Global Economy & Markets, Weekly Roundup 22/07/26
Bund yields hold near multi-year highs ahead of the ECB as renewed US/Iran tensions fuel inflation concerns
US equity indices interrupted a three-day losing streak on Tuesday, as investors’ focus turns to Alphabet and Intel, due to report results for Q2:2026 on July 22nd and 23rd, respectively. Both companies are expected to announce solid EPS growth, with consensus analysts’ estimates at +26% yoy ($2.90) and +113% yoy ($0.21), respectively.
Overall, the US corporate results season has kicked off on a strong note. With 49 companies of the S&P500 having reported results so far, EPS have exceeded analysts’ expectations by +12.3%, versus an average “beat rate” of +7.5% in the previous 4 quarters and +4.4% since 1994.
The S&P500 EPS blended earnings annual growth rate is expected at +26% yoy in Q2:2026, from +29.4% yoy in Q1:2026 and +27% in full year 2026 from +14% in 2025.
Meanwhile, hostilities in the Middle East continue unabated, with severe disruptions of naval flows in the Strait of Hormuz and the Gulf of Oman. As a result, global prices of major energy commodities continue to march higher, with the Brent price approaching $90/barrel. More importantly, crack spreads have widened indicating, inter alia, tight refined-product markets.
Attention now turns to the meeting of the European Central Bank (ECB) on July 23rd. The Governing Council is expected to hold rates unchanged at 2.25% (DFR). The post-meeting communique though will be closely monitored, for elements on how the Board assesses the possible repercussions of the latest developments in the Middle East, including also possible disruptions of naval flows in the Red Sea from the Yemen-based and Iran-affiliated Houthis.
In all, the flare-up of geopolitical tensions clouds the outlook for inflation and consequently for the path of monetary policy. Market expectations, according to overnight index swaps pricing, now appear to assign roughly equal chances for 1 or 2 more hikes (of +25 bps each) by end-2026.
Previously, the volatility of stock returns in the Global Technology Sector was fueled further after Taiwan Semiconductor Manufacturing Company (TSMC) reported its results for Q2:2026. Note that TSMC has a pivotal role in the global supply chain related to Artificial Intelligence (AI), as indicatively it holds c. 70% of the global semiconductor foundry market, while that percentage is estimated to be closer to 90% for the most advanced chips.
TSMC’s stock price lost -5.2% wow, despite easily beating expectations on Earnings-Per-Share (EPS), at $4.31 versus consensus analysts’ estimates of $3.82. The company also reported slightly above-consensus revenue and provided strong revenue guidance. Nevertheless, investors appeared to be concerned about the future returns from its significantly increased capital expenditure plans.
Having said that, the latest rout appears more like a correction in view of perceived pockets of exuberance in segments of the AI investment theme. In the event, stock prices of companies specializing or/and heavily invested in the data storage and retrieval field (a.k.a. “AI memory stocks” such as skHynix, Samsung Electronics, Micron Technology and Sanisk), a crucial part in the development of AI data centers, heavily underperformed in the past week.
However, these losses follow stellar gains, with stock prices of these companies still standing at levels ranging from 4 times to 7½ times the respective ones a year ago.
US equity indices interrupted a three-day losing streak on Tuesday, as investors’ focus turns to Alphabet and Intel, due to report results for Q2:2026 on July 22nd and 23rd, respectively. Both companies are expected to announce solid EPS growth, with consensus analysts’ estimates at +26% yoy ($2.90) and +113% yoy ($0.21), respectively.
Overall, the US corporate results season has kicked off on a strong note. With 49 companies of the S&P500 having reported results so far, EPS have exceeded analysts’ expectations by +12.3%, versus an average “beat rate” of +7.5% in the previous 4 quarters and +4.4% since 1994.
The S&P500 EPS blended earnings annual growth rate is expected at +26% yoy in Q2:2026, from +29.4% yoy in Q1:2026 and +27% in full year 2026 from +14% in 2025.
Meanwhile, hostilities in the Middle East continue unabated, with severe disruptions of naval flows in the Strait of Hormuz and the Gulf of Oman. As a result, global prices of major energy commodities continue to march higher, with the Brent price approaching $90/barrel. More importantly, crack spreads have widened indicating, inter alia, tight refined-product markets.
Attention now turns to the meeting of the European Central Bank (ECB) on July 23rd. The Governing Council is expected to hold rates unchanged at 2.25% (DFR). The post-meeting communique though will be closely monitored, for elements on how the Board assesses the possible repercussions of the latest developments in the Middle East, including also possible disruptions of naval flows in the Red Sea from the Yemen-based and Iran-affiliated Houthis.
In all, the flare-up of geopolitical tensions clouds the outlook for inflation and consequently for the path of monetary policy. Market expectations, according to overnight index swaps pricing, now appear to assign roughly equal chances for 1 or 2 more hikes (of +25 bps each) by end-2026.
Previously, the volatility of stock returns in the Global Technology Sector was fueled further after Taiwan Semiconductor Manufacturing Company (TSMC) reported its results for Q2:2026. Note that TSMC has a pivotal role in the global supply chain related to Artificial Intelligence (AI), as indicatively it holds c. 70% of the global semiconductor foundry market, while that percentage is estimated to be closer to 90% for the most advanced chips.
TSMC’s stock price lost -5.2% wow, despite easily beating expectations on Earnings-Per-Share (EPS), at $4.31 versus consensus analysts’ estimates of $3.82. The company also reported slightly above-consensus revenue and provided strong revenue guidance. Nevertheless, investors appeared to be concerned about the future returns from its significantly increased capital expenditure plans.
Having said that, the latest rout appears more like a correction in view of perceived pockets of exuberance in segments of the AI investment theme. In the event, stock prices of companies specializing or/and heavily invested in the data storage and retrieval field (a.k.a. “AI memory stocks” such as skHynix, Samsung Electronics, Micron Technology and Sanisk), a crucial part in the development of AI data centers, heavily underperformed in the past week.
However, these losses follow stellar gains, with stock prices of these companies still standing at levels ranging from 4 times to 7½ times the respective ones a year ago.