USA
June CPI fell 0.4% m/m — the largest monthly drop since April 2020 — bringing annual inflation to 3.5% vs. 3.8% consensus, with core flat on the month at 2.6% y/y, driven by a 5.7% slide in energy prices. Retail sales rose just 0.2%, the weakest gain in five months. Earnings season opened with solid results from JPMorgan, Goldman, Citi, Wells Fargo and Bank of America, but IBM plunged ~26% on a rare profit warning and Netflix fell over 8% on in-line results. The disinflation relief was overwhelmed by a semiconductor rout — the SMH ETF dropped almost 9%, pressured Friday by Chinese startup Moonshot AI's model announcement — and by renewed Iran escalation, with the ceasefire declared over and oil surging nearly 10% on the week, muddying the outlook ahead of the July 28–29 FOMC. Rotation cushioned the damage: eight of eleven sectors rose, led by Energy and Staples. For the week, the S&P 500 lost 1.6% to 7,457.69, the Nasdaq slid 2.9% to 25,520.24, and the Dow fell 0.9% to 52,146.42.
Europe
Euro area inflation was confirmed at 2.8% in June, down from 3.2% and the lowest since February, with core easing to 2.4%; Germany (2.4%) and France (2.0%) improved while Spain stayed stuck at 3.6%. May industrial production slipped 0.2%. Markets started the week flat but caught the chip contagion by Friday: ASML fell 3.9%, Infineon 4.8% and STMicroelectronics 5.8% despite strong ASML and TSMC results, while BBVA and Deutsche Bank lost ~2.5% each and defensives outperformed. Friday closes: FTSE 100 10,600.37 (+0.27%), DAX 24,830.98 (−0.34%), CAC 40 8,338.81 (−0.47%), with the STOXX 600 at ~641 — the UK's energy-heavy index once again the relative winner as oil rallied.
Japan
Tokyo was the epicenter of the AI unwind. The Nikkei 225 tumbled 4% Friday to 64,141.12, closing more than 10% below its June 25 peak — a technical correction and its worst week since April 2025; the TOPIX fell 2.7% to 3,919.21. The trigger: TSMC beat earnings but raised 2026 capex to $60–64bn, and chips sold the news — Tokyo Electron fell 9.3%, Advantest 10.5%, SoftBank 11.4%, while Kioxia plunged over 14% after a $229M patent verdict. With market leadership concentrated in chip equipment and the Hormuz disruption a direct terms-of-trade shock for an energy importer, Tokyo now trades as a high-beta proxy for the global AI capex cycle.
China
Q2 GDP slowed to 4.3% y/y vs. 4.5% expected — the weakest since Q4 2022 and below the 4.5–5.0% target. Industrial production beat at 5.3% and retail sales turned positive at 1.0%, but fixed-asset investment contracted 5.7% and property investment fell 18% in H1, confirming the supply-demand imbalance. Equities added a liquidity shock: the Shanghai Composite slumped 3.05% Friday to a near eleven-month low of 3,764 on fears that CXMT's $8.6bn IPO and other mega-listings will drain capital, while the Hang Seng slid 2.5% Thursday — with Hang Seng Tech down 5%, its sharpest fall since April 2025 — closing Friday at 24,562.24. Focus shifts to the late-July Politburo, where markets expect fiscal- led stimulus.