MPC Markets Morning Call — 17 July 2026: Chips Crack, Iran Burns, and the Fed Can’t Make Up Its Mind

The chip trade broke down on Thursday. The SOX semiconductor index plunged 4%, dragging comms services down 3% alongside it. SanDisk dropped 12.5% and Seagate Technology lost 10%. Consumer staples, of all things, led the session with a 3% gain. Nike added 4%. It was one of those days where the market’s internal rotation told you more than the headline index moves.

TSMC’s numbers were genuinely spectacular. A 77% jump in quarterly net profit to T$706.6 billion ($22 billion), comfortably ahead of consensus. Revenue hit $40.2 billion with gross margins of 67.7%. The company lifted its 2026 revenue growth target to slightly above 40% (up from 30%-plus) and jacked capex guidance to $60–$64 billion. CEO C.C. Wei said the current demand environment could last until the end of the decade. And yet: shares finished 2.3% lower in the U.S. “If investors were looking for cracks in the AI growth theme in TSMC’s quarterly results they’d struggle to find any,” noted Dan Coatsworth at AJ Bell. But the spending trajectory gave pause. TSMC is also building out a $265 billion Arizona commitment, and overseas fab expansion is pressuring margins.

Global indices — 16 July 2026. South Korea’s KOSPI bore the brunt with a 7% plunge; Japan fell 2.8%; Wall Street’s big three slid 0.2%–1.5%. Source: Bloomberg

The bigger question now is whether next week’s Magnificent Seven earnings can stop the rot. Alphabet, Intel, IBM, Texas Instruments, and Tesla report next week. Microsoft, Meta, Amazon, Arm, Qualcomm, and Apple follow the week after. Meanwhile, Netflix tumbled 8.6% after hours to $67.99 after guiding Q3 revenue to $12.86 billion against Street expectations of $13 billion. The company also said it would cut viewing-hours reports to once a year starting January 2027.

On the flip side, UnitedHealth climbed 1.2% on a beat across virtually every metric, and Abbott Laboratories surged nearly 11% after lifting guidance. South Korea’s KOSPI cratered 7% — the worst session since the LTCM crisis — and Seoul tightened rules on leveraged ETFs tied to Samsung and SK Hynix. Foreign investors are selling Korean stocks at the fastest rate in 25 years.

South Korea’s KOSPI volatility has spiked to levels not seen since the 1998 LTCM crisis. Source: Reuters

The U.S. military launched strikes on Iran for a fifth consecutive night on Thursday, hitting military sites along the Strait of Hormuz. CENTCOM said the operation began at 2 p.m. ET and was aimed at degrading Iran’s ability to threaten commercial shipping. Two earlier waves had already struck facilities in Bandar Abbas that day. Iran retaliated with missile and drone strikes at several U.S. military targets in the region.

The White House clarified that a blockade exists only for vessels entering and departing Iranian ports. “The Strait is open for ships that are not traveling to and from Iranian ports specifically, and the U.S. Navy is there to ensure that can take place,” Press Secretary Karoline Leavitt said. But Iran has largely rejected that distinction, continuing to attack commercial vessels attempting to pass through the waterway. Trump has vowed the campaign will continue “until I say that’s enough” and said strikes on Iranian oil infrastructure would be “saved for last.”

The more alarming development came from Reuters, reporting that Iran has told Yemen’s Houthi movement to stand ready to close the Red Sea oil route if the U.S. strikes Iranian power infrastructure. The Houthis have deployed missiles and drones near the Bab el-Mandeb strait and are awaiting the order to begin, according to a source close to the group. IRGC representatives already in Yemen would control the timing. With Saudi Arabia having diverted 70% of its energy exports through its Red Sea port of Yanbu after the Hormuz shutdown, any Houthi attacks would leave both of the Middle East’s main oil export routes disrupted simultaneously.

A Wall Street Journal report said Trump is leaning toward expanding the military campaign, with options including intensifying airstrikes, deploying ground forces to seize strategic Iranian islands near the Strait, and bombing a heavily fortified site believed to support covert nuclear activities. In a mixed signal, Trump noted Iran had released a U.S. citizen detained in late 2024 and thanked the country for its “goodwill.”

