Bulls & Bears
The week that closed the first half of 2026 delivered something more interesting than a directional market move: it forced a clarification. The AI trade is not over. It's just been redrafted. The hyperscalers — companies spending hundreds of billions to build the infrastructure — are getting sold. The companies supplying that infrastructure at margins they can barely keep up with are getting bought. Micron's blowout quarterly result, released Wednesday night, was the exclamation mark on a week that started with the "Chip Wreck" and ended with a very different conversation.
Monday set the week's template: Alphabet fell 5%, Amazon dropped 5%, and SpaceX — still digesting its record $75 billion IPO from June 12 — slumped 16.4% as the company disclosed a $20 billion-plus bond issuance to fund AI ambitions. On the other side, Micron rose 7%, Super Micro Computer surged 16%, and the Philadelphia Semiconductor Index hit a new record high. The market was already drawing a line between those receiving the AI cheques and those writing them.
Then came Tuesday. South Korea's KOSPI plunged 10% — its second-biggest single-day drop in history — after a report that SK Hynix was slowing HBM chip expansion and pivoting back to commodity DRAM. It was the trigger, but not the cause. The cause was a market that had seen the SOX index more than double in under two months and was looking for a reason to reduce exposure before H1 closed. The Philadelphia Semiconductor Index fell 7.9%. Micron dropped 13%. The Nasdaq lost over $1 trillion in value. Observers called it the "Chip Wreck."
Wednesday was a holding pattern. Tech failed to mount a meaningful recovery. Oil hit its lowest level since the day before the US–Israeli strike on Iran. Alphabet was confirmed as Dow's newest member, replacing Verizon from June 29. Then at 4:30pm New York, Micron reported. Revenue of $41.5 billion for Q3 against a $35.7 billion consensus. EPS of $25.11 against a $20.49 estimate. Q4 guidance of ~$50 billion — against a $43.2 billion expectation. CEO Sanjay Mehrotra's comment was the one that mattered: "no line of sight" to when supply will catch up with demand, and he expects the imbalance to persist beyond 2027. Micron jumped 13–16% after hours and gapped up 15% Thursday, pulling chip stocks sharply higher.
On the macro front, the dominant theme was oil's continued collapse and its collision with Fed Chair Kevin Warsh's hawkish posture. WTI briefly broke below $70 a barrel Wednesday — pre-war levels — as the Strait of Hormuz fully restored its oil flows. US Energy Secretary Chris Wright confirmed 72 ships and 20 million barrels transited the strait in one 24-hour window. And yet the dollar hit a 13-month high. The bond market, watching oil collapse and inflation expectations crater, took yields lower — the 10-year fell 9 basis points Wednesday — but Warsh's five-task-force structural overhaul of the Fed signals he is not going to be impressed by a commodity-driven CPI moderation. Bank of America has removed all rate cut projections; it now sees no Fed easing until 2028.
- SpaceX –23% across three sessions post-IPO; $20B+ bond raise spooked investors on AI capex logic
- KOSPI –10% Tuesday ("Chip Wreck") — second-biggest single-day drop in South Korean history
- SOX chip index –7.9% Tuesday; Micron –13% on day before earnings
- Micron Q3 blowout: revenue $41.5B (est $35.7B), EPS $25.11 (est $20.49); Q4 guide ~$50B
- Micron +15% Thursday; KOSPI +3.5% recovery Wednesday; Samsung +10% on buyback report
- Alphabet –5% to –6% on AI brain drain: Shazeer to OpenAI, Nobel laureate Jumper to Anthropic
- Alphabet joins Dow Jones Industrial Average from June 29, replacing Verizon
- Gold breaks below $4,000 for first time in 2026; Silver –8% Wed, down 55% from January peak
- WTI below $70 intraday Wednesday — pre-war levels; Brent $73.50, lowest since Feb 27
- US Energy Secretary Wright: Hormuz "fully" restored to pre-conflict oil flows
- BofA removes all rate cut projections; no Fed easing expected until 2028
- SK Hynix announces Nasdaq ADS listing — seeking ~$29.4B, largest deal since SpaceX IPO
- Cerebras –19.5% on disappointing margin guidance in first post-IPO quarterly report
- Anthropic accuses Alibaba of illicitly accessing Claude via 25,000 fake accounts (28.8M exchanges)
- US PMI composite 52.2 in June — five-month high; manufacturing output fastest since July 2021
- A2 Milk declares $300M fully franked special dividend after China regulatory approval
| Index | Level | Week | Signal / Commentary |
|---|---|---|---|
