Public Markets 3 Days

Last updated: July 28, 2026, 2:30 AM ET

AI Spending Fuels Chip Stock Volatility and Market Uncertainty

Global chip stocks experienced a significant selloff, driven by growing concerns over the sustainability of artificial intelligence spending and increased competition from Chinese manufacturers. South Korean markets, particularly chipmakers like SK Hynix and Samsung, led the losses, prompting trading halts on the Kospi index. Asia stocks broadly slid, with the regional benchmark heading for a technical correction after falling 10% from its June peak. Investors are questioning the returns from billions invested in AI, leading to a reassessment of chipmaker valuations. Nvidia, a key player in the AI boom, saw its stock decline, with Apple regaining its position as the most valuable public company amid these concerns. The deepening rout in semiconductor stocks was exacerbated by fears of circular funding and China's advancements in chipmaking.

Energy Markets React to Easing Middle East Tensions and Shifting Supply Dynamics

Oil prices extended a steep drop as tensions between the U.S. and Iran eased, with Brent crude falling 6% after earlier spikes pushed it above $100 a barrel. A pause in hostilities between the U.S. and Iran, with no strikes reported for a second day, fueled optimism among oil investors for a potential conflict resolution. The ongoing pause in U.S.-Iran hostilities contributed to a decline in oil prices in early Asian trade. However, satellite images showing smoke at Saudi oil facilities kept traders on edge, although data offered few clues about the kingdom's energy production. Japanese policymakers are considering expanding financial support for Japanese companies investing in overseas oil and gas pipeline projects, including in the Middle East, to strengthen alternative energy sources.

Corporate Earnings and Deal Activity Show Mixed Signals Across Sectors

Mercedes-Benz cut its sales guidance for the year, anticipating slightly fewer car sales and lower group revenue amidst a worsening Chinese market. In the luxury sector, LVMH reported a recovery in its main fashion arm, boosting hopes for a broader luxury market rebound with second-quarter sales reaching $22.20 billion. Private equity is seeing significant activity, with Ares Management reportedly in talks to acquire Leonard Green & Partners in a deal that would more than quadruple Ares' private equity business. Johnson & Johnson agreed to a $5.5 billion settlement to resolve about 76,000 lawsuits alleging its talcum powder products caused ovarian cancer. Meanwhile, Curium is in advanced discussions to acquire radiopharma company Lantheus Holdings Inc. in a deal potentially valued at around $7 billion.

Emerging Markets and IPO Activity Highlight Growth Opportunities Amidst Challenges

India's software stocks are poised for their biggest monthly outperformance over global chipmakers, indicating a shift in investor focus away from the AI trade towards beaten-down information technology stocks. India's IPO market is also active, with several offerings closing and more firms announcing their schedules ahead of an August deadline for audited results. Zhongji Innolight Co. priced its Hong Kong listing below the maximum, raising HK$53.4 billion ($6.8 in one of the city's largest initial public offerings in seven years. A Chinese province, Hefei, saw significant gains of 5,000% from its investment in CXMT's listing, highlighting the financial windfall from the artificial intelligence boom. BYD is challenging Toyota in Japan's "kei" car market with its new tiny EV, as the Chinese company aims to become the world's largest carmaker within five years.

Government Policy and Economic Trends Shape Market Sentiment

Taiwan's five-year bond yield climbed to its highest level in nearly two decades, influenced by a disappointing 20-year bond sale and growing expectations of a central bank interest rate hike. The Singapore dollar remained steady, supported by the Monetary Authority of Singapore's tighter policy stance. Australian central bank chief RBA's Bullock indicated signs of the economy cooling, though the effectiveness of this year's rate hikes in returning inflation to target remains uncertain. The Philippine central bank intervened minimally to defend the peso, which had weakened to a record low. Western nations are increasing spending to bring explosives production back home, reflecting a trend towards reshoring critical manufacturing.

Technology and Data Center Investments Drive Significant Capital Flows

Nvidia is reportedly backing a $50 billion lease for a Texas data center that will utilize its chips, with the company's CEO deploying its balance sheet to support the growth of the AI computing market. BlackRock Inc. successfully raised $12.5 billion in a bond sale tied to a Meta Platforms Inc. data center project in Texas, signaling robust demand for the securities despite a recent selloff in big tech debt. The surge in AI spending is leading to increased credit risks for big tech companies as they borrow heavily to fund data center investments. OpenAI is reportedly close to securing a $500 billion data center deal, with Nvidia providing a $250 billion financial backstop for the massive AI infrastructure project. Concerns are mounting over the economic implications of the AI boom, with chip stock valuations facing scrutiny and pressure on AI spenders to justify their investments.