Morning Brew July 29 2026

Good morning.

Markets are in a slightly uncomfortable phase. The headline indices, outside South Korea, still look reasonably calm, but the picture under the surface is more fragile. We are seeing a clear rotation away from the most crowded technology and AI infrastructure names and into more traditional sectors.

In the U.S., the S&P 500 rose 0.2% and the Dow gained 537 points, while the Nasdaq 100 fell 1.0%. The weakness was concentrated in semiconductors and data-centre-related names, where investors are becoming more sensitive to the size and financing of the AI buildout. Micron fell 8.8%, AMD lost 8.1%, Intel declined 5.9% and Sandisk dropped 14.2%. By contrast, Coca-Cola gained 5%, Boeing rose 4.8%, Microsoft added 1%, and Apple climbed almost 1% to USD 340.08 after briefly lifting its market value to USD 5 trillion for the first time.

The important message is not that the AI story is over. It is that investors are starting to ask harder questions about valuation, funding, margins and concentration. Credit-default swaps linked to AI-associated companies have moved higher, and Oracle’s credit protection is now at its highest level since the global financial crisis. That is a useful reminder that the market is no longer looking only at growth potential, but also at balance-sheet risk.

For those with a sense of humor, Jim Cramer also warned yesterday about leveraged AI investments. Some traders use him as a counter-indicator, but the broader point is still valid: when a theme becomes this popular, leverage and expectations matter.

Geopolitics remain a second source of risk. The U.S. and Saudi Arabia launched strikes on Iran-backed groups in Iraq, which they blamed for drone attacks on Saudi oil facilities. Iran warned that attributing those attacks to Tehran would be a major miscalculation.

The strikes come as Oman has proposed a new regional framework aimed at reducing tensions around the Strait of Hormuz, a critical route for global oil and liquefied natural gas flows. Oil rose by roughly USD 3, showing that the market remains highly sensitive to any fresh escalation in the region.

At the company level, Coca-Cola rallied 5% after raising its annual revenue and profit forecasts.

Boeing gained 4.8% after generating positive free cash flow as its turnaround continued to gain traction. Visa plans to cut around 7% of its workforce, or about 2,600 jobs, as the payments group looks to become more efficient.

U.S. trading volumes were broadly in line with recent sessions, with 17.2 billion shares traded versus an average of 17.4 billion over the previous 20 days.

Asia is where the pressure is most visible this morning. South Korea’s KOSPI is down nearly 12% as the chip rout deepens. SK Hynix reported strong quarterly results, but the numbers still fell short of elevated investor expectations, adding to concerns that AI spending by large technology companies may slow from here.

Rio Tinto reported a 43% rise in first-half profit, supported by strong commodity prices and higher production across its main commodities.

UBS also delivered a solid result, with second-quarter profit rising 17% and coming in ahead of expectations. The bank said it plans to repurchase shares worth USD 3 billion by the middle of next year at the latest.

At least USD 1 billion of that amount is expected to be bought back over the next three months.

Net profit attributable to shareholders came in at USD 2.8 billion, compared with expectations of USD 2.39 billion in a company-provided analyst poll. Deutsche Bank also beat expectations with earnings before tax at €2.7 billion vs an expectation of 2.27.

The Federal Reserve decision is the key macro event today. Markets currently assign a 71% probability to no change and a 29% probability to a 25-basis-point rate hike. That is unusually high uncertainty going into a Fed meeting and should keep FX, rates and growth equities sensitive to the tone of the statement and press conference.

Reserve Bank of Australia Governor Michele Bullock said another rate hike may still be needed to curb inflation, while also highlighting the unusually uncertain outlook.

U.S. Treasury yields fell 4–5 basis points across the curve, with the 10-year yield closing at 4.604% and the 30-year at 5.094%. The move was driven by lower oil prices and weakness in technology shares, although some of the gains were reversed after hours as Middle East headlines returned.

In FX, the USD Index is at 101.26. EUR/USD has risen to 1.14, GBP/USD is around 1.33, and USD/JPY has retreated to 163.40. Gold and silver are trading at 4,020 and 57.60, respectively, as markets wait for guidance from the FOMC. There are still more than 100,000 August gold futures contracts to roll; any remaining positions will be closed tomorrow.

The broader equity question is whether the market is simply rotating within risk assets or whether the AI trade is starting to create wider stress. Global markets have been volatile this month because investors worry that Alphabet, Microsoft, Amazon and other technology heavyweights may be overspending on AI data centres as they race to dominate the next phase of infrastructure.

The position of Friedrich Merz is weakening as there are fierce struggles about his cabinet reshuffle.

Today is also the second rate decision under Kevin Warsh’s leadership, which makes the communication especially important.

John summarises the setup well in his FX Update: this Fed says it does not want to provide forward guidance, but markets will still read every word for clues on growth, inflation and the likely reaction function. A rate hike would be taken as a hawkish surprise, while no move would likely reduce expectations for further tightening. The market is leaning toward a hawkish outcome and a stronger U.S. dollar, but it is not fully priced for a hike. A pass would therefore go against the market lean. One additional question is whether Warsh signals that the dot plots or Summary of Economic Projections may be discontinued from September onwards.

Besides the U.S. rate decision, we face a heavy earnings calendar, most notably Microsoft and Meta. Tomorrow brings more earnings and the U.S. inflation release, while month-end and index-linked savings-plan flows are also approaching.

The outlook is straightforward: if the Fed sounds hawkish, if inflation data remains sticky, or if Big Tech guidance disappoints, pressure on semiconductors and other long-duration growth assets can continue. If earnings confirm that AI demand remains strong and the Fed avoids a surprise, markets may stabilise quickly. Until then, position size matters more than conviction.

Trade safely.

Wednesday, July 29, 2026

Macro: No major U.S. macro release before the Fed decision.
Central banks / speakers: FOMC rate decision at 20:00 CET, followed by the press conference at 20:30 CET.
Corporate earnings: Microsoft, Meta, Qualcomm, Lam Research, Starbucks, Procter & Gamble, General Dynamics, UBS. Deutsche Bank, BASF, Nordex, Porsche AG, Airbus, L’Oréal, Hermès, ENI,Telecom Italia, Rio Tinto, ACS, Telefonica, CaixaBank, Endesa, Reckitt Benckiser, Glencore,

Thursday, July 30, 2026
Macro: German GDP and CPI; euro-area GDP, unemployment and sentiment indicators; U.S. GDP and PCE data.
Central banks / speakers: Bank of England rate decision.
Corporate earnings: Apple, Amazon, Mastercard, Shell, Anheuser-Busch InBev, Sanofi, Cigna, Valero Energy. BMW, Adidas, Symrise, Heidelberg Materials, Drägerwerk, MTU, Aixtron, ZF, Kion, Gerresheimer, KnorrBremse, Anheuser Busch, Saint Gobain, Société Générale, Schneider Electric, Veolia, Sanofi, Air France-KLM, Renault, Ferrari, Enel, Prada, ING, BBVA, Stellantis, Rolls-Royce, BAE Systems

Friday, July 31, 2026
Macro: China PMI; euro-area CPI; U.S. University of Michigan Consumer Sentiment.
Central banks / speakers: Bank of Japan rate decision.