Asia-Pacific semis under pressure

US tech, particularly semiconductors, was sharply lower overnight. Traders were spooked by large falls in South Korean AI-adjacent giants, SK Hynix and Samsung Electronics, which ended down 15.4% and 10.5% respectively. Outperforming chip stocks such as Marvell Technology and Micron Technology were down over 5% each in early trade.

SpaceX also took an early hit this morning, falling 4.5%. But the pullback proved to be a buying opportunity for most, and many bounced off their overnight lows by mid-morning in Europe. Micron Technology was a notable exception.

Source: TN Trader

There were further hostilities over the weekend between the US and Iran. The US struck at Iranian military targets while Tehran responded with attacks on US military bases in Kuwait, Bahrain and Jordan. These actions followed a similar tit-for-tat which began just over a week ago, leading President Trump to tell allies at the NATO summit that, as far as he was concerned, the US/Iran ceasefire was over.

Much of the current dispute is focused on the Strait of Hormuz. Iran fired on a vessel which, it insisted, was taking an unapproved route through the Strait. Other interested parties said this was not the case. As things stand, Iran says the Strait is closed, while President Trump insists it is open. Either way, there has been a drop in the number of vessels traversing it, or else they have switched off their transponders.

What is difficult to work out is whether any of this is directly affecting the stock market. Oil prices were sharply higher overnight. But they seem to be bouncing back from very oversold levels. Yet the US dollar, which has previously been the repository for ‘flight to safety’ inflows whenever the missiles start firing, was down this morning.

Rather, investors are once again looking past the war, instead considering if tech stocks remain overvalued even despite their recent chip-led pullback. This makes sense when one considers that the second quarter earnings season is getting underway.

Most of the big US banks report this week, with JP Morgan, Bank of America, Goldman Sachs, Wells Fargo and Citigroup set to release results tomorrow. But Wednesday sees the release of numbers from ASML, the Dutch supplier of high-tech lithography machines so vital in chip manufacture.

The following day, the Taiwan Semiconductor Manufacturing Company will also update. So, investors should get an early indication of how things may go once US tech starts to report next week.

Aside from earnings, there’s plenty of other stuff to keep an eye on this week. Fed chair Kevin Warsh begins two days of testimony in Washington, starting with the House Financial Services Committee tomorrow, with the Senate Banking Committee on Wednesday. Before tomorrow’s appearance, there’s the latest CPI report, with an update on wholesale prices the next day.

As things stand, the CME’s FedWatch Tool, a ‘real money’ indicator, suggests that there’s an 85% probability of at least one 25-basis point rate hike before the year-end, with a 51% likelihood of a rise at the September FOMC meeting.

European stock indices were initially weaker this morning as traders took stock of the Asian-Pacific chip-led selloff, which carried over into US markets. While there are relatively few European semiconductor stocks, the ones that do exist, such as Germany’s Infineon Technologies and Dutch chip-making equipment firm ASML (which releases quarterly results on Wednesday), fell in concert. But they rallied off their lows as the morning progressed, lifting the major European indices with them. There were other supports as well.

Crude oil was up sharply following further tit-for-tat military exchanges between the US and Iran over the weekend. UK-listed oil heavyweights, BP and Shell, added 2.6% and 1.1% respectively, while France’s TotalEnergies advanced 2.0%. The focus was back on the Strait of Hormuz. Iran boasts that it has closed off this vital chokehold for the passage of oil and chemicals to and from the Gulf, while the Trump administration insists that it is open for business.

Source: TN Trader

In an indication that investors are looking past the resumption of US/Iranian hostilities around the Gulf, the US dollar was softer overnight. Previously, the dollar has benefitted from large inflows whenever there has been an escalation of military activity across the Middle East, as investors have made straight for the greenback on a ‘flight to safety’ trade.

But the cash Dollar Index pulled back in early trade against most of the other majors, save the Japanese yen and, to a lesser extent, sterling. Despite this, the cash Dollar Index continues to find support from a band of prices, roughly between 100.30-100.50.

There are plenty of potential catalysts for a significant market move this week, including important inflation releases along with Fed Chair Kevin Warsh’s semi-annual testimony starting tomorrow through Wednesday. As things stand, the probability of a rate increase of at least 25-basis points this year is around 85%, according to the CME’s FedWatch Tool.

The GBP/USD pair slipped back below 1.3400 this morning, amid concerns about rising energy-driven inflation, which the UK must import. However, expectations that the Bank of England could deliver at least one 25-basis-point rate increase by the end of 2026 helped limit downside pressure.

