The PHLX semiconductor index has dropped 20% from its June high. The sell-off came even despite positive results from ASML and TSMC. The former raised its 2026 sales forecasts while the latter’s profit jumped 77% to a record in the second quarter. Meanwhile SpaceX dropped below its initial public offering price. Overall for the week, the tech-heavy Nasdaq Composite was down 2.9%, the S&P 500 fell 1.6% while the Dow Jones Industrial Average declined 0.9%.
Another focal point of the week was the release of US inflation data. Both the consumer and producer price indexes came in lower-than-expected for June. This did help to lift market sentiment but was not enough to offset the tech losses as well as concerns around the Middle East. The cooling inflation dampened expectations of an imminent rate hike from the Federal Reserve. Meanwhile retail sales and weekly jobs claims remained resilient whilst the housing market was on the weak side. Shorter dated Treasury yields declined on the inflation data, with the 10-year note ending the week at 4.55%, although the 30-year note did end higher.
European markets ended the week little changed with gains in the luxury sector being offset by losses in technology. Regional performance was mixed, whereby the French CAC 40 was flat, Germany’s DAX lost 0.9% whilst Swiss and UK indices gained. Earnings announced over the week were generally positive, but not enough to warrant a strong upward move in markets. Another factor weighing on market sentiment was escalating geopolitical tensions in the Middle East, prompting the price of Brent crude to rise over 15% for the week. The European Central Bank is due to meet this week and while it is expected by markets to remain on hold, inflationary effects from higher energy prices could put a September rate hike on the table.
In the Asia Pacific region markets were mostly lower, dragged down by the slide in tech names. Leading losses was South Korea’s Kospi, driven by selling pressure on index heavyweights Samsung Electronics and SK Hynix. Highlighting the volatility, authorities announced that they would temporarily ban new listings of exchange-traded funds tied to major tech companies. The index had seen a mid-week rally only to reverse course the next day, accelerated by the Bank of Korea’s surprise 25 basis point rate hike. Japan’s Nikkei 225 also saw a steep loss of 6.4%, with the rise in oil prices weighing on the yen. The Shanghai Composite dropped 5.8% however Hong Kong indices proved more resilient, again supported by large internet names as well as mainland buying.