MPC Markets Morning Call — 10 July 2026: Chips Rally as Markets Shrug Off Iran Strikes
A chip-led rebound powered Wall Street higher on Thursday as investors treated the latest U.S.–Iran exchange of fire as manageable escalation rather than a genuine threat to supply chains. The S&P 500 rose 0.8% to 7,541.83, the Nasdaq surged 1.3% to 26,206.89, and the Dow added 0.3% to 52,487.44. Crude pulled back sharply after Trump said Iran “called” wanting a deal, with Brent settling near $76 and WTI around $72 after both had spiked more than 5% the prior session. SK Hynix priced its record-setting U.S. ADR offering at $149 per share, raising $26.5 billion in the largest foreign debut in American history. The 30-year Treasury auction drew the highest yield in nearly two decades, a reminder that bond supply pressure has not gone away. SPI futures were up 3 points to 8,741, pointing to a flat-to-slightly-higher ASX open.
The S&P 500 gained 0.8% to 7,541.83, the Nasdaq jumped 1.3% to 26,206.89, and the Dow rose 0.3% to 52,487.44 as the Philadelphia Semiconductor Index rebounded more than 5% across two sessions.
Trump said Iran had called wanting a deal after the U.S. struck roughly 170 targets, though the president added he wasn’t sure Iran was “worthy” of one.
Brent settled near $76 and WTI around $72 after both fell roughly 2% on the day, reversing Wednesday’s 5%-plus surge when Brent briefly topped $80.
The 30-year Treasury auction drew yields near two-decade highs, while strategists in a Reuters poll still expect front-end yields to drift lower as rate-hike pricing looks overdone.
SK Hynix raised $26.5 billion in its U.S. ADR debut at $149 per share—the largest foreign IPO in U.S. history—with the book more than seven times oversubscribed and demand approaching $200 billion.
SPI futures were up 3 points to 8,741 with the ASX set for a quiet open; Bravura Solutions lifted FY26 EBITDA guidance to ~$77 million from a prior $69–$73 million range.
Equities: Semis Lead the Comeback
The Philadelphia Semiconductor Index clawed back more than 5% over Wednesday and Thursday after sliding nearly 14% across four sessions of aggressive profit-taking. Arm, SanDisk and Lam Research topped the Nasdaq’s percentage gainers, pulling the broader chip complex along with them. Micron added 4.5% after announcing it would lift its planned U.S. investment to more than $250 billion through 2035 and commit up to $3 billion to bolster the domestic supply chain.
Meta climbed 4.7% on a flurry of AI-related headlines. Reuters reported the company plans to start production of a custom AI chip in September and double its computing power to 14 gigawatts next year. Separately, Meta launched Muse Spark 1.1 and CEO Mark Zuckerberg told Bloomberg he is exploring a cloud business to rent out spare compute at premium rates. The iShares Expanded Tech-Software Sector ETF finished up 1.7% after Starbucks’s in-house AI software plans briefly spooked the sector in pre-market.
Seven of 11 S&P 500 sectors closed green, led by tech. Consumer staples were the biggest drag. Oliver Pursche at Wealthspire Advisors flagged a growing tension: AI spending has so far offset geopolitical headwinds, but rising oil-driven inflation, a cautious consumer and a fragile labour market could “structurally alter growth expectations.” The trillion-dollar question, he said, is whether the dam breaks.
“Companies will need to do more than just beat estimates. They will need to show that margins are holding at high levels, that guidance remains firm and probably even better than analysts currently project, and that tech-led profit growth still has enough breadth to support the market’s valuation.”
Geopolitics: U.S.–Iran Strikes, Then a Phone Call
The market spent Wednesday in full panic mode after the biggest escalation between the U.S. and Iran since last month’s interim peace deal collapsed. The Pentagon confirmed strikes on approximately 170 targets inside Iran, hitting air defence systems, missile and drone storage sites, and more than 60 Islamic Revolutionary Guard Corps small boats. Iran retaliated by striking U.S. bases in Kuwait and Bahrain.
Then the tone shifted. Trump told reporters on Air Force One that Iran had “called a little while ago” wanting to make a deal, though he questioned whether they were “worthy of making a deal” or would honour one. His rhetoric remained aggressive: “I say we hit them 20-to-1. Every time they hit us, we’re going to hit them 20.” When asked if full-scale war was coming, he said: “I don’t know.”
Markets chose to hear the word “deal.” Crude reversed Wednesday’s spike and equities rallied. Elias Haddad at Brown Brothers Harriman summed up the mood: the market treated the latest exchange as another round of managed escalation, betting the economy can absorb the shock. That bet has worked so far. But Putin is reportedly rejecting calls to negotiate on Ukraine too, with Kremlin sources telling Reuters there’s a “high probability” of further escalation in the coming months.
