Weekly house view | Chip dip
The week in review
Semiconductor shares stumbled last week as investors reassessed the durability of the artificial intelligence (AI) boom. This marks the biggest correction in the momentum trade in five years. TSMC dropped more than 7% due to a margin miss, while US technology stocks came under pressure from growing competition by low-cost Chinese AI platforms. Case in point, a new Chinese AI model, Moonshot’s Kimi K3, is billed as both cheaper and more capable than several Anthropic and OpenAI offerings.
Meanwhile, ASML beat expectations, reporting a 21% year-on-year rise in second-quarter sales. SpaceX fell more than 40% from its peak, slipping below its initial public offering (IPO) price of USD 135.
The Middle East conflict deteriorated further. The US launched several waves of airstrikes, reinstated a naval blockade on Iran and struck an oil tanker bound for Kharg Island. Tehran targeted commercial vessels near Oman and retaliated with attacks on US bases in the region. At least four US troops were killed.
This week 18% of S&P 5001 constituents will report second-quarter earnings, including Intel, Google and Tesla. Results so far have been solid, with US banks beating analysts’ estimates. This week we are watching for global purchasing managers’ index (PMI) data. The European Central Bank will announce its latest rate decision on Thursday. Markets also await consumer price index (CPI) releases from the UK, Japan and Canada.
Britain’s Labour Party elected Andy Burnham as leader, making him the favourite to become UK prime minister.
Spain beat Argentina 1-0 to win the 2026 World Cup.
Quote of the week
“I’m not going to show up here and say mission accomplished,” said Federal Reserve chair Kevin Warsh after a better-than-expected June inflation reading. “What I’d say is there’s plenty of work to do.”
Key data
Chinese headline economic growth slowed to its lowest levels in decades (excluding the Covid-19 pandemic). Second-quarter GDP grew by 4.3% year on year.
US economic data were broadly supportive. Headline US CPI eased to 3.5% in June from 4.2% in May, aided by lower energy prices. Core inflation, excluding food and energy, fell to 2.6% year on year and edged down 0.02% month on month.
US unemployment slipped to 4.2% from 4.3% in May. June US retail sales grew 0.2% on the month. These latest data readings are positive indicators of US economic growth.
