MPC Markets Morning Call — 22 July 2026: Chip Stocks Surge as Dip Buyers Pile In, But Oil Tops $91 on Houthi Red Sea Threat

The semiconductor trade came roaring back to life on Tuesday. The Philadelphia SE Semiconductor Index (.SOX) posted a 5.2% rally — its best day in a month — notching a second consecutive advance after closing Friday more than 20% below its late-June record high. That bear-market plunge had spooked a lot of people. What brought them back was a mix of FOMO and positioning mechanics.

Hedge funds had slashed long positions in momentum and semiconductor names by roughly 5% of gross market value in recent weeks, one of the largest reductions on record, according to UBS’s prime brokerage data. With mega-cap earnings starting Wednesday, the risk of being caught underweight ahead of potential blowout numbers was too much for many desks to stomach.

Philadelphia Semiconductor Index daily moves — the 5.2% surge on 21 July was the biggest in a month. Source: Bloomberg

“Investors are really buying back into the semis ahead of earnings because they have fear of missing out,” said Lindsey Bell, chief investment strategist at 248 Ventures. “These companies could report outsized earnings beats and increase their outlooks, and they don’t own as much as they did before the most recent pullback.”

But Bell added a word of caution: when stocks rally this hard into results, “it makes it more difficult for them to run in response to earnings. The numbers are going to be really good, but the stocks are also priced for perfection.”

The broader market rode the chip rally higher. The S&P 500 rose 0.9% to 7,509.20, the Dow added 0.7% to 52,224.64, and the Nasdaq Composite gained 1.3% to 25,837.21. Nine of the benchmark’s eleven sectors advanced, with info tech up 2.35% leading the pack. Consumer staples fell 1% and communications services lost 0.85%.

SanDisk led the S&P 500 with a 14.3% gain, followed by Western Digital at 12.5% and Micron at 12.2%. AMD jumped 8.1% and Intel surged 8.6% on plans to cut more jobs. Nvidia rose nearly 2% after confirming its latest chip designs are shipping to customers.

On the losing side, Danaher cratered 11%, the biggest S&P 500 decliner, after the life sciences firm trimmed its core revenue growth outlook and reported weaker-than-expected biotech revenue. MSCI tumbled 10% after raising its operating expense forecast despite beating on revenue.

Volume was light at 16.14 billion shares, well below the 20-session average of 19.56 billion. Advancing issues outnumbered decliners 1.44-to-1 on the NYSE and 1.65-to-1 on the Nasdaq.

Global index performance: daily vs five-day returns. The Nikkei surged 3.26% on the day but remains down 3.66% over five sessions. Source: Investing.com

The US completed a tenth consecutive day of strikes against Iran on Monday, targeting military command centres, launch sites and air defences. Iran retaliated with attacks on a tanker in the Strait of Hormuz and struck at US military bases across Kuwait, Jordan, Bahrain and Iraq. Kuwait said power and desalination plants were among the facilities hit. Three US service members have been confirmed dead since Friday, with another still missing.

Then came the Red Sea escalation. Iran-backed Houthi militants declared a maritime blockade on Saudi Arabia, putting at risk the millions of barrels the kingdom exports via the Red Sea, a route that had become a critical workaround after the Strait of Hormuz was effectively shut down. The Houthis sent emails to shipowners warning all vessels against calling at Saudi ports.

Defence Secretary Pete Hegseth told legislators the war had cost the US $37.5 billion so far, up from $29 billion in late May. He was on Capitol Hill pushing for a $67 billion supplemental defence spending bill. Hegseth told reporters: “Iran’s been given every opportunity to negotiate, to show that they’re reasonable on the Strait of Hormuz — but if they’re going to shoot at commercial shipping, then we’re going to hit them ten times harder.”

Tehran dismissed US claims that it was seeking talks. Iran’s foreign minister Abbas Araghchi said the country wouldn’t abandon diplomacy but wouldn’t be forced back to the table while under military attack, adding that Iran’s actions in the Strait “had global consequences and we became a global player.” Iran’s joint military command vowed a “powerful strike” against any attack on its nuclear sites.

Pakistan and Qatar, the main intermediaries, are pushing for a return to pre-July 9 positions as a first step. Mediators have reportedly proposed a 10-day ceasefire, but a US official said Trump is focused on punishing Iran for attacking ships. US retail gasoline prices have climbed back above $4 a gallon, a potential headache for Republicans ahead of November’s midterm elections.

