Yesterday, equity indices turned higher. The S&P 500 rose by 0.72%, and the Nasdaq 100 jumped by 1.12%. The Dow Jones Industrial Average gained 0.29%.
Today, Asian markets have already moved lower, with the technology sector again at the epicentre of selling. The MSCI Asia Pacific index fell as much as 2.2% intraday before buyers stepped in on the dip, trimming losses to about 1.5%. The renewed tech sell-off has intensified concerns that the AI rally may have gone too far.
Samsung was in the spotlight as its results illustrated a shift in market sentiment. The company reported a phenomenal 19-fold jump in profit, driven by surging demand for data-center memory chips, yet the stock still plunged by about 10%. The reason is that profit beat analyst expectations by only 6%, and after shares had doubled year-to-date, the market had been looking for more. The essence of the move is a large-scale re-pricing of the next stage of the AI race.
Enthusiasm for the technology itself has not disappeared, but investors' focus has shifted to a key question: can rising capex, intensifying competition, and capacity expansion deliver profit growth sufficient to justify elevated valuations? Headlines about capacity builds, delays, and rising debt — once ignored — are now triggers for selling. The dominant theme remains capital rotation out of overheated tech into other sectors.
Elsewhere, markets moved into risk-off mode, and the geopolitical premium returned to oil. Brent rose by about 1.2% to $72.85 after a loaded gas carrier was struck off the coast of Oman while transiting out of the Strait of Hormuz. The attack again calls into question the fragile late-June truce and reminds markets that regional geopolitical risk is far from resolved.
The 10-year Treasury yield rose by three basis points to 4.50%. Gold fell for a second day to about $4,125/oz as the dollar firmed slightly. The yen strengthened modestly to about 161.81 per dollar despite hedge funds holding their most bearish position on the currency since 2007.
Technically, the daily chart shows that the immediate task for buyers is to overcome the resistance level of $7,518. That would confirm upside and open the path to $7,544. Maintaining control above $7,574 would further cement buyers' positions. On the downside, buyers need to defend $7,494. A break below that level would likely push the index back to $7,474 and open the way to $7,451.