Technology stocks shrugged off the oil price shock to lead U.S. equities higher, while China’s divergent inflation data complicates interest rate and commodity pricing.

Today’s News Summary ・U.S. technology and semiconductor stocks re-emerged as market leaders. The Philadelphia Semiconductor Index rose 3.06%, lifting the Nasdaq by 1.30% and the S&P 500 by 0.81%; investors are temporarily treating AI-related capital expenditures as a growth driver independent of the macroeconomic cycle. Reuters ・Oil prices retreated from yesterday’s geopolitical conflict-driven highs: WTI fell 2.3% to $71.83 per barrel; Brent dropped 2.5% to $76.05. Energy-driven inflation pressure eased temporarily, pushing U.S. Treasury yields lower and improving valuation conditions for growth stocks. Reuters ・China’s June PPI rose 4.1% year-on-year—the fastest pace in nearly four years—while CPI rose only 1.0% y/y, down from 1.2% in May. Rising upstream input costs coexist with weak end-demand, creating divergent impacts on corporate profit margins, CNH exchange rates, Chinese equities, and industrial commodities. Reuters ・U.S. initial jobless claims fell to 215,000 last week, suggesting no widespread layoffs yet; however, nonfarm payrolls rose by just 57,000 in June, and the declining labor force participation rate implies the low unemployment rate may overstate labor market resilience. U.S. Department of Labor ・The June FOMC meeting minutes revealed that some policymakers had considered further rate hikes justified. The Committee also discussed two scenarios—continued disinflation versus persistently elevated inflation—indicating policy direction remains highly dependent on energy prices, tariffs, AI demand, and labor data. Federal Reserve ・The Middle East conflict has yet to follow a stable de-escalation path. The oil price decline reflects easing immediate supply concerns, but does not mean risks to Strait of Hormuz shipping, military operations, or subsequent crude inventory replenishment have disappeared. Lead-in The core shift over the past 24 hours has been a market pivot—from “geopolitical tensions driving up oil prices and yields” to “oil price retreat, long-dated Treasury yields falling, and tech stocks regaining leadership.” This does not signal risk resolution, but rather a temporary market view that the energy shock is manageable—and a renewed focus on AI capital spending. Meanwhile, China’s accelerating PPI alongside slowing CPI, coupled with internal contradictions in U.S. employment data, reveal an emerging global economic configuration: elevated upstream costs, divergent end-demand, and concentrated asset prices. Global Market Themes 1. Oil remains the short-term transmission mechanism for rate expectations After Middle East tensions escalated, oil prices surged rapidly, pushing up inflation compensation, U.S. Treasury yields, and major central banks’ rate-hike expectations. Subsequently, oil prices retreated: the U.S. 10-year yield fell to ~4.54%, and the 2-year yield declined to ~4.16%, indicating reduced market pricing of near-term energy-driven inflation. A single-day oil price drop cannot alone signal the end of conflict-related impact. What truly warrants watching is: ・Whether actual shipping volumes through the Strait of Hormuz recover; ・Whether military operations disrupt ports, refineries, or export infrastructure; ・Whether crude spot premiums and marine insurance costs continue rising; ・Whether strategic petroleum reserve replenishment by various countries creates additional demand. If crude prices break above prior highs again, markets may reprice central bank hikes or delayed easing; if oil prices continue falling, Treasuries and growth stocks will gain more stable valuation support.

Crude oil plunged 5%; chip stocks collectively tumbled: With Powell’s first press conference approaching, is the market beginning to recalculate its positions?

Markets have gotten interesting lately. Last night, the real headline wasn’t the Fed—it was crude oil. With the U.S.-Iran memorandum of understanding nearing finalization, U.S. officials signaled Iran would be permitted to resume oil exports immediately, and full navigation through the Strait of Hormuz is expected to resume this week. As soon as the news broke, the oil market collapsed. WTI briefly fell below $76 per barrel; Brent breached the $80 threshold—both hitting their lowest levels since March. Goldman Sachs and Morgan Stanley simultaneously lowered their oil price forecasts; Goldman even projected Persian Gulf oil exports would rebound to pre-war levels by late July—nearly one month earlier than previously anticipated. Logically, this is easy to understand. Over recent months, much of the oil price surge stemmed from Middle East risk premiums. Markets feared disruptions to Strait of Hormuz shipping, Iranian export bans, and broader energy supply chain shocks. Now that the agreement framework is clarifying, markets are naturally unwinding those previously embedded geopolitical risk premiums. The problem? Last night’s market action didn’t follow the script many expected. By conventional logic, falling oil prices should ease inflationary pressure; easing inflationary pressure should make future Fed rate cuts more likely; and rising rate-cut expectations should benefit tech and growth stocks. But the actual price action looked nothing like that. The Nasdaq fell 1.15%; the Philadelphia Semiconductor Index plunged 5.71%; Marvell dropped nearly 10%; Intel fell over 8%; AMD slid over 7%; Micron shed over 6%—the entire AI hardware supply chain was broadly sold off. In contrast, the Dow Jones Industrial Average rose 0.64%, hitting yet another all-time high. At first glance, this price action even seems borderline schizophrenic. Oil fell—but tech stocks didn’t rally; inflation expectations cooled—but capital rotated toward defensive assets. So what, exactly, is the market trading? The answer may lie not in oil—but in positioning. Over the past two months, AI has become arguably the most crowded trade globally. Nvidia kept setting new all-time highs; Marvell surged after Jensen Huang’s comment calling it “the next trillion-dollar company”; Micron was fundamentally re-rated on HBM demand; and SpaceX’s post-listing market cap rocketed into the world’s top five. Capital flooded into AI, chips, computing power, and optical communications—market sentiment verged on euphoric. And this week, Bank of America’s latest fund manager survey delivered a telling datapoint: 80% of surveyed fund managers identified “long global semiconductors” as the most crowded trade in the market today—a record high. When a trade becomes the market’s most crowded position, two things typically follow. First, virtually all bulls have already bought in. Second, any uncertainty—even minor—triggers rapid de-risking, starting precisely here. Thus, last night’s semiconductor selloff reflects less a sudden loss of faith in AI—and more a broad-based, high-level position adjustment. Microsoft’s cancellation of part of its cloud capacity leasing plans, growing market discussions around AI’s return on investment, and fund managers reducing their tech overweight—all contributed to cooling the previously overheated AI trade. What ultimately prompted funds to front-run this de-risking, however, was the upcoming Federal Reserve meeting.

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