Apple Chip Costs Keep AI Spending Concerns In Focus

Summary

Apple remained in focus after last week's price rises for iPads and MacBooks reinforced concerns over rising chip costs and whether heavy AI infrastructure spending will deliver sufficient returns. The S&P 500 and Nasdaq ended last week lower as semiconductor shares weakened, while the FTSE 100 also slipped despite posting its strongest weekly gain in more than a month. The US dollar stayed near a one-year high, sterling remained under pressure and oil prices edged higher after renewed US-Iran hostilities before easing as fresh talks were agreed.

Equities

The FTSE 100 closed 0.2% lower on Friday as losses in banks and energy stocks outweighed gains in precious metal miners. The FTSE 250 also slipped 0.06%, although the blue-chip index still recorded its strongest weekly gain in more than a month as tensions in the Middle East eased and shipping through the Strait of Hormuz resumed.

Shell and BP both closed more than 0.9% lower on Friday after crude oil prices fell 2.3%, dragging the energy sector lower.

Banking stocks also weakened, with the sector falling 1.4%. Carmakers dropped 3.9%, while chemical companies lost 3% during the session.

Precious metal miners moved in the opposite direction, rising 2.5% as stronger gold prices supported the sector.

Wise climbed 9.6% after reporting a 21% increase in active customers to 18.9 million during fiscal 2026. The company also announced plans to launch a new share buyback programme, helping lift the shares.

Heathrow Airport warned that profit could shrink this year after lowering its 2026 passenger forecast, adding pressure to the travel and leisure sector.

US markets ended Friday slightly lower as investors continued to reassess the outlook for AI-related spending. The S&P 500 slipped 0.05%, the Nasdaq fell 0.24% and the Dow Jones Industrial Average eased 0.09%.

The S&P 500 lost 2.05% over the week, while the Nasdaq dropped 4.7%. The Philadelphia Semiconductor Index fell 5.3% on Friday and finished the week down 7.9%, its worst weekly performance since early April.

Apple closed 3.1% higher on Friday, recovering part of Thursday's decline after announcing higher prices for iPads and MacBooks because of rising memory and storage chip costs.

Moderna surged almost 13% to its highest level since 2024 after presenting its drug development pipeline at an investor event.

ON Semiconductor plunged almost 24% after agreeing to acquire Synaptics in an all-stock deal worth about $7 billion. Synaptics also fell 3.7% following the announcement.

SpaceX edged 0.15% higher ahead of its inclusion in the Russell indexes. Reports that OpenAI could delay its planned public listing until next year also weighed on sentiment towards AI-related stocks.

Forex & Commodities

The US dollar remained firm early on Monday and is on course for its strongest monthly performance in almost a year. The dollar index held near a 13-month high at 101.3, supported by elevated US Treasury yields and continued uncertainty surrounding the Middle East. Investors are also looking ahead to this week's US labour market data, which could provide further direction for Federal Reserve policy.

Sterling edged lower early on Monday to $1.320, extending its decline for the month, while the euro was little changed at $1.139 after falling to a 13-month low against the dollar last week. The Japanese yen remained under pressure at 161.8 per dollar, close to a 40-year low, while the Australian and New Zealand dollars also continued to weaken.

Spot gold fell early on Monday to $4,058 per ounce, marking a fourth consecutive monthly decline. The metal came under pressure as higher oil prices and expectations of further US interest rate increases reduced demand for non-yielding assets. Silver also moved lower to $58.64 per ounce, while platinum rose to $1,617 and palladium climbed to $1,221.

Oil prices rose early on Monday after renewed US and Iranian strikes slowed shipping through the Strait of Hormuz. Brent crude increased to $72.44 a barrel, while US West Texas Intermediate crude traded at $70.05. Although Washington and Tehran agreed to resume talks following the weekend's escalation, disruption to tanker traffic has raised concerns that supply could take longer to recover than markets had previously expected.