Global equity markets are showing increasingly divergent performance, with US markets maintaining solid year-to-date gains, European equities facing renewed pressure from energy and geopolitical risks, and Japan continuing to stand out among developed markets.
US markets are closed for Labor Day following another positive week. The S&P 500 gained 0.46% over the past five sessions and now stands at 7,718.60, up 13.41% year-to-date. The Nasdaq Composite remains the strongest major US benchmark, with a 14.54% year-to-date gain, while the Dow Jones Industrial Average is up 11.64%.
Technology continues to provide support, with renewed enthusiasm around artificial intelligence driving semiconductor stocks higher late last week. OpenAI's unveiling of GPT-6, branded "Astra," reinforced expectations surrounding AI-related semiconductor demand and helped lift the Philadelphia Semiconductor Index and Nasdaq 100.
JPMorgan strategists remain constructive on equities, pointing to improving earnings revisions and strengthening manufacturing data. They also see potential for non-US equities to outperform their US counterparts for a second consecutive year.
European markets are more cautious as rising energy prices and geopolitical tensions create renewed pressure. Brent crude approached $97 per barrel following the largest exchange of tanker attacks between the US and Iran to date in the Strait of Hormuz, while European natural gas prices also moved sharply higher.
The Stoxx 600 is down approximately 0.1%, with the majority of its constituents trading lower. Germany's DAX is the weakest major European index, declining 0.30% amid both higher energy prices and political uncertainty following gains by the AfD. France's CAC 40 and the UK's FTSE 100 remain marginally positive.
The FTSE 100 was the only major European benchmark to finish the previous week higher, gaining 0.48%. Year-to-date, the Euro Stoxx 50 leads European markets with an 11.80% gain, followed closely by the FTSE 100 at 11.67%, while the DAX and CAC 40 continue to lag.
Sentiment toward European equities has also weakened among wealth managers, with only seven of 22 surveyed by Bloomberg now overweight the region, compared with ten at the beginning of the year. Rising bond yields driven by higher inflation expectations remain a key concern.
Chinese equities continue to present a more subdued picture. The CSI 300 and Shanghai Composite are modestly higher in the latest session but remain negative year-to-date, while the Hang Seng has declined 0.93%. Broader enthusiasm surrounding AI across Asia has so far provided only limited support to Chinese markets amid persistent macroeconomic and geopolitical concerns.
Japan remains the standout developed market. The Nikkei 225 has surged 2.12% to 66,399.84, extending its year-to-date total return to 29.27%. Semiconductor stocks are leading the advance, with renewed AI enthusiasm also supporting South Korea's Kospi and the broader MSCI Asia Pacific Index.
While higher energy prices and geopolitical uncertainty are weighing on Europe, AI-related momentum continues to support US and Asian technology markets, with Japan maintaining its position as the strongest-performing major developed equity market this year.