TSMC’s expanding Arizona facility, part of a $265 billion U.S. commitment reshaping global semiconductor manufacturing. Source: Bloomberg

Oil prices are up double digits for the week and it’s not hard to see why. Brent crude has surged more than 11% since the ceasefire between Washington and Tehran collapsed. WTI edged up another 0.7% on Thursday to $79.53 a barrel. The Strait of Hormuz remains a live flashpoint, and the Houthi threat to close Bab el-Mandeb adds a second choke point to the mix. U.S. natural gas, by contrast, hit a two-month low at $2.823/mmBtu.

June retail sales data showed gasoline station receipts fell 5.3% month-on-month to $60.6 billion, reflecting the brief relief when the interim U.S.-Iran deal held in mid-June. Average pump prices dropped to $4.18 a gallon from $4.61 in May. That window has slammed shut. With hostilities resuming, petrol prices are climbing again and the third-quarter consumer outlook is dimming.

U.S. retail sales rose 0.2% in June, masking strong gains at auto dealers (+1.9%) and online retailers (+1.9%) behind a 5.3% drop at gasoline stations. Source: Reuters

Commodities, energy & FX — 16 July 2026. Gold and silver sold off on dollar strength and hawkish Fed commentary; oil stayed supported by Middle East risk. Source: Bloomberg

Gold dropped 2.1% to $3,975.21/oz, below $4,000 for a third session this week. “Oil prices remain elevated due to the resumption of hostilities between the U.S. and Iran,” said David Morrison at Trade Nation. “This is supporting expectations that the Federal Reserve could still raise rates later this year.” Silver fell 4%. The dollar gained 0.3%, with dollar/yen still sitting above 162.00 near 40-year highs. The euro was flat at $1.1444. Bitcoin edged up 0.2% to $64,209.

Dallas Fed President Lorie Logan dropped the most hawkish commentary of the week on Thursday, telling an audience at the Houston Branch that she “currently believe[s] modestly higher interest rates would better balance the outlook and risks.” She’s a voting member this year. That matters. Her counterpart in Kansas City, Jeff Schmid, echoed the concern, calling inflation his biggest worry.

Logan acknowledged the June CPI report offered a “more hopeful scenario where inflation returns all the way to target,” noting that core goods prices fell as tariff effects receded and housing costs moderated. But she wasn’t buying it. “That path is tenuous. It relies on avoiding further price pressures from energy shocks in the near term and from strengthening demand in the medium term. For now, it is more a hope than a likelihood.”

The data itself was solid. Retail sales rose 0.2% month-on-month in June to $768.6 billion, matching expectations. Core retail sales (ex-autos, gas, building materials, food services) rose a healthy 0.5%. Initial jobless claims fell to 208,000, the lowest since May and well below the 216,000 consensus. Ellen Zentner at Morgan Stanley Wealth Management put it plainly: “Despite challenges, consumers are still spending and the labor market shows no signs of cracking.” Economists upgraded Q2 GDP estimates to as high as 2.4% annualised, up from 2.1% in Q1.

Australian shares are set for a weaker open after the tech selloff rippled through Asian futures overnight. ASX 200 futures fell 15 points or 0.2% to 8,784. Hang Seng futures dropped 0.3% and Nikkei 225 futures fell 1.4%.

Coles walked away from its $4 billion talks with TPG Capital over veterinary group Greencross. The stock had already been punished, falling nearly 9% since the bid was disclosed on July 1. Analysts had warned Coles was making a mistake playing outside supermarkets. Zip announced it will exit New Zealand to focus on its faster-growing Australian and U.S. businesses.

In the miners, Perseus Mining flagged mine-life upside at its Yaouré gold mine in Côte d’Ivoire after the open pit delivered 24% more contained gold than its reserve model. The company committed $34 million to exploration in FY27. Regis Resources guided FY27 production of 360,000–400,000 ounces at all-in sustaining costs of $2,990–$3,390/oz. And roughly 50 BHP high-voltage workers in the Pilbara endorsed strike action after 12 months of failed bargaining, with 98% backing stoppages of up to 24 hours.

BHP’s Pilbara operations face industrial action after high-voltage workers endorsed stoppages. Source: AFR