| ASX 200 | 8,749 | –0.9% Fri | Healthcare best sector; materials weak on BHP Jansen cost blowout; Micron rally a tailwind for tech names |
| S&P 500 | ~7,415 | –0.8% Wk | Tues lows 7,365; recovered on Micron. Defensives/equal-weight held better than headline. Record still in sight. |
| Nasdaq Composite | ~25,720 | –1.7% Wk | Chip Wreck –2.2% Tues offset by Micron-led recovery. SpaceX drag significant across the week. |
| Dow Jones | ~51,900 | +0.4% Wk | Defensives/cyclicals outperform. Alphabet joining June 29 will reshuffle composition weightings. |
| KOSPI (S. Korea) | ~3,310 | –6.8% Wk | –10% circuit-breaker Tues; +3.5% recovery Wed on Samsung buyback report; SK Hynix Nasdaq IPO announced |
| Nikkei 225 | — | Strong | Record high territory; BOJ at 1.0%, highest since 1995; USD/JPY testing 162 — yen at 40-yr lows |
| China A50 / CSI | — | +1–3% Wk | Near record; Alibaba fell 3%+ mid-week on Anthropic accusations of illicit Claude access |
| Euro Stoxx 600 | — | Modest + | Rheinmetall –19% Thursday on de-escalation; UK assets constrained by Starmer vacuum |
| Russell 2000 | — | +1–2% Wk | Small caps outperforming. SpaceX added to Russell indexes Friday — estimated $2.68B passive inflow |
The macro story this week had two competing pulls. Oil's collapse toward pre-war levels should, mechanically, deliver significant CPI relief over the coming months — and inflation expectations across bond markets are already pricing that. The US 5-year breakeven fell to 2.20%, its lowest this year. One-year eurozone inflation swaps dropped back below the ECB's 2% target. The 2/10s yield curve flattened to 25 basis points, its narrowest since March 2024.
But the Fed chair isn't buying it yet. Kevin Warsh has assembled five internal task forces — covering communications, balance sheet, data sources, productivity metrics, and inflation measurement — a structural overhaul that signals he intends to run a tighter, less predictable central bank than his predecessors. His message after last week's hawkish dot plot has not softened: Bank of America moved most aggressively, stripping all rate cut projections from its house view and pushing the first easing back to 2028. Goldman held a more nuanced view — roughly half the dot-plot hikers are non-voting regional presidents — but acknowledges the risk is firmly tilted toward tightening.
The dollar tells the fuller story. The USD index closed at 13-month highs above 101.50 for much of the week, even as Treasury yields pulled back on Wednesday's oil-driven inflation relief. José Torres at Interactive Brokers noted the signal: "The long end's reluctance to move proportionally signifies that the market believes the economy cannot sustain significant tightening — it will slow activity before inflation is fully tamed." The curve flattening is itself a warning signal. It didn't predict the last recession, but the market keeps watching it.
May PCE: Expected to show energy-driven peak inflation. Given oil's subsequent collapse, the May reading is likely to be the high watermark — but services inflation and AI buildout cost pressures are stickier. Warsh needs to see broad progress, not a commodity-driven blip, before changing tone.
✓ US PMI Composite 52.2 in June — five-month high; manufacturing output fastest since July 2021; economy holding
The oil collapse this week crossed a threshold that matters symbolically: WTI briefly broke below $70 a barrel Wednesday — the level it held in the days just before the US–Israeli strike on Iran in late February. Brent hit its lowest level since February 27, one day before the conflict began. The war premium that drove oil to a near-$120 peak has now been almost completely unwound in the space of six weeks. US Energy Secretary Chris Wright confirmed 72 ships and 20 million barrels of oil transited the Strait of Hormuz in a single 24-hour window Wednesday, describing pre-conflict flows as "fully" restored. Technical talks between the US and Iran resume in Switzerland on June 30.
The pace of the reversal is extraordinary — and it carries macro implications that markets are still processing. Goldman Sachs expects lower energy costs to deliver a meaningful sequential uplift to US real consumer income in the months ahead. Importers across Asia and Europe that bore the brunt of the inflation shock are already seeing relief. But ING's analysts noted an important caveat: Brent needs to sustain levels near $73–74 for a multi-week period before US crude inventory drawdowns — which hit their lowest level since October 1984 this week — begin to normalise. The market is watching the 60-day negotiating window, not the current spot price.
