As of 12:00 Germany time (CEST, UTC+2)
TL;DR: Global markets ended the week under pressure as the semiconductor rout spread across Asia, Europe and U.S. equities. Strong results from TSMC and upbeat guidance from ASML were not enough to restore confidence in the AI trade, with investors now questioning valuations, capital spending and positioning. Oil moved sharply higher as U.S.-Iran fighting escalated, bringing the inflation risk back into focus even as Treasury yields eased.
In Asian Equity Markets stocks fell sharply as the chip selloff accelerated. MSCI’s broadest index of Asia-Pacific shares outside Japan finished down around 2.7 percent, while Japan’s Nikkei dropped 4 percent and moved further into correction territory. Taiwan also came under heavy pressure after TSMC shares fell despite reporting stronger-than-expected earnings growth. South Korean markets were closed for a holiday, but the broader message from the region was clear: investors are no longer rewarding strong semiconductor numbers automatically.
In European Equity Markets stocks slipped as technology weakness and Middle East risk outweighed support from defensive sectors. The pan-European STOXX 600 fell around 0.3 percent, leaving the benchmark close to flat for the week. European technology shares were under pressure even after ASML raised its 2026 sales outlook earlier in the week. Utilities performed better, while luxury shares were hit by signs that the Middle East conflict is weighing on tourist spending in Europe.
In U.S. Equity Markets stocks fell again as semiconductor weakness dragged the main indexes lower. The Dow lost around 0.8 percent, the S&P 500 fell roughly 1 percent and the Nasdaq declined about 1.4 percent. The Philadelphia Semiconductor Index dropped for a third straight session and ended more than 20 percent below its June record. Moonshot’s release of Kimi K3, a large open-weight AI model, added to concerns that competition and falling model costs could challenge the economics behind the AI infrastructure boom.
In Commodities Markets oil rose to its highest level in more than a month as the conflict between the United States and Iran intensified. Brent settled near $88.10 per barrel, up more than 4.5 percent on the day, while WTI rose to roughly $82.49. The United States struck bridges in Iran, while Tehran responded by hitting power and desalination infrastructure in Kuwait. Reports of tanker incidents near the Strait of Hormuz kept the market focused on physical supply risk rather than only headline geopolitics.
In Currency Markets the dollar was broadly steady on Friday but ended the week lower after softer U.S. inflation data reduced expectations for an immediate Federal Reserve hike. The dollar index traded around 100.76, while EUR/USD held near $1.144. USD/JPY remained elevated around 162.4, keeping Japanese intervention risk alive. Higher oil makes the yen’s weakness more uncomfortable because it raises Japan’s import bill while rate differentials continue to favour the dollar.
In Bond Markets longer-dated Treasury yields eased as investors moved into defensive assets and largely priced out a July Fed hike. The U.S. 10-year yield traded near 4.55 percent, while the 30-year yield moved just above 5.07 percent. The bond market is still not ignoring inflation risk, but Friday’s price action showed that equity stress and softer U.S. inflation data are limiting the upward pressure from oil for now.
The Cross-Asset Read
Friday was the clearest sign so far that the AI trade has moved from earnings risk to confidence risk.
TSMC delivered strong numbers. ASML raised its revenue outlook. SK Hynix’s U.S. listing had already shown that demand for direct AI memory exposure remains real.
The sector still sold off.
That matters because the market is no longer asking whether AI demand exists. It is asking whether the current valuation, spending and margin assumptions can survive a more competitive environment. Moonshot’s Kimi K3 added to that concern by showing that the AI model race is still producing new competitive threats at speed.
Oil made the setup harder. Brent near $88 changes the inflation conversation, especially with the Strait of Hormuz again in focus and Gulf infrastructure being targeted. Treasury yields eased on Friday, but the relief is fragile if crude keeps rising.
The immediate flag is Brent at $90 and the U.S. 10-year yield at 4.60 percent. A sustained move above both would tighten financial conditions and place more pressure on long-duration growth stocks. If yields stay below 4.60 percent while semiconductors keep falling, the damage is coming from positioning and earnings expectations inside the AI trade itself.
The week ended with strong AI demand still visible, but no longer enough to carry the market.
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