Morning Brew June 24 2026

Good morning.

Markets are starting the day caught between two powerful forces: tentative progress in the Middle East and a sharp reassessment of the artificial intelligence trade. The situation around the Strait of Hormuz remains complex, with conflicting statements from Washington and Tehran, but tanker traffic has started to improve again as U.S.–Iran talks continue. Security assurances from the International Maritime Organization could help release hundreds of ships from the Persian Gulf, while UAE exports have recovered to roughly 85% of pre-conflict levels through pipelines, storage and alternative routes. A temporary U.S. waiver also allows global buyers to purchase Iranian crude and products for the next 60 days.

This does not mean the geopolitical risk has disappeared. Iran and Oman are discussing a possible joint framework for Hormuz transit, including the idea of passage fees, and the broader political backdrop remains fragile. In the U.S., support for the war is visibly weakening. Donald Trump’s approval ratings have slipped, and the Republican-controlled Senate voted to halt the war in a largely symbolic move. That vote does not end the conflict, but it highlights growing divisions inside his own party and makes the policy path less predictable.

The macro picture is equally mixed. The latest S&P Global U.S. Manufacturing PMI rose to 55.7 in June, its highest level since May 2022 and clearly above expectations. Output and new orders were strong, inventories jumped, and supplier delivery times lengthened. However, the headline number needs to be read carefully. Much of the strength appears to come from companies front-loading orders and rebuilding inventories because they fear supply disruptions and higher input costs. At the same time, manufacturing employment fell at its fastest pace since May 2020, which is not exactly the kind of detail that supports a clean growth story.

The Federal Reserve story remains in focus: Stronger activity data, persistent price pressure and rising input costs are pushing markets toward a more hawkish rate outlook. The U.S. dollar has strengthened broadly, with the Bloomberg Dollar Spot Index reaching its highest level since November 2025. EUR/USD is below 1.14, GBP/USD is near 1.32, Bitcoin is around 62,000, and USD/CHF has broken above 0.81 for the first time this year. The most sensitive currency pair remains USD/JPY, which is trading close to 162 and therefore back in intervention territory. Japanese officials will not be comfortable with these levels.

Equity markets are no longer treating higher rates as background noise. Wall Street suffered a sharp technology-led selloff, with the S&P 500 down 1.4% and the Nasdaq 100 down 3.3%. The pressure was concentrated in semiconductors and artificial intelligence-linked names. The Philadelphia Semiconductor Index fell almost 8%, with memory and chip-related stocks leading the declines after a very strong year. Nvidia was the largest drag on the S&P 500, while Sandisk also sold off heavily. Financials, by contrast, managed to outperform, which tells us this was not a general collapse in risk appetite but a very targeted unwind of crowded growth exposure.

The technology rout started in South Korea, where the Kospi suffered its sharpest one-day fall since March before recovering part of the move. Japan and Taiwan also struggled, while Europe was pulled lower by the same semiconductor weakness. The Stoxx Europe 600 fell, technology was the clear laggard, and the DAX declined as Infineon came under pressure. The Swiss market was one of the few relative bright spots, supported by Novartis.

This looks less like a panic and more like an expectations reset. The artificial intelligence story is still alive, but valuations had become very demanding. When a sector has risen this far, investors no longer accept good news; they need great news. That makes tonight’s Micron earnings important. The market will not only look at the past quarter. It will look for signs that memory demand, data-centre spending and AI-related orders are still accelerating. If the numbers and guidance are strong, the selloff may stabilise. If not, the pressure on semiconductors could continue.

Commodities are sending a similar message about positioning and liquidity. Gold fell below 4,100 dollars per ounce, its lowest close in two weeks, as investors appear to have liquidated bullion holdings to cover losses elsewhere. A stronger dollar added another headwind. Silver is also under pressure and is now trading close to important support near 61.20. Brent crude has slipped below 77 dollars per barrel as improving tanker traffic through Hormuz reduces some of the immediate supply risk. WTI is near 73 dollars. Lower oil is helpful for the inflation outlook, but only if the peace process continues to hold.

From here, the market needs answers on three fronts. First, can the U.S.–Iran talks continue without another setback in Lebanon or Hormuz? Second, can the AI and semiconductor trade absorb a valuation reset without turning into a broader equity correction? Third, will upcoming data confirm that the U.S. economy is strong enough to justify higher rate expectations, or will investors start to worry that tighter financial conditions are beginning to bite?

For today, the German IFO survey and Micron’s earnings are the key near-term events. Tomorrow’s U.S. PCE data will be even more important for the rate path. The market is now being driven by the interaction between technology sentiment and U.S. rates. If Micron reassures investors and PCE does not surprise to the upside, some calm can return. If either disappoints, volatility is likely to remain elevated.

My view is that this is not yet a broad market breakdown, but it is a warning shot. Crowded trades are being tested, leverage is being reduced, and markets are becoming less forgiving. In this environment, chasing every move is dangerous. The better approach is to respect the volatility, focus on position size, and wait for confirmation before assuming that yesterday’s selloff was either the end of the correction or the start of something much larger.

Outlook: The day will likely be shaped by whether the market sees yesterday’s technology selloff as a healthy reset or the beginning of a broader unwind. The German IFO survey will give an early read on European sentiment, but the bigger test comes from Micron’s earnings and tomorrow’s U.S. PCE data. If Micron confirms that AI-related memory demand remains strong and inflation does not surprise higher, risk appetite can stabilise. If guidance disappoints or PCE reinforces the hawkish Fed repricing, the pressure on high-growth and rate-sensitive assets could continue.

Trade safely.

• Wednesday, June 24, 2026
  U.S. New Home Sales, Germany IFO, U.S. Current Account, Fed Stress Test Results, Micron earnings
• Thursday, June 25, 2026
  U.S. GDP, Personal Income and Spending, PCE, Durable Goods Orders, Initial Jobless Claims
• Friday, June 26, 2026
  U.S. Advanced Goods Trade Balance, University of Michigan Sentiment Final, Kansas City Fed Services Activity