Gold is having its worst month since 2008. A combination of war-premium unwinding, dollar strength, and the end-of-half portfolio rebalancing has driven spot below $4,000 for the first time this calendar year. Silver fell 8% on Wednesday alone and is now more than 50% below its January peak. Bitcoin also crossed below $60,000, joining precious metals in a broad risk-asset rebalancing that's coinciding with the H1 close. Whether these moves represent structural position unwinding or the start of a genuine reversal in safe-haven demand will only be clear in the weeks ahead.
A2 Milk Company (A2M) Special Div
Declared a $300 million fully franked special dividend — 41.36¢ per share — after China's SAMR approved the transition of two infant formula registrations from the Pokeno facility. Goes ex-dividend July 8. A clear example of balance sheet discipline: return the capital, don't sit on it.
Telix Pharmaceuticals (TLX) Watch
The EMA accepted the Marketing Authorisation Application for Pixclara (TLX101-Px) this week, starting a 210-day review clock. No commercially available 18F-FET PET product exists in Europe. The September 11 FDA PDUFA date is the bigger near-term catalyst — Pixclara approval is the companion diagnostic that unlocks the TLX101-Tx therapy pathway, currently priced at zero in every model.
Healthcare Sector Recovery
Healthcare was the best-performing ASX sector for the prior week (+4.84%), recovering from a 9-year low touched in early June. Technically driven for now — watch for guidance confirmation before calling a sustained turn. The sector is still 39% below its 12-month highs.
BHP Group –5.6% Last Fri
The Jansen potash project in Canada has ballooned toward C$7 billion in costs — a significant blowout that dragged the entire materials sector down 4% on the day. Execution risk on mega-projects is back in focus. With bulk commodity prices soft and the China recovery still grinding, the timing is poor.
Atlas Arteria (ALX) Pressure
IFM Investors now holds above 50% of Atlas Arteria after its bid at $5.10/share automatically extended the offer 14 days to July 7. The independent board maintains the offer significantly undervalues the company and is urging shareholders to hold. A supplementary target statement is expected before the week is out.
Gold Producers — NST / NEM Structural
Spot gold's fall below $4,000 — down 12% in June alone, worst month since 2008 — flows directly into earnings pressure for Northern Star and Newmont. The gold thesis is not broken, but the war premium built into prices over the past three months is unwinding faster than producers can hedge. Watch for guidance revisions.
Micron Technology (MU) +15% Thu
The print of the half. Q3 revenue of $41.5B crushed a $35.7B consensus. Q4 guidance of ~$50B against $43.2B estimates. Gross margin hit 84.9% — nearly double last year. CEO Mehrotra says there is "no line of sight" to supply catching up with demand beyond 2027. SK Hynix's Tuesday report looks even more misguided in hindsight — this market is not slowing.
Super Micro Computer (SMCI) +16% Mon
Server and rack-scale infrastructure continues to be the cleaner expression of the AI trade. SMCI gets paid to build data centres, not to fund them. The rotation out of hyperscalers and into hardware suppliers that characterised the week played directly to its business model.
Homebuilders — DHI / LEN / PHM +6–8% Wed
The PHLX Housing Index jumped 5.4% Wednesday after Congress passed the 21st Century ROAD to Housing Act. Trump signalled he won't actively block the bill — if he does nothing for 10 days, it becomes law. Pulte +8%, DR Horton +6%, Lennar +6%. UBS sees Trump signing before mid-terms.
SpaceX (SPCX) –23% over 3 sessions
Three consecutive sessions of losses since the IPO euphoria faded. The $20B+ bond issuance — combining with AI capex anxiety — hit a stock priced for perfection. SpaceX briefly broke below its $150 first-day opening price Tuesday before recovering. Still 15% above its $135 IPO. Russell index inclusion Friday ($2.68B estimated passive inflow) may provide technical support.
Alphabet (GOOGL) –5% to –6% Mon
Two star AI departures in 48 hours: Noam Shazeer (Gemini co-lead, the man Google paid $2.7 billion to re-acquire) left for OpenAI. Then Nobel laureate John Jumper (AlphaFold, Google DeepMind) left for Anthropic. D.A. Davidson's Gil Luria captured the dynamic: "OpenAI and Anthropic can promise less bureaucracy and a more focused pursuit of Superintelligence." Alphabet joins the Dow on June 29 — small consolation.
Cerebras Systems (CBRS) –19.5% Wed
First quarterly report since going public delivered disappointing margin guidance, sending the AI chipmaker to its lowest level since debut. The warning: not every name that benefits from the AI capex wave has the pricing power to translate it into earnings. Cerebras is learning that lesson the hard way.
