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Week commencing July 20th 2026
TradeDay Macro Matters
Macroeconomic / Geopolitical developments
- US stock averages sell off, tech leads lower
- Iran/ US tensions weigh on risk appetite, as oil climbs
- US CPI data better than expected
- Banks, Taiwan Semiconductor Manufacturing and ASML post strong earnings reports
- Week ahead sees focus on results from Google, Tesla and Intel
- What's Ahead
US stock averages sell off, tech leads lower
US equity markets sold off over the week as concerns over artificial intelligence spending and rising competition from Chinese developers weighed heavily on technology stocks. The Nasdaq led the decline, falling 2.90%, while the S&P 500 dropped 1.55% and the Dow Jones Industrial Average declined 0.70%, with investors rotating away from large cap growth names.
Technology was the weakest performing sector, falling 3.65%, while energy gained 4.54% as oil prices surged amid escalating tensions in the Middle East. The broader market remained under pressure as semiconductor stocks also retreated, with AI related valuations and the sustainability of the sector's recent rally coming under renewed scrutiny.
Iran/ US tensions weigh on risk appetite, as oil climbs
Renewed military strikes between the United States and Iran weighed heavily on investor sentiment during the week as tensions surrounding the Strait of Hormuz continued to escalate. The latest exchange of attacks cast further doubt over the fragile ceasefire agreed between the two countries, with the United States carrying out additional strikes and Iran showing little indication that it was ready to de-escalate. The Strait of Hormuz remained at the centre of investor concerns, as the crucial shipping route normally handles around a fifth of the world's oil supply. Tanker traffic through the strait fell sharply, highlighting the growing risk that further military escalation could disrupt the flow of energy from the Persian Gulf.
Oil prices climbed sharply as markets assessed the potential impact of the conflict on global energy supplies. West Texas Intermediate crude rose 15.42% to $82.54 per barrel last week, with Brent also moving significantly higher as traders priced in the possibility of prolonged disruption. The increase in energy costs added to concerns that inflation could prove more persistent, potentially complicating the outlook for central banks and interest rates. Meanwhile, heightened geopolitical uncertainty weighed on risk appetite, with technology and other growth focused stocks coming under pressure as investors rotated towards more defensive areas of the market. The energy sector was one of the strongest performers as oil prices surged, although the outlook remained highly dependent on whether tensions between Washington and Tehran continued to intensify or diplomatic efforts eventually resumed.
US CPI data better than expected
US inflation surprised to the downside in June, with headline CPI falling 0.4% month over month and the annual rate easing to 3.5%, while core inflation remained unchanged monthly and slowed to 2.6% year over year. The weaker than expected data, driven largely by lower energy and moderating services costs, helped reduce expectations of a near term Federal Reserve rate hike and pushed Treasury yields lower.
The report offered welcome relief on price pressures, although policymakers remain cautious given the potential for renewed Middle East tensions to lift energy costs again. With the Fed still focused on returning inflation sustainably towards its 2% target, investors viewed the data as supportive of a prolonged pause in interest rates rather than an immediate shift towards policy easing.
Banks, Taiwan Semiconductor Manufacturing and ASML post strong earnings reports
The second quarter earnings season got off to a strong start, with JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and Goldman Sachs all beating expectations. Strong equities trading revenue was a key driver, while Goldman Sachs also highlighted a deal pipeline at its strongest level in five years. Early results have been encouraging across the S&P 500, with 88% of companies reporting above forecast earnings and aggregate results coming in 16.4% ahead of estimates.
Taiwan Semiconductor Manufacturing delivered another standout quarter, with net income jumping 77.4% year over year and revenue rising 36% to a record NT$1.27 trillion. The company also raised its third quarter revenue forecast, with management pointing to extremely strong AI demand and high performance computing accounting for 66% of revenue. TSMC is continuing to expand production capacity, including a further $100 billion investment in Arizona to support growing demand for advanced chips.
ASML also raised its 2026 guidance for the second time this year after reporting better than expected second quarter results, with net sales of €9.3 billion and net profit of €2.9 billion. Strong orders from customers expanding AI and semiconductor capacity prompted the company to forecast full year sales of €43 billion to €45 billion, reinforcing the view that demand across the wider AI chip supply chain remains robust.
Week ahead sees focus on results from Google, Tesla and Intel
Investors face another busy week of second quarter earnings, with Alphabet and Tesla reporting on Wednesday before Intel takes center stage on Thursday. With the Nasdaq already down 2.90% last week as semiconductor stocks extended their recent pullback, markets will be watching closely to see whether corporate results and forward guidance can justify elevated technology valuations. Particular attention will be placed on AI spending, cloud demand, server growth and whether the huge investment in artificial intelligence is beginning to generate measurable returns.
The relatively light economic calendar should keep the focus firmly on corporate results, although the Global Flash PMI on Friday will provide a broader update on the health of the global economy. Earnings from GE Vernova, AT&T and T-Mobile will also offer insight into industrial activity and power demand, while investors will assess whether the recent weakness in the AI and semiconductor trade is simply a pause or the beginning of a wider correction.
What's Ahead
Central Bank Watch: This week's main central bank event is the ECB's Interest Rate Decision, Monetary Policy Statement and Press Conference on Thursday.
Macro Data Watch: This week's main macro data release is the Global Flash PMI on Friday, with Canadian CPI on Monday, UK Employment data on Tuesday and UK CPI on Wednesday also worth watching.
Earnings Watch: Second quarter US earnings take center stage this week, with Alphabet and Tesla, two of the Magnificent Seven reporting on Wednesday, followed by Intel on Thursday.
Date
Major Macro Data
07/20/2026
PBoC Interest Rate Decision; German PPI; Canadian CPI
07/21/2026
UK Employment Reports
07/22/2026
UK CPI, PPI and RPI
07/23/2026
ECB Monetary Policy Statement, Interest Rate Decision and Press Conference; Canadian Retail Sales; US Initial Jobless Claims; EU Consumer Confidence
07/24/2026
Global Flash PMI; UK Consumer Confidence and Retail Sales; Japanese CPI; German Consumer Confidence
Date
Major Earnings Data
07/20/2026
Nothing of note
07/21/2026
Charles Schwab; Danaher; Chubb; Capital One Financial
07/22/2026
Alphabet; Tesla; Philip Morris; GE Vernova LLC; Texas Instruments; AT&T; ServiceNow
07/23/2026
Intel; Rtx Corp; T-Mobile; Thermo Fisher Scientific; Union Pacific; Blackstone
07/24/2026
Exxon Mobil; American Express; NextEra Energy; Verizon
