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Stocks slide on AI fears

Equity markets were under pressure at the start of the week as concerns about AI investment renewed a sell-off in semiconductor shares. Investors also remained vigilant ahead of the US central bank’s highly anticipated interest rate decision on Wednesday, while around one-third of S&P 500 companies - including Microsoft, Apple, Meta and Amazon - are due to report second-quarter results this week. The situation in the Middle East and the development of oil prices remained the major focus points for investors. In Germany, the Ifo Institute's corporate survey results came in better than expected, while some ECB members hinted at further tightening.

  • Date
  • Author Alessandro Fezzi, Content & Publications
  • Reading time 5 minutes

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Asian equities fell sharply on Tuesday as concerns about heavy artificial intelligence investment triggered a renewed semiconductor sell-off. South Korea’s KOSPI dropped 10%, while Japan’s Nikkei 225 fell as much as 4%, after reports that chipmaker Nvidia’s AI financing commitments had surpassed USD 750 billion. SK Hynix and Samsung Electronics led losses in Seoul, while Japanese chip-equipment groups also declined amid concerns about China’s progress in domestic lithography technology. Chinese and Hong Kong technology shares proved more resilient, supported by optimism over Beijing’s drive for semiconductor self-sufficiency ahead of major central-bank decisions and US technology earnings.

On the New York Stock Exchange US equities closed mixed on Monday after initial gains driven by hopes of a ceasefire between the US and Iran faded amid weakness in semiconductor shares. The Dow Jones Industrial Average rose 0.5% to 52,210.08 points, while the S&P 500 was little changed at 7413.18 points and the Nasdaq 100 fell 0.3% to 28,039.21 points. Concerns over China’s emerging DUV lithography capacity and the rapid market debut of memory-chip maker CXMT weighed on the sector, while Nvidia declined 5% amid concerns about the returns on large AI investments. Lower oil prices hurt Chevron and ExxonMobil, whereas Ford and General Motors gained following positive analyst recommendations.

US durable-goods orders rise modestly

US orders for durable goods rose 0.3% in June, falling well short of economists’ expectations, according to Commerce Department data released on Monday. The increase followed a revised 4% decline in May, compared with an initially reported 4.5% fall. Orders excluding transport equipment rose 0.6%, also missing forecasts, while non-defence capital-goods orders excluding aircraft increased 0.9%, exceeding expectations.

German business confidence improves further

Germany’s Ifo business climate index rose to 86.6 points in July from 85.7 in June, exceeding expectations, the Munich-based institute said on Monday. Companies’ outlook improved to 86.7 points, while their assessment of current conditions slipped to 86.5. Sentiment strengthened in services, trade and construction, although economists warned that much of the survey was completed before the recent surge in oil prices linked to the conflict around the Persian Gulf.

German energy costs curb investment

German companies are holding back investment as elevated energy costs weigh on competitiveness, a DIHK survey of more than 3000 businesses showed on Monday. Nearly one-third of respondents had postponed investment plans, while almost one-fifth were considering cutting domestic capacity or shifting production abroad, with electricity costs rising for almost half and heating costs for more than two-thirds over the past year. The lobby group’s energy transition barometer fell three points from a year earlier to -11.5 in 2026, its first deterioration since 2023, reflecting the effects of gas shortages, higher oil prices and the shift towards renewable power.

ECB official supports September rate rise

European Central Bank policymaker Peter Kazimir said on Monday that the ECB will probably need to raise interest rates at least once more, even if the economic outlook improves. He argued that policymakers should act before higher energy costs from the Middle East conflict generate broader and more persistent inflation pressures. The ECB held rates steady last week but indicated that a September increase was likely, while markets currently expect at least two further moves.

European shares edge higher despite chip sell-off

European equities closed broadly higher on Monday as hopes of de-escalation between the US and Iran pushed oil prices lower, although gains faded after concerns over Chinese competition hit semiconductor stocks. The Euro Stoxx 50 ended little changed at 6282.21 points after rising as much as 1.4%, while Switzerland’s SMI gained 0.7% to a record 14,421.97 points. 

Corporate and economic calendar

Corporate news in focus: Quarterly figures from Air Liquide, Boeing, Coca-Cola, EssilorLuxottica, GSK, Kering, KLA, Logitech, Mercedes-Benz, PayPal, S&P Global, Safran, United Parcel Service, and Visa.

Economic data in focus: Spanish unemployment rate (09:00), Spanish retail sales (09:00), Italian trade balance (10:00), German Bundesbank monthly report (12:00), US trade balance (14:30), Conference Board Consumer Confidence Index (16:00), Richmond Fed Manufacturing Index (16:00).

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Publisher: LGT Bank (Switzerland) Ltd., Glärnischstrasse 36, CH-8027 Zurich
Editor: Alessandro Fezzi
Source: LGT Bank (Switzerland) Ltd.