PinnedMon 20 Jul 2026 at 6:53amMon 20 Jul 2026 at 6:53amMarket snapshotBy Stephen LettsASX 200 futures: +0.6% to 8,814 pointsASX 200 (Friday): -0.5% to 8,798 pointsAustralian dollar: -0.2% to 69.80 US centsWall Street (Friday): S&P 500 -1.0%, Dow -0.8% Nasdaq -1.5%Europe (Friday): Dax -0.3%, FTSE +0.3%, Eurostoxx -0.8%Spot gold: +1.2% to $US4,017/ounceOil: Brent futures +4.6% to $US88.10/barrel, WTI futures +4.5% to $US82.49/barrelIron ore (Friday): flat at $US100.10/tonneCopper (LME, Friday): -0.3% to $US13,543/tonneBitcoin: -0.4% to $US64,433Prices current at around 7:00am AESTKey EventMon 20 Jul 2026 at 8:48amMon 20 Jul 2026 at 8:48amBrent crude jumps back above $US90/barrelBy Stephen LettsAs expected, the intensified missile and drone attacks across the Gulf over the weekend have resulted in global oil prices rising further this morning.In early trade (8:40am AEST):Brent crude futures: +3.4% to $91.06/barrelWest Texas Intermediate crude futures: +3.1% to $US85.08/barrelMon 20 Jul 2026 at 8:20amMon 20 Jul 2026 at 8:20amWill China's Moonshot expose US AI valuations as lunacy?By Stephen LettsThe release of what's being called the world's largest open-weight AI model by Chinese AI startup Moonshot on Friday certainly did little to calm the nerves of investors holding heavy positions in premium-priced US AI companies.Moonshot said its Kimi K3, a 2.8 trillion-parameter model, delivers performance approaching US giant Anthropic's frontier Fable model.Kimi K3, according to Moonshot, is the first open-weight model to approach the 3 trillion-parameter mark and is designed for advanced reasoning, long-horizon coding and knowledge work.Reuters noted the model features a 1 million-token context window, allowing it to process and retain substantially more information than earlier generations in a single prompt.The development is backed by Chinese tech giants Alibaba and Tencent, and it's reasonable to assume the Chinese government has more than a passing interest in it.The Kimi K3 launch, which comes a month after Anthropic's Fable and Mythos models were abruptly withdrawn by the US government due to security concerns, underscores how quickly China's open AI ecosystem is narrowing the gap with the most advanced U.S. systems.Companies including Moonshot, Z.ai and MiniMax are releasing increasingly powerful models at sharply lower cost, challenging long-held assumptions in the West that Chinese developers trail their American peers by months.That is a point taken up by NAB's Head of FX Strategy, Ray Attrill in his always interesting note this morning about the recent capitulation in the AI sector's valuations."Intensifying concerns about valuations in the AI sector was the unveiling Friday by Chinese AI pioneer Moonshot of a new open weight model, Kimi K3, that it claims performs on par with some of the top-tier platforms from OpenAI and Anthropic," Mr Attrill said."It had some commentators immediately drawing parallels with DeepSeek's launch of its R-1 model in January this year. "Moonshot claimed its open model outperforms all rivals except Anthropic's Claude Fable 5 and OpenAI's GPT-5.6 on overall capability."A comment from a hedge fund manager on X reported on one of the news wires and which captures the current move regarding (US) AI company valuations went: 'US AI companies have been pricing like they're selling luxury goods. Chinese labs are pricing like they're selling commodities. Both products do roughly the same thing. History says the commodity pricing wins eventually, and "eventually" seems to be arriving faster than anyone on the US side expected.'"Mon 20 Jul 2026 at 8:10amMon 20 Jul 2026 at 8:10amApple back as world's most valuable companyBy Stephen LettsFor those keeping score, Apple has returned to the top of the table of the world's most valuable companies by market capitalisation.Apple, which hasn't been spending nearly as much as its peers on AI development, has benefited from the rotation out of the AI-heavy "hyperscalers" that has been evident since May.On Friday Apple was valued at $US4.88 trillion, clambering over the previous leader Nvidia which slid again, down 3.5%, to end the week at $4.86 trillion.It's the first time Apple has led the pack since April last year."Apple was seen as a laggard in the AI race because it wasn't spending to develop models, but now sentiment has changed," BRI Wealth head of investment Management head of investment Toni Meadows said."Apple is less exposed to capex intensity and better positioned to monetize AI via services, ecosystem lock-in, and hardware upgrades."The re-rating reflects confidence in earnings durability rather than speculative AI upside."Most valuable companies (by market cap $US) (LSEG Datastream)Mon 20 Jul 2026 at 7:55amMon 20 Jul 2026 at 7:55amUS earnings season: Alphabet, Intel and Tesla in focus as earnings season acceleratesBy Stephen LettsAbout 20% of the S&P 500 are due to release quarterly earnings results this week, with Alphabet and the US government-subsidised chipmaker Intel holding the most interest.Alphabet, apart from being Google's parent, is also one of the so-called "hyperscalers" that are spending billions of dollars to build data centres and AI infrastructure.Such AI capital spending has been at the heart of this year's market rally, driving huge gains for semiconductors and other companies benefiting from the massive outlays.If Alphabet announces "any type of pullbacks with respect to the spending that they're forecasting around AI, you could see ripple effects across the entire AI ecosystem," Hennion & Walsh Asset Management chief investment officer, Kevin Mahn said.Results from semiconductor firms Intel and Texas Instruments take on particular significance due to the stunning rally this year in chip