US stocks slipped from record highs on Friday as rising energy prices and expectations of a more dovish Federal Reserve (Fed) stance weighed on investor sentiment. There was a decline of 1.20%, a decline of 1.50% and a decline of 1.10% as concerns about war-induced inflation and increased interest rates resurfaced.
The technology sector was hit by profit-booking after recent gains: down nearly 5%, down 3% and down nearly 4%, while the latter was down 2%. The trend bucked with a 4% rise after Bill Ackman revealed that Pershing Square had built a stake in the company. The extended losses – down about 3% – came after falling nearly 5% on Thursday as investors responded to President Donald Trump's claim that China had agreed to buy 200 jets, a figure that was just above earlier expectations.
Inflation expectations strengthened after recent CPI and PPI data pointed to rising price pressures related to the Middle East conflict and the continued closure of the Strait of Hormuz. The yield rose 10bps to 4.60%, its highest level in a year, while markets expect a full Fed rate hike by March next year and a more than 50% chance of additional tightening before the end of 2026.
European shares also closed sharply lower as higher energy prices and higher sovereign bond yields weighed on sentiment. It fell 1.80% to 5 825, while it fell 1.60% to 606. Industrial and technology stocks suffered losses, and all retreated sharply.
Britain fell about 2% as mining and banking stocks came under pressure amid renewed political uncertainty and rising inflation concerns. slipped 6.30%, while, and all finished lower. Germany underperformed its European peers, ending the day down about 2.10% and halting a two-day rally.
Asian markets were down nearly 2% on Friday and were down more than 1%. In Beijing, President Donald Trump wrapped up two days of talks with President Xi Jinping and the pair agreed to meet again in the US later this year. The White House said China will buy at least $17 billion worth of American agricultural goods annually by 2028, building on earlier commitments. Both sides also agreed to establish a trade and investment board to streamline bilateral negotiations.
China indicated it would consider tariff cuts as part of the package, although the US statement made no explicit mention of duties. Beijing confirmed plans to buy about 200 Boeing aircraft and said the US would ensure the supply of engines and other parts; China continues to develop its own passenger jet program but remains dependent on some foreign components.
The R fell around 16.70 against the US dollar on Friday, while rising as much as 8.78% as inflation concerns and political uncertainty weighed on sentiment.
In parliament, President Cyril Ramaphosa said the government was finalizing a formal electric-vehicle (EV) program and coordinating with Chinese manufacturers on nationwide charging infrastructure. The announcement followed questions about unemployment in the manufacturing sector and concerns about Morocco becoming Africa's largest vehicle producer in 2025.
The Department for Trade, Industry and Competition is completing an EV scheme aimed at attracting manufacturers and supporting local assembly. South Africa's relatively advanced industrial base should ease the transition, but domestic EV production is limited, officials say.
On Friday, commodity markets experienced significant volatility, with precious metals falling sharply in contrast to a strong bounce in energy prices. It rose more than 4.50% to near $106 a barrel, ending the week nearly 11% higher as the Strait of Hormuz remained effectively closed, raising concerns over global oil supply disruptions. Efforts to resolve the conflict have stalled, with the ongoing disruptions keeping energy markets under pressure and supporting higher oil prices. Meanwhile, Brent crude futures climbed above $109 a barrel, registering a weekly gain of about 8.10%.
The International Energy Agency warned that the oil market could remain severely undersupplied until October 2026, even if hostilities subside next month. At the same time, oil reserves continue to decline, while tanker traffic through the Strait of Hormuz is severely disrupted.
Precious metals also came under pressure, falling more than 2% to trade at around $4 542 an ounce, while metals fell nearly 9%, sliding for a third consecutive session, reflecting increased volatility in global commodity markets.