Stan ChoeUpdated July 20, 2026 — 10:11am,first published July 20, 2026 — 5:22amThe Australian sharemarket has made a positive start to the week while oil prices have climbed after tensions escalated in the Middle East.The S&P/ASX 200 was up 35 points, or 0.4 per cent, in early trade. Oil prices advanced over the weekend and jumped more than 2 per cent this morning as the United States launched more airstrikes at Iran in response to the killing of US troops, and Iran fired missiles toward Jordan that risked widening the conflict into neighbouring Israel.On Friday, a fresh selloff in artificial intelligence stocks sent Wall Street lower. The S&P 500 fell 1 per cent to finish its first losing week in the last three and only its third since the end of March. Just a couple of days earlier, it had climbed within 0.5 per cent of its all-time high.Chip stocks and other AI darlings once again were at the centre of the shaky trading on Wall Street.APThe Dow Jones Industrial Average dropped 406 points, or 0.8 per cent, and the Nasdaq composite sank 1.4 per cent. The Australian dollar was trading at US69.71¢.Chip stocks and other AI darlings once again were at the centre of the shaky trading. They’ve been under pressure for weeks on worries that their prices shot too high and that voracious demand for computer memory and processors may be unsustainable if AI ends up producing less profit and productivity than promised.Nvidia was the heaviest weight on the S&P 500 after dropping 2.2 per cent. Its recent losses forced it to briefly cede the No. 1 ranking as the most valuable company on Wall Street Friday, but it finished the day back above Apple.Applied Materials sank 5.6 per cent to trim its surge for the year to 106 per cent. Micron Technology swung between a loss of 5.8 per cent and a gain of 3.2 per cent before slipping 0.5 per cent.Earlier in the morning, tech sold off worldwide. Indexes tumbled 6.5 per cent in Taipei, 4 per cent in Tokyo and 3 per cent in Shanghai as stocks like Taiwan Semiconductor Manufacturing Co. dropped 7.3 per cent.News of a powerful Chinese AI model by startup Moonshot, Kimi K3, further shook markets. Similar to when China’s DeepSeek announced its AI model in early 2025, another low-cost rival to big Western AI models like ChatGPT and OpenAI could potentially hurt demand for computer chips and other components.Adding to the pressure on Wall Street were drops for several stocks following their latest earnings reports. Companies are under pressure to deliver big growth for the spring to justify the big moves upward their stock prices have already made.Netflix sank 7.3 per cent after its revenue for the latest quarter fell just short of analysts’ expectations, even though its profit was bigger than expected. Its forecasts for upcoming revenue and profit in the summer also fell below expectations.Intuitive Surgical, a maker of robotic surgical systems, dropped 14.1 per cent despite topping expectations for the latest quarter. Analysts pointed to worries about slowing procedure growth because of the expiration of enhanced tax credits that helped lower the cost of health insurance for many Affordable Care Act enrollees.Elon Musk’s SpaceX fell 5.4 per cent and touched its lowest level since its stock began trading on the Nasdaq just over a month ago. The owner of the xAI business has been swept up in the swings for AI stocks, and it also had to abort a test flight of its mega Starship rocket within a second or so from blasting off.Longer-term Treasury yields eased Friday. The yield on the 10-year Treasury fell to 4.55 per cent from 4.57 per cent late Thursday.A report suggested sentiment among US consumers is improving more than economists expected, while expectations for upcoming inflation eased. That’s important for the Federal Reserve, which is considering hikes to interest rates to keep a lid on inflation.If expectations for inflation remain anchored, it could prevent a vicious cycle where people make moves in anticipation of higher inflation, which only worsen it.With APThe Market Recap newsletter is a wrap of the day’s trading. Get it each weekday afternoon.From our partners