Micron's result should settle the debate that opened this week. The AI infrastructure buildout is not slowing. It is accelerating so hard that the memory supply chain cannot keep pace. Micron CEO Sanjay Mehrotra said HBM4 shipments to a lead customer platform are already underway, that HBM4E next-generation products are progressing, and that supply imbalances will persist beyond calendar 2027. No line of sight to normalisation. That is not the language of a business managing through a demand lull — that is a company struggling to build fast enough.
The contrast with the hyperscalers is stark. Nvidia announced a $25 billion bond offering — its first in five years. SpaceX tapped the bond market for $20B+ and attracted $89 billion in demand. Alphabet announced an $80 billion equity raise to fund AI infrastructure. Meta is reportedly considering a large public stock offering. The money must come from somewhere. The market's response — sell the spenders, buy the suppliers — is a rational, if blunt, reallocation. Whether it's sustainable is a separate question. If AI demand is genuine and durable, the spenders will eventually show returns on that capital. But the proof of the pudding is earnings, and earnings are still a few quarters away for the hyperscalers' AI investments.
The week also produced two important non-market AI signals. Anthropic accused Alibaba of waging an industrial-scale campaign to illicitly access Claude — 28.8 million exchanges via 25,000 fraudulent accounts between April and June — an effort it termed "adversarial distillation" that replicates frontier AI capabilities at a fraction of the training cost. The accusation landed in a letter to US senators and White House officials and is likely to accelerate legislative action on Chinese access to US AI outputs. Separately, OpenAI unveiled its first custom chip developed with Broadcom — the first step in reducing its dependence on Nvidia's supply chain. And SK Hynix announced a Nasdaq ADS listing targeting approximately $29.4 billion, which would be the second-largest share sale in history after SpaceX's IPO.
"Another day, another rotation. Tech and communication services are consolidating after a historic run off the March lows. But the bigger story is beneath the surface. Even with headline indices down, the equal-weight S&P 500 is modestly positive. Lagging and more cyclical areas are picking up the baton. We expect this rotation to continue in the near term, allowing tech to take a breather before potentially reasserting leadership later this year."
"A recovery in commercial traffic along the Strait of Hormuz is sparking a Treasury rally as inflation concerns are being quelled by crude oil plunging below $70 a barrel. The long end's reluctance to move proportionally with shorter tenors signals the market believes the economy cannot sustain significant tightening — it will slow activity before inflation is fully tamed."
"The recent tech weakness looked more like a rotation and a rightsizing of positioning than a fundamentally driven alarm bell. When stocks rise too much and too fast, a pullback almost always ensues. The pullback can present an opportunity for investors who do not have adequate exposure to tech, which is still fundamentally strong."
"There's a distinguishing aspect of this market between those who are receiving the cheques — like memory names — and those who are writing them. This is more of a broader sector pullback on ongoing anxiety over tech companies' massive capital spend on AI infrastructure."
The first half of 2026 ends with markets in a more complicated place than they started. The Iran war shock — which drove oil to $120, inflation toward 5%, and forced a complete repricing of the Fed — has been largely resolved. Oil is back to pre-war levels. Inflation expectations have collapsed. The ceasefire is holding, more or less. On paper, the macro backdrop is better than it was in February.
And yet markets are not rallying into that relief. The reason is the Fed's own reaction function. Warsh used the inflation shock to install a structural hawkish pivot that won't be unwound by cheaper petrol. His five task forces, his opaque communication style — deliberately reminiscent of the Greenspan era — and the dot plot that now projects rate hikes rather than cuts all point to a Fed that is no longer the market's backstop. Bank of America is not wrong to price out cuts until 2028.
The rotation this week — memory and hardware suppliers up, hyperscalers and AI spenders down — is the right read of the AI trade for this moment. Micron's earnings prove demand is real. Whether the hyperscalers' capex translates into returns is a 2027 question. For now, the market is choosing to own the picks and shovels rather than the miners. That preference should persist until the hyperscalers start demonstrating AI revenue that justifies the infrastructure spend.
For Australian investors, the week's key data points are the employment and CPI prints that will set the July RBA decision. The global disinflationary tailwind from oil is real but may not arrive in time for the July meeting. If employment remains strong and trimmed mean CPI stays elevated, the RBA moves. If there is a clear downside surprise in the data — and the falling oil price gives it some cover — the hold case is viable. Either way, the rate-sensitive sectors of the ASX (REITs, utilities, bond proxies) remain under structural pressure as long as both the Fed and the RBA maintain a tightening bias.
