Wall Street closed lower as selling hit semiconductor names, with the pullback and escalating Middle East tension pushing oil prices and Treasury yields higher. Still, the broader picture for equities remains supportive, backed by a resilient economy and strong earnings expectations for the second quarter. Investors continue to favour equities over bonds, though scrutiny of AI-related valuations is growing.
Wall street falls as chip concerns deepen
Technology stocks led US markets lower, with semiconductor names bearing the brunt of the selling. The Philadelphia Semiconductor Index dropped by more than 4%, and heavily traded chipmakers including Micron Technology, Marvell Technology, Applied Materials, Intel and Advanced Micro Devices all posted sharp losses. Rising oil prices and geopolitical uncertainty added to the pressure, pushing money into defensive corners of the market such as healthcare, consumer staples and utilities, all of which outperformed on the day. Energy shares also gained ground as crude prices climbed.
Reuters reported that DeepSeek is working on its own AI semiconductor, aiming to reduce its reliance on chips from Nvidia and Huawei. The chip will focus on AI inference tasks and could strengthen China’s AI hardware ambitions. The news added to unease around the sector, and Nvidia shares fell 1.6% as a result, even though DeepSeek is likely to face real hurdles including export controls and the technical difficulty of building competitive chips from scratch.
Asian and European shares track the global tech pullback
The sell off in US chip stocks rippled through markets in Asia and Europe, though the picture was not uniformly negative everywhere. The sections below cover how each region responded.
Asian markets stay cautious
Most Asian indices moved lower as investors remained wary of further weakness in AI related technology shares following the semiconductor rout. Selective buying did emerge in South Korean, Taiwanese and Japanese chip names, but this was not enough to lift the broader market mood. Elevated oil prices, geopolitical tensions and central bank expectations kept sentiment subdued across the region.
US futures little changed as Fed minutes come into focus
US stock futures were little changed overnight, with S&P 500 and Nasdaq 100 futures edging higher while Dow futures were flat. Investors remained cautious amid escalating Middle East tensions and looked ahead to the release of the Federal Reserve’s June meeting minutes, as rising oil prices kept inflation and interest rate concerns in focus.
European indices slip on tech weakness
European equities also felt the impact of the global technology sell off, with the STOXX 600 index closing 0.7% lower. Chipmaking equipment supplier ASML and Siemens Energy were among the session’s biggest decliners. Energy major Shell moved higher after lifting its earnings outlook, while defence group Saab gained on the back of a NATO related contract announcement. French carmaker Renault also edged up following reports of renewed interest from China’s BYD, even though Renault reportedly rejected two previous approaches from the Chinese electric vehicle maker to acquire a stake in the company, in 2024 and again in 2025, according to Les Echos. The discussions highlight Renault’s strategy of maintaining control and protecting its position in the European automotive market amid growing Chinese competition.
Currency and commodity markets react to Middle East risk
Both the dollar and oil prices moved sharply as escalating tension in the Middle East pushed investors toward safe haven assets and raised concerns over energy supply. The two sections that follow look at currencies and commodities in turn.
The dollar firms on safe haven demand
The US dollar held firm, with the dollar index staying above the 101 level as renewed tension in the Middle East drove demand for safe haven assets. The euro traded around 1.1415 against the dollar as markets awaited the Federal Reserve’s June meeting minutes for further clues on the path of interest rates. Rising oil prices have added to expectations that the Fed could lean toward a more hawkish stance given the potential inflationary impact of higher energy costs.
Oil jumps on Strait of Hormuz tensions
Crude prices surged this morning, with both Brent and WTI gaining close to 3% after the United States carried out fresh strikes on Iran and introduced tighter sanctions following attacks on commercial shipping in the Strait of Hormuz. Concerns about a wider disruption to Middle East oil supply have outweighed expectations of increased production from OPEC and its allies, keeping crude prices well supported.
Company news and analyst calls to watch
A number of individual stocks were in focus this week on the back of corporate updates, analyst rating changes and merger speculation.
Logistics and industrials
DHL Group lifted its 2026 earnings guidance after posting stronger than expected second quarter results, driven by rising demand and cost savings. Group EBIT rose 29% to roughly 1.85 billion euros, with the DHL Express division driving much of the improvement. Revenue increased by more than 10%, and the company pointed to its Fit for Growth efficiency programme as a key driver of the stronger profitability.
Technology and semiconductors
Mizuho analyst Jordan Klein argued that investors are overreacting to Samsung’s preliminary second quarter results, suggesting the recent semiconductor weakness reflects a shift in trading momentum rather than a genuine deterioration in fundamentals. He expects strong memory pricing and remains positive on TSMC, ASML, Intel and AMD, noting that Samsung’s fuller memory market update later in July will carry more weight than the preliminary figures.
Legrand also drew positive attention after both Barclays and Kepler Cheuvreux upgraded the stock, citing strong demand tied to AI driven data centre build outs and improving earnings prospects. Both brokers flagged Legrand’s exposure to AI infrastructure investment, along with the potential for further growth supported by stronger demand from North America and possible guidance upgrades.
Barclays moved in the opposite direction on Siemens Energy, downgrading the stock to Underweight, sending shares lower, even as it raised its price target to 130 euros. The broker argued that the current valuation already prices in peak cycle conditions, and flagged the risk that gas turbine demand, market share and free cash flow could soften after 2026, limiting further upside despite strong earnings growth.
Automotive
Wolfe Research initiated coverage of Ferrari with an Outperform rating and a price target of 382 euros, arguing the market is underestimating the luxury carmaker’s growth potential. The broker expects new model launches from 2027 onward to drive sales and profit above current market expectations, and views concerns around Ferrari’s electrification strategy as overdone.
Aerospace, AI and e-commerce
JPMorgan Chase weighed in on speculation of a potential tie up between Space Exploration Technologies and Tesla, with analyst Rajat Gupta noting the combination could make sense strategically given potential synergies across AI, robotics and space technology. He cautioned, however, that regulatory hurdles, governance questions and shareholder concerns, particularly relating to China, would make any such deal difficult to execute despite existing operational integration.
Citigroup started coverage of Space Exploration Technologies with a Buy rating and a 200 dollar price target, citing its Starship programme, satellite connectivity business and AI capabilities as the main growth drivers. The broker believes a successful Starship rollout could open up trillion dollar addressable markets over time, with the shares potentially exceeding 900 dollars in the long run, while flagging execution, manufacturing and regulatory risk.
Bank of America reinstated coverage of Shopify with a Buy rating and a price target of 150 dollars, arguing the company is well positioned to benefit from the shift toward AI driven commerce. The broker views recent share price softness as an attractive entry point, pointing to growth in AI powered transactions, international expansion, enterprise adoption and improving margins.
What to watch this week
The Federal Open Market Committee’s minutes are due for release, which should offer further detail on the Federal Reserve’s thinking around interest rates and the broader policy outlook. Investors will also be watching the US Energy Information Administration’s weekly crude oil inventories report for fresh signals on oil supply, energy markets and potential inflationary pressures.
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