Ahead of us is one of the most tense weeks of the year, with markets digesting both crucial central bank decisions and a reality check on the valuations of tech giants. Yesterday's relief in the oil market, which we covered in our previous brief, is somewhat stabilizing sentiment; however, investor focus is quickly shifting back to the United States. Rising U.S. bond yields and growing concerns over the massive costs of artificial intelligence (AI) development have triggered a distinct capital rotation on Wall Street in recent hours.

Geopolitical Environment

• A breath of relief in the oil market. Following the recent shock when Brent crude crossed the $100 per barrel mark in response to escalating tensions and strikes between the US and Iran, the market continues its correction. Reports of a temporary pause in mutual airstrikes pushed US WTI oil prices down by over 5% yesterday (into the low $80s), while Brent pulled back below the midpoint of the $80–$90 range. Market commentaries highlight that this military pause eases the short-term perception of inflationary risk, which helped prompt a slight pullback in bond yields immediately following the peak in commodity prices. (Sources: Charles Schwab; ADM Investor Services; Saxo Bank; Zanders).

Today's Highlights

• A painful reality check in the tech sector. Quarterly results and guidance from tech giants triggered a sharp sell-off. During a recent session, the tech-heavy Nasdaq 100 index fell by around 2%, while the broader S&P 500 dropped by more than 1%. Tesla shares plunged by approximately 14–15%, and Alphabet (Google's parent company) sank by around 6–7%. The market attributes these declines to disappointment over certain profitability metrics and growing fears regarding mammoth capital expenditure (capex) plans for AI infrastructure. Capital is beginning to rotate away from expensive growth stocks toward sectors such as energy and materials. (Sources: Saxo Bank; Zanders; TradingKey).
• Nvidia, OpenAI, and market fears over "circular financing". Pressure on the Nasdaq was also driven by declines in chipmakers (Nvidia down ~5%, AMD down ~8%). The sell-off followed media reports, citing anonymous sources, according to which Nvidia is considering providing around $250 billion in financing guarantees for OpenAI. These funds would enable the lease of a planned 10-gigawatt data center campus in Ohio (linked to SoftBank). The market fears the phenomenon of circular financing, where a chipmaker effectively finances demand for its own products. Concern is also raised by the fact that the privately held OpenAI does not hold a public investment-grade credit rating. (Sources: Wall Street Journal; TheStreet; Tom's Hardware).
• Rising yields and dollar strength ahead of Fed decision. The 10-year US Treasury yield surpassed the 4.70% level, while 2-year yields hit new highs for the year. This is pushing the US Dollar Index (DXY) to its highest levels since early July, driving EUR/USD down toward 1.14. Higher yields boost the attractiveness of US assets but simultaneously weigh on stock valuations. This comes amid massive uncertainty ahead of tomorrow's decision by the US Federal Reserve (Fed). Analysts describe the July meeting as a close call—the market is deeply divided, with forecasts split between a 25-basis-point rate hike and keeping rates unchanged, a hangover from the recent spike in oil prices and sticky inflation. (Sources: Saxo Bank; Zanders; IC Europe Forecast; BNN Bloomberg; Edward Jones).
• Record debut in China – CXMT the star of the trading floor. ChangXin Memory Technologies (CXMT) raised approx. $8.6 billion (CNY 57.9 billion) in its debut on Shanghai's STAR Market. This is the largest IPO (initial public offering) in Asia in 2026. The company's stock soared 466% on its first trading day, translating into a market capitalization above CNY 3.3 trillion and briefly making it the most valuable company in mainland China (surpassing even ICBC). The capital raised is slated for a massive expansion of DRAM memory production capacity (including the DDR5 standard). (Sources: Business Insider; Forbes; Tom's Hardware).
• Yen at historic lows – the specter of intervention. USD/JPY broke above the 163 mark, marking the weakest level for the Japanese currency since the late 1980s. Such a drastic weakening of the yen amplifies the risk of "imported inflation" in Japan (raw materials and energy purchased abroad become significantly more expensive). This situation fuels market speculation that Japanese authorities may soon opt for direct currency intervention, especially ahead of the Bank of Japan meeting scheduled for this week. (Sources: IMF Global Markets Monitor; IC Europe Forecast; Saxo Bank).

Market Background

• Astronomical flows on Wall Street and SpaceX debut. The recently completed quarterly rebalancing in major US indices generated record capital flows of around $1.3 trillion—more than double last year's average. A key driver was the inclusion of stock market newcomer SpaceX in the Nasdaq 100 index, which forced passive funds into automatic stock purchases worth approx. $4.3 billion. The predictability of these flows enabled some hedge funds to generate additional arbitrage profits. (Sources: Financial Times; JPMorgan).
• Barclays strongly beats expectations. The British bank reported a 17% year-on-year increase in pre-tax profit for the first half of the year (reaching £6.1 billion), clearly beating consensus estimates. The main growth drivers were equity trading revenues and advisory on mergers and acquisitions (M&A). As a result, the bank announced a new £1 billion share buyback program and raised its full-year revenue forecasts. (Sources: Reuters; Global Banking & Finance Review).
• Gold loses its luster due to bonds. The precious metal fell by about 2% during the last session and now trades more than 20% below its February peaks. Although geopolitical risks (e.g., the Middle East) typically support gold, it is currently losing ground to rising real US bond yields and a strong dollar, which make fixed-income assets significantly more attractive. (Sources: Zanders; Saxo Bank).

What to Watch

• July 28 (today), 16:00 – US: Consumer Confidence Index (Conference Board). An important gauge of US household sentiment. A weaker reading could cool inflation expectations somewhat and impact the dollar's valuation.
• July 29 (Wednesday), 20:00 – US: Fed Interest Rate Decision. The key event of the week. The market is torn between a pause and a hike. A press conference will take place half an hour after the decision, setting the direction for the dollar, bonds, and stock markets.
• July 30 (Thursday), 13:00 – UK: Bank of England (BoE) Decision. Investors will closely monitor the voting split within the committee to assess whether the BoE is preparing the market for shifts in monetary policy.
• July 30 (Thursday), 14:30 – US: Preliminary GDP (Q2) and Core PCE Index. A series of major macroeconomic data points from the US. The PCE index is the Fed's preferred inflation metric, which, combined with economic growth, will determine future Federal Reserve moves.
• July 31 (Friday) – Japan: Bank of Japan (BoJ) Decision. With the yen at historic lows (above 163 against the dollar), the market eagerly awaits potential steps to normalize Tokyo's ultra-loose monetary policy.