Morning Brew July 2 2026

Good Morning,

Key things to watch:

• U.S. Nonfarm Payrolls are due today, with consensus at 110k, unemployment expected at 4.4%, and average hourly earnings at 2.5%. U.S. markets will be closed tomorrow for Independence Day.
• Meta surged 9.7% on reports that it plans to sell excess AI compute capacity as a cloud-infrastructure business.
• WTI extended its decline toward USD 68, while gold held above USD 4,000 and silver traded near USD 60.
• U.S. private businesses added 98k jobs in June, down from 122k in May and below forecasts of 113k.
• Euro-area inflation came in softer than expected, weighing on the euro.
• Equity indices are showing some nerves ahead of the U.S. data and the long weekend.
• Swiss CPI will be released at 08:30, with consensus at 0.5% year-on-year.

Fed Chair Kevin Warsh kept his message at the ECB’s Sintra forum deliberately vague. He said policymakers would  decide whether to raise rates only once they “shut the door” and begin their next meeting, again refusing to offer forward guidance. His comments leave markets focused on the data rather than any clear policy signal.

In Asia, SK Hynix announced plans to invest 100 trillion won, or roughly USD 64 billion, in new NAND memory-chip and packaging facilities. The investment underlines how aggressively the AI supply chain is still expanding, even as semiconductor stocks remain vulnerable to crowded positioning and high expectations.

U.S. equities were mixed. The S&P 500 closed 0.2% lower at 7,483, while the Nasdaq 100 fell 1.5% as semiconductors came under heavy pressure. The Philadelphia Semiconductor Index dropped 6.3%, with Micron down 10.6% and Corning off 13.6%. Meta was the clear standout, rising almost 10% after reports that it is preparing to turn excess AI compute capacity into a cloud-infrastructure business. The Dow, meanwhile, gained 0.6% and reached a new record above 52,700, supported by financials.

European markets were softer. The Stoxx 600 slipped 0.4% to 639.31, pulling back from the prior session’s record high after its best quarter since 2020. The Euro Stoxx 50 lost 0.72%, while the DAX managed a small gain as Rheinmetall jumped 6.1% and European defence stocks extended their rally following the UK’s GBP 15 billion military-spending commitment. ASML was the biggest drag on the Stoxx 600, falling 4.6%.

In FX, EUR/USD fell as much as 0.4% to 1.1376 after ECB President Lagarde said risks to euro-area inflation and growth are now less pronounced. The softer inflation backdrop and more balanced ECB tone left the euro under pressure.

USD/JPY was steady around 162.55 after the yen’s latest slide to four-decade lows. Japan’s FX chief again highlighted intervention as an effective tool and stressed close coordination with the U.S., keeping intervention risk firmly on the radar.

Gold rose as much as 2.7% as the dollar and bond yields pared gains after Warsh’s remarks, with futures settling around USD 4,068 per ounce. The metal has stabilised above USD 4,000 after a difficult second quarter, while silver remains close to USD 60.

Charu looked at ways to trade the AI theme more safely. The core message is that AI remains a long-term growth story, but the trade has become crowded. Heavy exposure to the Nasdaq, semiconductors and mega-cap technology can leave portfolios vulnerable to sharp drawdowns.

Investors can reduce that risk by rebalancing winners, adding defensive growth, lowering mega-cap concentration and using dollar-cost averaging rather than chasing every move. The aim is not to abandon AI, but to avoid having too much of the portfolio depend on one crowded theme working perfectly.

Expect volatility today on the one hand driven by the data we expect, the long weekend is likely to cause position adjustments and we expect beginning of the month passive flows to be felt.

I will write a short comment before going on holiday tomorrow.

• Thursday, July 2, 2026
  Swiss CPI, U.S. Nonfarm Payrolls, unemployment rate, average hourly earnings, initial jobless claims and factory orders; U.S. bond market early close ahead of Independence Day.
• Friday, July 3, 2026
  U.S. Independence Day observed — U.S. equity markets closed; liquidity likely thin in Europe.