Market Quick Take - Big Tech's Capex Test, Oil Tops $96 - 23 July 2026
Market Drivers and Catalysts
On July 23, 2026, U.S. stocks experienced a slight decline while European markets advanced broadly, and Asian markets rallied, driven by renewed AI spending that positively impacted Korean chipmakers. The VIX index eased below 17 as the chip sector rebounded, with upcoming Intel earnings and the European Central Bank (ECB) meeting being key focus points.
Macro Overview
The U.S.-Iran conflict intensified, with U.S. Central Command conducting strikes on Iranian military targets. Iran-backed Houthi militants attacked Saudi oil tankers in the Red Sea, leading to increased supply-risk premiums in crude oil. This situation has reignited inflation concerns, prompting discussions about potential Federal Reserve rate hikes as Treasury yields approached cycle highs.
In Asia, the Bank of Japan is reportedly considering faster rate hikes due to persistent yen weakness, while Bank Indonesia surprised markets by maintaining its policy rate at 5.75% after previous hikes. In Europe, attention is on the ECB's policy decision, following a positive German ZEW sentiment report.
Earnings Events
Recent earnings reports included notable performances from Tesla, Alphabet, and General Electric Vernova, with Alphabet's capital spending guidance raising concerns about profitability despite strong cloud growth.
Equities Performance
USA
The S&P 500 fell 0.1%, the Nasdaq 100 dropped 0.5%, and the Dow remained flat. Notable declines included GE Vernova, which fell 8.7%, while Super Micro Computer surged 19.8% after reporting significant new orders. Alphabet's stock fell over 3% after raising its capital spending guidance to $195–205 billion for 2026.
Europe
European markets saw gains, with the Stoxx 600 rising 0.6%. Airbus announced a €5 billion buyback, boosting its stock by 7%. Other notable gainers included Randstad and Hiab, reflecting positive labor demand and order growth.
Asia
Asian equities advanced, led by South Korea's Kospi, which rose approximately 3.5%. The rally was supported by Alphabet's increased capital spending plans, which bolstered demand expectations for memory chips and AI infrastructure.
Volatility Insights
The VIX index settled at 16.64, indicating a soft volatility environment despite the mixed performance in tech stocks. The term structure remained in contango, with options implying modest movements in the S&P 500.
Digital Assets
Digital assets saw a slight decline, with Bitcoin and Ethereum both down around 0.5%. However, crypto miners experienced gains, with Riot and Cipher leading the way. Mirae Asset's acquisition of the Korean exchange Korbit marked a significant development in the local crypto market.
Commodities Update
Crude oil prices surged, with Brent reaching nearly $96.50 per barrel due to geopolitical tensions affecting supply routes. Gold prices remained stable above $4,100 per ounce, supported by inflation concerns and safe-haven demand amid Middle East tensions.
Fixed Income Overview
U.S. Treasury yields remained elevated, with the 10-year yield nearing its 2026 high. The market is closely monitoring inflation risks stemming from rising oil prices, which have revived discussions about potential Fed rate hikes.
Currencies Analysis
The U.S. dollar eased slightly, while the yen remained under pressure amid speculation of Bank of Japan rate hikes. The euro strengthened ahead of the ECB meeting, supported by positive economic indicators from Germany.
Conclusion
The market is navigating a complex landscape of geopolitical tensions, inflation concerns, and corporate earnings, with significant implications for investment strategies moving forward.