker highlighted accelerating adoption of AI applications and ongoing capacity constraints, while maintaining an upbeat revenue and investment outlook. TSMC also pointed to longer-term opportunities in autonomous vehicles and robotics.
Alphabet disclosed a series of strong metrics for its AI and cloud divisions. Gemini reached 900 million monthly active users, with 350 million paying subscribers. AI Overviews serves more than 2.5 billion users monthly. Its cloud backlog nearly doubled to over $460 billion, enterprise demand continues to outpace supply, serving costs declined 78%, and capital spending is expected to rise in 2027.
Cybersecurity
CrowdStrike delivered first-quarter fiscal 2027 results that beat consensus estimates, with revenue growing 26% and annual recurring revenue reaching a record high. The strong performance was driven by AI-powered cybersecurity demand. The company raised its full-year guidance and announced a four-for-one share split. Shares nonetheless declined in after-hours trading due to higher operating costs despite improved earnings and cash generation.
Consumer and retail
Inditex reported strong first-quarter results. Net income rose 5.4% to 1.4 billion euros and revenue grew 5.8% to 8.75 billion euros, beating analyst forecasts. Gross margins improved, and early second-quarter sales were up 11.5%. The group highlighted solid operational execution, continued market share gains, a net cash position of 10.8 billion euros, and planned investment of 2.3 billion euros.
Industrials and materials
USA Rare Earth secured agreements with the US Department of Commerce, gaining access to up to 1.6 billion dollars under the CHIPS Act to support the build-out of a domestic rare earth supply chain. The funding supports the company’s Texas Round Top project and manufacturing expansion, with production targeted by 2028 and total committed funding reaching approximately 3.5 billion dollars.
Rio Tinto was downgraded to underperform from sector perform by RBC Capital Markets, despite an increase in its price target to 6,400 pence. The downgrade reflects a weaker iron ore price outlook, with prices expected to decline toward $85 per tonne by 2027. While earnings forecasts were revised upward, the current market valuation implies meaningful downside risk from here.
Market strategy
Yardeni Research, which holds Wall Street’s most bullish S&P 500 target of 8,250, has adopted a more cautious near-term stance. The firm highlighted Middle East tensions, potential oil price spikes, possible Federal Reserve tightening, and a pipeline of major IPOs as near-term risk factors. It remains constructive over the longer term, pointing to strong corporate earnings, favourable economic data and AI-driven productivity gains.
Citi identified selective opportunities within the nuclear upstream supply chain as small modular reactor development continues, albeit slowly, with limited near-term hyperscaler deal activity. SMRs are expected to become more commercially relevant in the early 2030s, though existing operators remain cautious about cost overrun risks. Citi’s preferred exposure is Centrus Energy, with NuScale Power its least preferred name.
Morgan Stanley raised its price target on ASML to 1,660 euros from 1,400 euros, maintaining an overweight rating. The revision reflects stronger confidence in EUV shipment capacity and long-term demand. The bank lifted its 2027 and 2028 output and earnings estimates, expects structural support from memory long-term agreements, and outlined a bull case target of 2,000 euros and a bear case of 400 euros.
Upcoming economic data and events
Key US data releases today include the Challenger job cuts report, weekly jobless claims and continuing claims, final first-quarter productivity and unit labour costs, EIA natural gas storage figures, Treasury bill auctions, mortgage rates, Federal Reserve speeches, and Fed balance sheet data.
On the earnings front, notable reports are expected from Ciena, Samsara, Rubrik, DocuSign, Planet Labs and Guidewire, among others.
This information is provided solely for educational and informational purposes and should not be construed as investment advice, advice on specific investments or investment decisions, tax advice, legal advice, or any other form of professional or regulatory advice. The information does not take into account your personal circumstances and is provided to you on the express understanding that it does not constitute advice and should not be relied upon in making any investment decision. Investing in financial instruments involves risk. You should conduct your own research before making any investment decisions and seek the assistance of a licensed financial advisor if you are unsure. No person should act on any opinion or information contained in this document without first obtaining appropriate professional advice. Calamatta Cuschieri Investment Services Limited does not accept liability for any actions, proceedings, costs, demands, expenses, damages, or losses suffered as a result of reliance on the information herein.
