MPC Markets Morning Call — 29 June 2026: Chips Crumble, Iran Flares and the Fed Stays Hawkish

The PHLX semiconductor index tumbled 5.3% on Friday and shed 7.9% for the week, its steepest weekly decline since early April. The selling was broad-based across AI-linked chipmakers as investors questioned whether the massive capital expenditure cycle building out data centres would deliver returns quickly enough. ON Semiconductor dropped nearly 24% after announcing a $7 billion all-stock acquisition of Synaptics, while memory names Western Digital (−13.19%) and Seagate (−12.24%) gave back the gains driven by Micron’s blowout earnings on Thursday.

Eight of the eleven S&P 500 sectors finished in the red on Friday, with industrials leading the decline at −3.41%, followed by materials at −2.45%. On the other side, Microsoft surged 5.71%, Salesforce added 5.45% and IBM climbed 5.17%, while Apple rallied 3.1% to partially recover from Thursday’s selloff triggered by its MacBook and iPad price hikes. Moderna was the standout, soaring 12.6% to its highest level since 2024 after showcasing its pipeline at an investor event.

The conflicting signals within tech tell their own story. As Richard Reyle, chief investment officer at Questar Capital Partners, put it: “The AI narrative in markets right now is all over the place, shifting from questions about ROI from the AI spend, to exuberance about the AI spend, as seen in Micron’s gaudy numbers this week. These conflicting narratives suggest that the market is in the process of picking winners and losers in this space.” The hot money that chased Nvidia has now discovered the memory stocks, Reyle warned, but memory is largely a commodity business and current pricing power is unlikely to last.

Global stock indices performance — Friday session. The Dow outperformed with a weekly gain of 0.6%, while the Nasdaq posted its worst week in months.

A weekend of tit-for-tat military strikes between the United States and Iran has shattered whatever remained of the ceasefire framework. President Trump on Friday accused Iran of shooting at least four one-way attack drones at ships transiting the Strait of Hormuz, hitting the Singapore-flagged cargo vessel M/V Ever Lovely in what he called a “foolish violation” of the ceasefire agreement. U.S. Central Command responded with strikes on Iranian missile and drone storage sites and coastal radar installations.

Tehran hit back on Saturday, launching drone attacks targeting Bahrain and Kuwait in retaliation for the U.S. strikes. A second commercial vessel, the tanker M/T Kiku, was struck by a projectile in the Strait of Hormuz. Iran’s Revolutionary Guard warned that any attempt to cross the strait along routes not approved by Tehran would be “unacceptable and completely dangerous,” while the International Maritime Organisation halted its coordinated evacuation of over 11,000 stranded seafarers.

Amid the flurry of strikes, both sides reportedly agreed to stop attacks and reschedule technical talks for Tuesday in Doha, Qatar. “We decided to stop all the kinetic activity,” a senior U.S. official told Axios. But Iran withdrew from Sunday’s planned technical discussions, citing unfulfilled conditions of the memorandum of understanding — including access to unfrozen funds. Vice President Vance warned: “If they have disagreements about how the MOU is being applied, they can pick up the phone. But violence will be met with violence.”

Separately, Israel destroyed a 200-metre underground Hezbollah tunnel in the southern Lebanese town of Majdal Zoun, informing the U.S. ahead of the operation. And Ukraine continued its long-range drone campaign against Russian energy infrastructure, setting fire to a major refinery in Slavyansk-na-Kubani that processes close to 4 million tonnes of crude per year.

Oil prices fell sharply on Friday even as the Strait of Hormuz situation deteriorated. WTI crude for August delivery dropped 2.86% to $69.86 a barrel, while September Brent fell 3.10% to $73.16. The decline reflected a view among traders that overall shipping traffic through the strait remained resilient despite the drone attacks, and that the geopolitical risk premium built into crude during the worst of the Iran conflict had been largely unwound. Whether that view survives Monday’s open after the weekend escalation is another question entirely.

The memory chip supply crunch is creating a second inflation channel beyond energy. Apple’s decision to raise MacBook, iPad and home device prices to offset soaring memory costs drew comparisons to the pandemic-era semiconductor shortage. Art Hogan, chief market strategist at B. Riley Wealth, noted: “We saw a similar dynamic during the pandemic, when supply chain disruptions limited access to semiconductors. Now, we’re witnessing a comparable supply shock, this time driven by memory, which is creating renewed inflationary pressure.”

Gold futures for August delivery rose 0.92% to $4,084.70 a troy ounce, maintaining its safe-haven bid. The U.S. Dollar Index slipped 0.10% to 101.10, EUR/USD edged up 0.18% to 1.14, and USD/JPY was essentially flat at 161.74. The CBOE Volatility Index declined 2.70% to 18.38, suggesting options markets were not yet pricing in a significant escalation — though that reading predates the weekend strikes.

Supplementary market data — Friday 27 June 2026.

Commodities, energy and FX performance — Friday session. Gold held firm at $4,084.70 while crude oil extended its slide on easing overall Hormuz shipping concerns.

The Bank for International Settlements used its Annual Economic Report on Sunday to lay out a sobering catalogue of systemic risks. Record-high public debt has created what the BIS calls a “sovereign-financial stability nexus,” where sovereign bond markets increasingly dominated by large, highly leveraged hedge funds could amplify market shocks. Frank Smets, acting head of the BIS monetary and economic department, warned that “the new fiscal-financial stability nexus may mean more frequent and sharper drops in sovereign bond values,” which could rapidly tighten financial conditions.

On artificial intelligence, the BIS acknowledged the boost to confidence and growth expectations but cautioned that supply bottlenecks and intense competition “could lead to the kind of overinvestment seen in previous boom-and-bust cycles.” The financing of the AI boom looks increasingly reliant on debt and complex funding structures, the report noted — a point underscored this week by SpaceX joining the parade of mega-cap names tapping bond markets to fund expansion.

BIS General Manager Pablo Hernandez de Cos said the message was one of “urgency” on bringing down debt levels. “Policymakers must act now. Delay will only make the necessary adjustments more costly,” he said. On inflation, de Cos warned that more frequent supply disruptions could cause higher inflation expectations to become entrenched, though he described the U.S.–Iran ceasefire as “good news” that would help avoid extreme scenarios.

Australian investors return on Monday to a complicated set of signals. Wall Street’s tech rout will weigh on the local technology and semiconductor-exposed names, while the weekend Iran escalation introduces fresh geopolitical uncertainty that was not priced into Friday’s close. However, the sharp decline in oil prices could ease some pressure on energy-importing sectors, and the improvement in U.S. consumer sentiment provides a modest counterweight.

U.S. equity fund flows turned negative in the week to 24 June, with $3.53 billion in outflows and a staggering $20 billion pulled from technology sector funds alone. That reversal from $21.46 billion in tech inflows the prior week signals institutional repositioning that could continue to ripple through global markets. Money market funds recorded $25.74 billion in net outflows, their largest since mid-April.