U.S. equity funding markets remain stretched. The cost of financing equity positions hit 200 basis points above the fed funds rate at quarter-end, the highest since December 2024. Dealers hold roughly $211 billion of equity repo exposure on their balance sheets. Kevin Muir, a Toronto-based prop trader, warned: “The next correction could very well be much larger than people expect because of the crazy amount of speculation that’s occurring.”
Energy, Commodities & FX
Oil gave back most of Wednesday’s war premium. Brent settled down 2.2% near $76 and WTI dropped 2.0% to around $72 a barrel after Trump’s comments suggested Iran was ready to negotiate. That was a sharp reversal from the prior session when Brent briefly punched above $80 for the first time since 22 June. In early Asian trading on Friday, WTI slipped a further 0.4% to $71.76. Traders appear to be pricing a limited conflict scenario where energy infrastructure stays intact.
Gold rose more than 1% on the day as haven demand offset the easing of crude prices. Spot gold was little changed in early Friday trade. The dollar dipped on stable jobless claims data and the ongoing Iran tensions, with the Bloomberg Dollar Spot Index flat. The euro held at $1.1430, the yen sat at 162.38 per dollar, and the offshore yuan was steady at 6.7957.
The 10-year Treasury yield fell 3 basis points to 4.55% on Thursday, though the 30-year auction drew yields near two-decade highs. A Reuters poll of 74 strategists found the consensus still expects the 10-year to hold around 4.48% over three to six months, with most viewing current rate-hike pricing as excessive. Citi’s Jason Williams put it bluntly: the market is pricing almost 40 basis points of hikes for 2026 and “if that ends up being zero, that alone could be worth 30-odd basis points in 10-year yields.” Bank of America, however, forecasts three quarter-point hikes this year.
AI Infrastructure: SK Hynix’s Record Debut and the Memory Boom
SK Hynix priced its U.S. ADR offering at $149 per share, raising $26.5 billion and dethroning Alibaba’s $25 billion debut as the largest foreign IPO in American history. The book was more than seven times oversubscribed with demand approaching $200 billion. Nearly half the ADRs went to the 10 largest accounts, and the top 25 took about two-thirds. The shares start when-issued trading Friday on the Nasdaq under the symbol SKHYV.
The pricing came at a roughly 3% premium to SK Hynix’s Korean-listed close, a signal of confidence that the U.S. stock will find buyers even after wild swings in Seoul. SK Hynix controls 57% of the global high-bandwidth memory market by revenue, making it the go-to supplier for Nvidia. Global memory monthly sales hit a record $74.6 billion according to UBS’s July Memory Monthly report. OpenAI’s Sam Altman told CNBC that soaring memory and compute costs were “definitely a headwind” for the AI startup’s expansion.
Fed Chairman Kevin Warsh named leaders for five policy task forces covering communications, the $6.7 trillion balance sheet, data sources, productivity/AI, and inflation frameworks. The roster includes former Bank of England Governor Mervyn King, former RBI Governor Raghuram Rajan, Marc Andreessen, and Anthropic’s Charles I. Jones. Conclusions are due by year-end. RSM’s Joe Brusuelas called the lineup “very impressive” but cautioned the Fed’s own army of PhDs had already investigated many of these areas.
ASX Outlook & Day Ahead
Australian shares are set for a muted open after SPI futures added just 3 points to 8,741. The Nasdaq’s chip-led rally should provide a tailwind for local tech and semiconductor names, though the ASX has its own headlines to digest. Bravura Solutions upgraded its FY26 cash EBITDA guidance to approximately $77 million, up from a prior $69–$73 million range, citing stronger customer engagement and project work. Revenue guidance held steady at $280–$285 million.
UniSuper CIO John Pearce poured cold water on the Firmus mega-float, telling the AFR there’s “too much we don’t know” about the data centre darling and questioning whether the IPO will get away. On the policy front, Treasury’s new tax on discretionary trusts is creating a “postcode lottery” for rollover relief that could cost restructuring families millions in state stamp duty.
The ASX opens into a Friday with offshore direction mixed. The chip rally is encouraging for sentiment but SPI futures are barely positive, and the local market has underperformed on a five-day basis. The Australian dollar sits at a minimal 0.03% five-day move and remains largely rangebound.
- ASX Open — SPI futures +3 points to 8,741, pointing to a flat-to-slightly-higher start.
- SK Hynix ADR Trading Begins (Friday US) — When-issued trading starts on the Nasdaq under SKHYV; watch for read-through to local chip-adjacent plays.
- Bravura Solutions (BVS) Guidance Upgrade — Cash EBITDA lifted to ~$77m from $69–$73m; full-year results due 12 August.
- Germany CPI (June) — Key input for ECB rate expectations; any surprise could move European futures and AUD crosses.
- Canada Employment (June) — Labour market read-through for BoC policy, with implications for commodity currencies including AUD.
- U.S.–Iran Developments — Any overnight escalation or deal progress will directly impact crude prices and risk appetite at the Asian open.