Meanwhile, the US unveiled additional 50% tariffs on certain Canadian imports ranging from wine to hockey sticks to cement. Trump said the tariffs were a response to how Canada “has treated our farmers and our people,” not a response to recent wildfire air quality concerns.

Brent crude jumped 2.4% to $91.35 a barrel, its highest level since early June. WTI rose 2.5% to $84.50. Oil prices have surged roughly 25% in July as the two key workarounds that had been easing the supply shock from the Iran war — Red Sea shipments via Yanbu and dark tanker transits through Hormuz — are both now under direct threat.

Saudi Red Sea shipping routes before the war vs after the ceasefire agreement. Yanbu port became critical after Hormuz flows collapsed. Source: Bloomberg

On Tuesday, a handful of oil tankers paused their journeys as they approached Yemeni waters heading into the Red Sea. Other ships laden with Saudi crude u-turned and sailed north towards the Suez Canal. A crude tanker managed by Greece’s Dynacom Tankers, which saw three of its vessels hit in recent days (one now half-submerged in the middle of Hormuz), also turned away. Kazakh oil flows to the Black Sea were forced to stop as vessel owners refused to enter port following attacks on ships there.

Oil berth occupancy at Persian Gulf ports has collapsed since the ceasefire ended. Saudi Arabia, Iran, and the UAE show near-zero activity. Source: Sentinel-1 / Bloomberg

Satellite imagery tells the story starkly: oil berths across Saudi Arabia, Kuwait, Iran, Iraq and the UAE are operating at a fraction of their normal rate. Saudi Arabia showed zero vessels at four observed berths on 21 July, down from a pre-war average of six at ten. The IEA’s Fatih Birol warned that the escalation “increases security of supply concerns” at a time when global inventory buffers are running increasingly thin.

In the supertanker market, the largest ships are currently earning close to $200,000 a day, one of the biggest booms ever. Bloomberg reported that some seafarers are being offered months’ worth of wages to risk crossing the Strait of Hormuz.

Elsewhere, gold surged 1.9% to $4,084.58 an ounce. The 10-year Treasury yield rose four basis points to 4.63%, with Michael O’Rourke at Jones Trading flagging that continued bond weakness could push yields above the May peak to one-and-a-half year highs. The Bloomberg Dollar Spot Index rose 0.2%, the yen weakened 0.4% to 163.22 per dollar, and sterling fell 0.4% to $1.3380. Bitcoin added 1.7% to $66,419.

Commodities and macro daily vs five-day performance. Crude leads with a 2.73% daily gain and 5.52% over five days. Uranium surged 4.09% over the week. Source: Investing.com

China’s Moonshot AI is preparing to open discussions in August on a final round of fundraising before listing in Hong Kong at a valuation of as much as $50 billion. The company is about to close a round at $31.5 billion, then intends to immediately begin talks on a follow-on raise — the last capital infusion before an IPO that could come as soon as this year.

The speed is driven by the explosive reception of Kimi K3, Moonshot’s 2.8 trillion-parameter open-weight model that surprised the industry by approaching the performance of frontier models from OpenAI and Anthropic. Daily revenue has surged at least sixfold since K3’s launch, and annual recurring revenue hit $300 million in June, up from $200 million in April.

Elon Musk called K3 “impressive.” OpenAI’s head of strategy Dean Ball warned the open-weight release pushes the tech world closer to “full AI communism.” Treasury Secretary Scott Bessent said the US will carefully examine open-source AI models from China and take action on any evidence of intellectual property theft.

The real test comes Wednesday when Alphabet reports. Capital expenditure guidance will be the focal point, with the company facing “significant concerns” about AI spending swallowing up cash flow, according to AJ Bell’s Danni Hewson. Intel and Texas Instruments also report this week, followed by Microsoft, Meta, Apple and Amazon next week.

Margin debt vs S&P 500 — leverage has surged to record levels alongside the index. Prior peaks preceded the Dot Com bust, GFC, and late-pandemic correction. Source: FINRA / FRED

Australian shares are poised to open modestly higher, tracking the broad Wall Street advance even as oil topped $91 a barrel. ASX 200 futures were up 21 points, or 0.2%, to 8,763.

The local session will be shaped by two competing forces. The overnight chip rally should lift tech-adjacent names, but the continuing oil price surge adds to input cost pressures for transport and industrials while benefiting energy producers. Watch for follow-through in Goodman Group and WiseTech on the tech side, Woodside and Santos on the energy side.

Treasury yields ticking higher globally will keep pressure on rate-sensitive sectors. The ASX remains technically neutral on the daily timeframe, with weekly signals still flashing Strong Buy.