29/07/2026
Renewed geopolitical conflicts in the Middle East have broken the region’s recent calm, stoking fears of energy supply disruptions and pushing oil prices higher while driving declines in U.S. Treasury prices. Asian equities traded mixed amid the cross-asset volatility.
Brent crude surged more than 4% to around $87.50 per barrel, rebounding sharply from its worst three-day slump since April 2020. The turnaround came after the U.S. military confirmed it had intercepted an “imminent attack” by Iranian forces on U.S. troops and launched retaliatory strikes against Iran.
U.S. Treasury prices fell, with the benchmark 10-year yield rising one basis point to 4.62%, as investors weighed the inflationary risks stemming from Middle East tensions ahead of the Federal Reserve’s policy decision on Wednesday. Gold edged down 0.2%, pressured by the prospect of higher interest rates that would diminish the appeal of non-yielding bullion, while the Bloomberg Dollar Spot Index remained steady.
Following a steep selloff in chip stocks on Wall Street Tuesday, tech shares saw intense volatility in early Asian trading. SK Hynix Inc. dropped 2% despite reporting a 557% year-over-year jump in quarterly profit, as results still fell short of market expectations. The MSCI Asia Pacific Index dipped 0.4% at its intraday low before paring losses to close 0.5% higher. Previously, a key U.S. semiconductor gauge tumbled 4.5%, pushing the Nasdaq 100 to the brink of a technical correction.
Escalating Middle East hostilities have refocused market attention on the Strait of Hormuz. The mounting risk of oil shipping disruptions threatens to lift inflation expectations right ahead of the Fed’s rate decision. This has deepened investor uncertainty, already heightened by doubts over whether multibillion-dollar artificial intelligence investments can deliver sufficient returns, prompting widespread selling in technology stocks.
In geopolitical developments, U.S. President Donald Trump welcomed Israeli Prime Minister Benjamin Netanyahu at the White House on Tuesday. The U.S. administration is seeking to avoid further airstrikes on Iran and instead lay the groundwork for renewed diplomatic efforts.
“Given that previous disagreements over the management of the Strait of Hormuz led to Iranian aggression and the early collapse of prior memorandums of understanding, we remain cautious about any potential deal that fails to meaningfully resolve core issues surrounding the strait,” said Ryan McKay, Senior Commodity Strategist at TD Securities.
On Tuesday, Micron Technology and SanDisk were among the biggest drags on the S&P 500. The Philadelphia Semiconductor Index slumped 4.5%, on track for its worst month since 2002 after notching one of its strongest quarterly performances on record.
Vikram Ray, Portfolio Manager at First New York, commented that the divergence between the S&P 500 and Nasdaq 100 “reflects a rotation of capital away from chipmakers into other sectors.” He added that “without strength in the semiconductor and memory segments, the Nasdaq 100 cannot stage a meaningful recovery.”
These market dynamics have set a challenging backdrop for the upcoming earnings releases of major U.S. tech firms. Microsoft and Meta Platforms are scheduled to report results after Wednesday’s close, followed by Apple and Amazon on Thursday.
The Federal Reserve is widely expected to hold interest rates steady following its two-day policy meeting. However, with market patience for elevated inflation wearing thin, traders are closely monitoring risks of a surprise rate hike.
JPMorgan analysts stated that the odds of a rate hike are lower than the market’s current 30% pricing. They noted that while inflation remains elevated, it shows limited risk of a sharp upside surge. The bank pegs a 50% probability that the Fed will maintain its hawkish stance, arguing policymakers will stay vigilant even as recent energy price declines signal potential disinflation.
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