This content was published on
July 21, 2026 - 12:04
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(Bloomberg) — A rebound in chipmakers gathered pace on Tuesday, driving stock markets higher in an otherwise quiet session that saw modest moves in Treasury yields, oil and currencies.Nasdaq 100 futures rallied 1.3%. An exchange-traded fund tracking chip names advanced 4% in early trading. In Asia, strong export data from South Korea and Taiwan lifted Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co. Tech also outperformed in Europe. S&P 500 contracts climbed 0.5%.Buyers are picking up chip stocks at cheaper valuations after the sector suffered its worst week in more than a year. Chipmakers have been the biggest beneficiaries of the global rollout of artificial intelligence, but have suffered from volatile trading as investors worry about lofty multiples and whether hyperscalers will sustain their spending.UBS Group AG’s trading desk said the selloff in momentum stocks may be nearing its end, creating an opportunity for investors to start rebuilding positions in AI and chips.“While volatility is likely to remain high given the elevated concentration still present in parts of the market, the correction has been both deep and lengthy enough to alleviate some valuation concerns,” said Santiago Mateo Yanguas, head of equity at CaixaBank AM.Brent struggled for direction before rising 0.6% to nearly $90 a barrel. The relative calm could be short-lived, though, as the US and Iran kept up their exchange of strikes for a 10th straight day.Goldman Sachs Group Inc. analysts warned the benchmark could rally to more than $120 a barrel by the fourth quarter if disruptions in the Strait of Hormuz persist, although that’s not the bank’s base case. At present, Goldman sees Brent at $80 a barrel in the fourth quarter, with risks “tilted to the upside.”In the UK, government bonds ticked higher as investors awaited fresh policy details from new Prime Minister Andy Burnham. Weak economic data dimmed bets on higher interest rates.All eyes will soon focus on the start of the reporting season for Big Tech firms, where AI hyperscalers will also update investors on their capital spending plans. Alphabet Inc. reports on Wednesday, while Microsoft Corp., Meta Platforms Inc. and Amazon.com Inc. are due next week.“The next test is no longer whether AI demand exists, but whether pricing, margins and cash flow can justify the capex bill,” said Florian Ielpo, head of macro at Lombard Odier Investment Managers. “If they can, the rebound should broaden. Otherwise, volatility remains the regime.”A question that investors are asking themselves is whether now is the time to sell chips and rotate toward hyperscalers, which have underperformed semiconductors this year, according to Alexandre Drabowicz, chief investment officer at Indosuez Wealth Management in Paris.“Our view is that one needs to be invested in both,” Drabowicz said. “Alphabet’s earnings this week will be a real bellwether for the industry and its capacity to monetize AI. We believe the market underestimates how fast these companies will be able to monetize.”What Bloomberg Strategists Say:“The S&P 500 has effectively traded sideways for the past two months as investors weigh exceptional earnings expectations against signs of rising speculation. Whether this proves a healthy reset that allows the AI rally to extend, or the start of a more damaging unwind, will depend heavily on the reporting season.”— Skylar Montgomery Koning, macro strategist. Click here for the analysis.Corporate News:TSMC has held discussions with clients about price increases of as much as 10% in 2027 to cover the rising cost of manufacturing materials, the Nikkei reported, citing people with knowledge of the matter. Paramount Skydance Corp. is facing a legal hurdle that risks putting its $110 billion takeover of Warner Bros. Discovery Inc. on hold for months. Novartis AG reported higher-than-expected profit last quarter as newer cancer medicines offset the aging blockbuster Entresto’s generic hit, signaling a return to growth. Julius Baer Group Ltd. profit more than doubled to a record in the first half of the year as the Swiss wealth manager emerges from a long reorganization. Swatch Group AG gave upbeat guidance for sales growth for the rest of this year after posting lower-than-expected profit in the first half. Some of the main moves in markets:StocksThe Stoxx Europe 600 rose 0.4% as of 11:01 a.m. London time S&P 500 futures rose 0.5% Nasdaq 100 futures rose 1.3% Futures on the Dow Jones Industrial Average rose 0.3% The MSCI Asia Pacific Index rose 2.4% The MSCI Emerging Markets Index rose 2.2% CurrenciesThe Bloomberg Dollar Spot Index was little changed The euro was little changed at $1.1422 The Japanese yen fell 0.1% to 162.68 per dollar The offshore yuan was little changed at 6.7671 per dollar The British pound was little changed at $1.3426 CryptocurrenciesBitcoin rose 1.4% to $66,246.41 Ether rose 1.9% to $1,940.63 BondsThe yield on 10-year Treasuries was little changed at 4.60% Germany’s 10-year yield advanced one basis point to 3.16% Britain’s 10-year yield was little changed at 5.02% CommoditiesBrent crude rose 0.6% to $89.76 a barrel Spot gold rose 1.4% to $4,066.14 an ounce This story was produced with the assistance of Bloomberg Automation.–With assistance from Julien Ponthus and Christian Dass.©2026 Bloomberg L.P.
