Global equity markets are experiencing a broad-based retreat as technology stocks take a breather amid growing warnings that an unprecedented rally has run too far and too fast. Nasdaq 100 futures slipped 0.7% after a rally in chipmakers pushed the index to back-to-back record highs, with S&P 500 contracts falling 0.3% according to latest market data. The tech sector underperformed across major markets, with fears of new taxes on AI profits roiling Samsung Electronics Co. and SK Hynix Inc. in South Korea, pulling the Kospi index lower and weighing on Asian stocks. This retreat comes despite HSBC's bullish outlook on US equities, which had raised its year-end 2026 S&P 500 target to 7,650 from 7,500 earlier, citing stronger corporate earnings and continued resilience in large-cap technology stocks.
Global equity markets are demonstrating remarkable resilience despite rising geopolitical uncertainty in West Asia, as investors increasingly focus on the long-term promise of artificial intelligence and technological innovation rather than short-term disruptions from war and energy shocks. According to market strategist William Lee from Global Economic Advisors, speaking to ET Now, investors remain convinced that the ongoing conflict will remain limited in duration, allowing markets to concentrate on opportunities emerging from the next phase of technological transformation. As reported by The Economic Times, Lee noted that "It is a strong consensus among market participants that the war is going to be a short one and that consensus has held throughout this period even though there have been setbacks and some delays in the negotiation." He added that "We have clearly seen the market reaction that the markets are much more focused with the post-war era than they are with the war itself."
Brent crude rose 1.8% to above $106 a barrel for a third straight day, with the impasse between the US and Iran weighing heavily on market sentiment. The ceasefire in the Middle East is appearing increasingly fragile, with the Strait of Hormuz remaining almost shut after more than two months. As reported by Bloomberg, Guillermo Hernandez Sampere, head of trading at MPPM, noted that "Hopes for a resolution have suffered a setback and any further recovery stands on shaky ground." He emphasized that "Markets will need to reduce their risk exposure to avoid being overinvested at the wrong moment." This oil price surge is adding to inflation concerns that have already prompted investors to watch the benchmark US 10-year bond yield climbing toward 4.4% ahead of latest consumer price index readings.
While countries across Asia, including India, have faced pressure from supply shortages and rising commodity prices, Lee emphasized that investors continue to believe the United States and Europe remain firmly positioned to benefit from the accelerating AI revolution. According to the market strategist, "Europe and the United States remain fairly well on its way toward implementing the AI revolution, toward implementing technology, and toward implementing the kind of things that will lead to higher profits and that clearly is driving the markets." This technological focus is expected to continue as capital flows favor the United States over emerging markets due to America's leadership in artificial intelligence and innovation. Lee believes investors are "far more focused on productivity gains and identifying which sectors and companies stand to benefit the most from the AI-driven transformation underway globally." HSBC highlighted AI adoption as a key medium-term earnings driver, saying efficiency gains from artificial intelligence could support margin expansion across sectors beyond pure technology.
The Bloomberg Dollar Spot Index rose 0.3% while the euro fell 0.3% to $1.1750 and the Japanese yen fell 0.2% to 157.51 per dollar. The British pound fell 0.5% to $1.3538 amid political turmoil in the UK as Prime Minister Keir Starmer faced growing pressure to step down. Cryptocurrencies also declined, with Bitcoin falling 1% to $80,977.81 and Ether falling 1.5% to $2,311.77. Spot gold fell 0.8% to $4,696.46 an ounce while the MSCI Asia Pacific Index fell 0.7% and the MSCI Emerging Markets Index dropped 1.2%. The yield on 10-year Treasuries advanced two basis points to 4.43% while Germany's 10-year yield advanced five basis points to 3.09% and Britain's 10-year yield advanced nine basis points to 5.09%.