stocks.The trade faltered in recent weeks, with the Philadelphia SE Semiconductor Index ending on Friday down over 20% from its late-June record high, confirming it has been in a bear market.Elon Musk's Tesla is also set to post results in the coming week.Mon 20 Jul 2026 at 7:40amMon 20 Jul 2026 at 7:40amThis week: Unemployment and jobs dataBy Stephen LettsAustralia:Wed: Westpac/MI Leading Index (Jun) Paladin interim resultsThu: Employment/unemployment (Jun) Newmont interim resultsFri: PMI (July)International:Thu: EU — ECB rates decision, Consumer confidence (Jul)Fri: US, EU, UK, JP — PMIsThe ABS June labour force figures (Thursday) are the main interest in an otherwise quiet week.Job creation has slowed in the past couple of months. The consensus forecast is that there were a modest 15,000 jobs added in June.The unemployment rate is expected to hold steady at 4.4%.Ahead of the August reporting season, a couple of results are expected this week — half-year earnings for Paladin Energy (Wednesday) and gold giant Newmont and its locally listed CDI.Globally, there's not much about either. The ECB has a policy meeting on Thursday but is expected to keep its deposit rate on hold at 2.25%.Key EventMon 20 Jul 2026 at 7:20amMon 20 Jul 2026 at 7:20amAI anxiety and war weigh on Wall StBy Stephen LettsWorries about war and AI stock valuations saw Wall Street extend its decline on Friday.S&P 500: -1.0%Dow: -0.8%Nasdaq: -1.5%Over the week, the S&P 500 fell 1.6%, compared to a 0.7% decline in Europe and an even more modest 0.1% fall on the ASX.It's still too early to call the listing AI sector a chip-wreck, given the pullback is relatively small to the substantial gains the sector has made in the past year. However, a trend is developing.The broadest measure of the chip/data memory sector valuations, Philadelphia SE Semiconductor Index, logged its steepest weekly loss in over a year and has tumbled over 18% so far in July.Add some pre-July losses into the equation and technically the sector is now in "bear market" territory.Even so, the index remains up nearly 65% year-to-date, compared with the S&P 500's nearly 9% gain over the same time frame.Many investors in the artificial intelligence space have begun positioning for a slowdown in the nearly trillion-dollar spending boom, with some active managers already scaling back their exposure."It's like the market has chip fatigue," chief market strategist at Carson Group Ryan Detrick told Reuters."Chip stocks are down three of the last four weeks, and it's the same worries, the same concerns; those stocks got way ahead of themselves, and now they're coming back to earth."Among the Magnificent Seven group of AI-related megacaps, all but Apple dipped, with Meta and Alphabet suffering the worst of it, down 2.7% and 3.2%, respectively.Outside the tech sector, things seem to be going swimmingly, rather than floundering.Second-quarter earnings season is still in its early days, with 49 of the companies in the S&P 500 having reported.Of those, 90% have delivered better-than-expected results, according to LSEG.Analysts now see year-on-year S&P 500 earnings growth of 26%, in aggregate, up from the 19% expectations three months ago."It's early in earnings season, but we're off to a tremendous start," Mr Detrick said."Over the next several weeks, we're going to get a lot more sectors and industries reporting. But so far, the banks have really started us off on the right foot."Chips vs S&P 500 (LSEG, Datastream)European stocks also slipped, although the UK's FTSE made a modest gain.ASX 200 futures are priced for a gain this morning, but trading closed before news of the deaths of at least two US servicemen filtered through and the missile and drone attacks intensified.Oil prices continued to climb in step with growing tensions in the Gulf region.Brent futures: +4.6% to $US88.10/barrelWTI futures: +4.5% to $US82.49/barrelFor the week, both key benchmarks gained around 16%."The market is reacting to the increasing hostilities between Iran and the United States that have culminated this week with nightly attacks on Iranian infrastructure and retaliation by Iran on its neighbours' infrastructure," President of Lipow Oil Associates, Andrew Lipow said."If more tankers come under fire and become damaged, we're going to see oil prices continue to move up as shipowners simply refuse to enter the Persian Gulf."The heightened tensions helped support the US dollar, thanks to its "safe haven" reputation.However, the Aussie dollar still managed to end the week higher overall at just under 70 US cents, capping a third successive week of gains.With ReutersMon 20 Jul 2026 at 6:48amMon 20 Jul 2026 at 6:48amGood morningBy Stephen LettsWelcome to another day on the ABC markets and finance blog.Stephen Letts from ABC business limbering up for blow-by-blow coverage of the day's events, where every post is hopefully a winner, but none should be construed as financial advice.Wall Street's growing anxiety over AI and chip-related stocks saw its key indices all fall — a disappointing close to a generally disappointing week, despite solid earnings results starting to roll in.The ASX futures punters don't seem overly worried, though.When trading closed on Saturday morning, ASX 200 futures pointed to a 0.6% gain this morning, although that was before news of a further escalation in the US-Iran war.The deaths of at least two US servicemen, another deluge of missile and bomb strikes from both sides in the conflict, apocalyptic threats from the White House and a growing realisation that maybe Iran isn't desperate for a deal are not exactly harbingers of serenity on the markets.Certainly, the oil price looks likely to come under renewed pressure today.As always, the game's afoot, so let's get blogging.