Market Developments
Equity markets pulled back as the AI and semiconductor rally driving most of 2026’s gains lost momentum: the S&P 500 fell 2.0% and the Nasdaq 4.2%, while the Dow added 0.6%, consistent with a rotation out of crowded tech positions. Asia saw a sharper version of the same move, with South Korea’s KOSPI reversing on an SK Hynix/Samsung pullback and Hong Kong’s Hang Seng falling 5.2% on internet-name weakness. Oil extended its decline ((9.6%) on the week to $69.2/bbl, (20.8%) MTD) as the Hormuz ceasefire held, reinforcing the disinflation trend. UK PM Keir Starmer resigned, with Andy Burnham the clear frontrunner to succeed him; the formal Labour leadership contest opens 9 July.
The Fed left rates unchanged, but Chair Warsh’s hawkish post-meeting tone moved markets more than the decision did. The USD firmed further (DXY above 100), and the US 10Y yield fell 8bps to 4.37% as oil’s decline eased the inflation premium at the long end, even as the front end stayed elevated. Gold fell below its 200-day moving average for the first time since October 2023, pressured by reduced safe-haven demand from the ceasefire and higher real rates. The S&P BDC Index remains down 15.0% YTD despite a marginal weekly gain, reflecting unresolved AI-disruption concerns in software-exposed credit.