Meanwhile, USD/JPY climbed back above 162.00 as higher oil prices and the wide interest rate differential weighed on the Japanese yen. This undid the yen’s rally at the end of last week, which was triggered by comments from Japan’s Minister of Finance, Satsuki Katayama.

Source: TN Trader

She has suggested encouraging Japanese pension funds, including the Government Pension Investment Fund, with assets of $1.8 trillion, to unwind some of their foreign holdings and buy Japanese assets with the proceeds. This would boost the demand for yen and, hopefully, put a floor under it.

Gold and silver continued their respective declines overnight in moves which began this time last week. Both are struggling once again and still appear to be heading south, searching for some solid support levels. The bulls are hoping that the bottom of the correction, which began at the end of January, may be closer to its end than its beginning.

The bears feel sure there is more downside to come, believing that there’s a long chill in store for prices, just as there was after precious metals previously peaked, back in 2011. As has been seen ever since gold and silver collapsed back from record highs earlier this year, any strength in the US dollar has weighed on prices. But even today’s dollar decline couldn’t offset selling pressure.

Towards the end of last month, gold found support just below $4,000 per ounce. But a prolonged break below here could signal lower prices to come. Unless $3,900 acts as support again, just as it did in October last year.

Source: TN Trader

Silver also came under selling pressure today, and a retest of the June lows around $55.50 cannot be ruled out. Meanwhile, the bulls continue to look for significant support levels as areas where the price can hold and consolidate. Many remain convinced that the best days are still to come, when both gold and silver will soar to fresh all-time highs.

Source: TN Trader

Oil prices gapped higher overnight as the market reopened after the weekend. Traders responded to news of further military tit-for-tat engagements between the US and Iran, with the biggest concern being Iran’s attacks on US military bases in Kuwait, Bahrain and even Jordan.

Last week, President Trump told his NATO allies at a summit in Turkey that, as far as he was concerned, the ceasefire was over. Since then, both sides have got busy, and Iran has once again attacked shipping attempting to pass through the Strait of Hormuz.

Tehran has insisted that the vessels under fire were using ‘unapproved routes.’ Yet other countries have said that such routes don’t exist. There’s now a stand-off, with Iran claiming that it controls the Strait and has blocked it, while President Trump says that the Strait remains open for shipping.

The bottom line is that there are fewer ships passing through the Strait than there were last week or the week before that. Although it has been suggested that ships in the region have turned off their transponders.

Technically, oil prices have rebounded off very oversold levels, according to their respective daily MACDs. The MACDs have now turned up sharply but have yet to approach their neutral levels. The rally so far could be enough to reset the MACDs. But there’s a possibility that prices need to rally further to exhaust fresh buying.

Source: TN Trader

One way or another, traders would like to hear more evidence to suggest that the Strait of Hormuz is safe to traverse. But the markets have been very successful in keeping a lid on oil prices by avoiding the Strait, increasing production and releasing stored inventories.

Bitcoin was little changed on Monday. Investors continued to reduce exposure to risk-sensitive assets amid escalating geopolitical uncertainty. But at the same time, they seem uncertain as to whether to consider cryptos as alternative risk assets, which could be a haven in uncertain times, or as straightforward risk assets like equities.

The renewed conflict between the US and Iran has weighed heavily on speculative assets, particularly as higher oil prices raise concerns about inflation and the possibility of higher interest rates globally. Bitcoin has struggled throughout the conflict, with investors increasingly favouring artificial intelligence-related equities over cryptocurrencies. The digital asset remains roughly 50% below its record high reached in October.

Investor sentiment remains fragile as markets balance geopolitical risks against the start of earnings season and a critical week of inflation data. The VIX volatility index rose around 3%, reflecting a modest increase in market anxiety following the latest developments in the Middle East.

This week’s key events include US CPI and PPI inflation reports, testimony from Federal Reserve Chair Kevin Warsh before Congress, and the beginning of second-quarter earnings season led by major US banks, including JPMorgan Chase and Goldman Sachs.

Meanwhile, tensions between Washington and Tehran continue to dominate headlines. Both sides continue to blame each other for the latest escalation, while officials insist that diplomatic discussions remain ongoing.

For now, oil prices remain the market’s most important signal. Any further disruption in the Strait of Hormuz could intensify inflation concerns, influence central bank policy expectations and drive volatility across global financial markets.

* The information provided does not constitute investment advice nor take into account the individual financial circumstances or objectives of any investor. Any information that may be provided relating to past performance is not a reliable indicator of future results or performance.