📉 US100 loses 1.5%

• Hyperscaler stocks have held up better than hardware manufacturers, but the ongoing sector rotation has not been strong enough to offset the sell-off in semiconductors. As a result, concentration risk is beginning to materialize, while renewed gains in oil prices and the escalating US-Iran conflict are adding a broader macroeconomic dimension to the market weakness.
• Yesterday, the United States reiterated that the Strait of Hormuz blockade is fully back in effect, while military exchanges between Tehran and Washington continue. Oil prices have rebounded by around 20% from their recent lows, and although June US CPI and PPI data came in more favorable than Wall Street had expected, they provide little relief from concerns that inflationary pressures could re-emerge in the coming months.
• The US earnings season continues to look solid overall despite isolated disappointments such as Netflix's latest report. At the same time, concerns are growing that semiconductor manufacturers may be entering another cyclical downturn. The more investors begin to price in that possibility, the more aggressive the capital rotation away from AI-related stocks could become.

Meta Platforms recently announced that it plans to launch a new business focused on selling excess AI computing capacity. Following the announcement, investors began reassessing whether hyperscalers such as Amazon, Meta, Microsoft, Alphabet and Oracle may have overinvested in AI infrastructure and whether this could eventually lead to lower capital expenditure plans in future quarters. Goldman Sachs' High Beta Momentum basket is currently on track to decline by around 23% this month, which would mark its worst monthly performance in 17 years. The basket includes stocks such as Nvidia, Super Micro Computer, Palantir, D-Wave Quantum and Navitas Semiconductor, many of which have also been among retail investors' favorite AI plays. It is worth emphasizing, however, that the current decline could still prove to be a temporary correction within a longer-term bull market, as the underlying fundamentals of leading technology companies remain strong.

US100 (D1 interval)

The daily chart shows that the 28,200-30,700 point range has developed into a strong distribution zone, effectively preventing the index from breaking to new all-time highs. The US100 has since fallen decisively below its 50-day EMA (orange line), suggesting that the short-term trend has shifted to the downside.

Source: xStation5

On the hourly chart, the US100 is approaching the lower boundary of its descending price channel. The 28,000-28,200 point area may provide important technical support. However, the hourly RSI currently stands at just 14.5, indicating that the index is already deeply oversold.

Source: xStation5