U.S. stocks closed lower for the week after semiconductor shares tumbled following the launch of a Chinese artificial intelligence model that its developer said could compete with leading offerings from OpenAI and Anthropic, renewing fears of another “DeepSeek moment,” according to Bloomberg.

Details

• Market losses: The Nasdaq 100 fell 1.5%, while the S&P 500 dropped 1%, ending a two-week winning streak.

• Bear market: The Philadelphia Semiconductor Index lost 1.6%, extending its decline to more than 20% from its recent peak, meeting the definition of a bear market.

• AI concerns: Moonshot’s Kimi K3 model renewed questions about competitive pressures and whether massive AI investment will generate the expected returns.

• Corporate movers: Netflix fell 7.3% after forecasting a second straight quarter of slower revenue growth, while Intuitive Surgical slid 14% on softer U.S. sales growth for its da Vinci surgical robots.

• Investor focus: Analysts said chip stocks could recover if major AI companies reaffirm their capital spending plans during the earnings season.

Between the lines

The market is shifting from enthusiasm over AI to a closer examination of whether heavy investment can translate into sustainable revenue and profits, making technology shares more sensitive to earnings guidance.

What to watch

Investors will closely watch earnings from major technology companies for updates on AI spending plans, demand trends, and whether management teams maintain their long-term investment outlook.

Source

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The decline in Silicon Data’s LLM Token Expenditure Index has unsettled AI investors, with Bloomberg reporting that the drop may point to weaker pricing power or a shift in demand toward cheaper models.

Details

• Market signal: Bloomberg reported that the index is down about 20% from its May high after nearly doubling since December.

• Mixed reading: Silicon Data said the gauge is not a direct price tag, but a proxy for marginal willingness to pay.

• Spending gap: Allianz Research said the gap between AI investment and sales is approaching 46%.

• Bull case: David Miller said inference-stage economics are better than the costly training phase.

• Regulatory pressure: Bloomberg reported that US and EU rules may push companies toward cheaper, less burdensome models.

Between the lines

The test is no longer just demand for chips. According to Bloomberg, the story funding the march toward $1tn in capex by 2027 is pricing power.

What to watch

Markets will watch whether the index stabilizes after its late-June pause, and whether the dip reflects a temporary demand mix shift or a peak in customer willingness to pay..

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The latest

Investors are pulling back from AI-linked stocks after a bruising start to the week for global technology markets.

The sell-off began in the U.S., moved through Asia and then resumed on Wall Street. The message from the market is getting clearer: enthusiasm for AI remains strong, but it is no longer enough on its own to justify high valuations and huge capital spending plans.

Details

• In South Korea, SK Hynix and Samsung fell more than 12%, helping drag the Korean market index down about 10%.

• The Magnificent Seven stocks ended down 1.5% as a group, with only Microsoft and Amazon posting gains.

• U.S.-listed AI and chip names also came under pressure, including Broadcom, Micron, AMD, Intel and Marvell.

• Google fell 5%, while SpaceX dropped 16%. Some analysts saw those losses as enough to trigger a broader sector sell-off.

• Interest rates are another concern. Most forecasters expect the Federal Reserve to raise rates by at least a quarter-point this year.

• Bank of America projected three rate increases in 2026, totaling three-quarters of a point.

• Higher rates could slow the huge investment plans that tech companies have built around AI infrastructure.

• Investors are now asking the harder question: will the hundreds of billions being poured into AI turn into real profits, or has the market priced in too much future growth?

What to watch

Micron’s earnings will be the next major test.

The chipmaker is expected to offer a clearer read on whether demand for AI infrastructure remains strong, or whether the market’s anxiety will keep spreading.

Strong numbers could calm the sell-off. Weak guidance could turn this from a short correction into a deeper test of the AI trade.

Source: Morning Brew.

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• Sterling eased after Starmer’s resignation speech, extending recent pressure on the pound.
• The pound has fallen around 3% since February as speculation over Starmer’s leadership intensified.
• The benchmark 10-year UK gilt yield stood around 4.85%, with borrowing costs still elevated by international standards.
• Analysts said the muted reaction suggested markets had largely priced in Starmer’s exit, but remained cautious about what comes next.
• Investors are focused on whether the next Labour leader and chancellor will maintain fiscal rules or shift toward higher spending and borrowing.
• Andy Burnham is widely viewed as the frontrunner to succeed Starmer, but markets are watching policy signals more closely than the leadership contest itself.
• The FTSE 250, which is more exposed to the domestic economy, fell to a one-week low, while the FTSE 100 was broadly stable.
• Rate-sensitive sectors, including homebuilders and household goods companies, came under pressure as traders weighed the impact on interest rates and mortgage costs.
• Mortgage brokers are watching gilt and swap markets because fixed-rate mortgage pricing is closely tied to swap rates.
• Global traders were also focused on talks to end the US-Iran conflict and signs that shipping was resuming through the Strait of Hormuz.

What Else

Markets will watch the Labour leadership contest, expected to conclude before Parliament returns in September. The next chancellor and early signals on tax, spending and borrowing are likely to matter more for investors than the resignation itself.

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The latest

SpaceX has entered the stock market in one of the biggest public listings in years, a debut that could send ripples across both public and private markets, Axios reported.

The story is not only about Elon Musk’s company. SpaceX’s size and valuation make its IPO a market event, one that could affect investor appetite and shape expectations for other private tech giants waiting to go public.

Details

• Aaron Mulvihill, a strategist at JPMorgan Asset Management, told Axios that any large IPO has a “gravitational pull” that can affect public markets, private markets and related sectors.

• SpaceX made only about 5% of its shares available for trading. A typical IPO usually offers around 10% to 20% of a company’s shares, according to Mulvihill.

• Axios said the limited float was partly tied to SpaceX’s high valuation. Offering 20% of a company valued at about $2 trillion could have disrupted the market.

• The small float also means investors should be careful with the headline numbers around SpaceX’s valuation and Musk’s wealth. For now, they are based on trading in only a small slice of the company.

• Bill Smith, CEO of Renaissance Capital, wrote that IPO hype often peaks on the first day.

• JPMorgan data cited by Axios showed that the average IPO this decade was down 26% from its offering price one year later.

• Vanda data showed SpaceX recorded the largest day of net retail buying for an IPO in recent history, with $117.6 million in net purchases.

• SpaceX accounted for roughly 56% of all retail net buying on Friday, according to Vanda.

• Apex Fintech Solutions said traders bought $2.4 billion of SpaceX stock and sold $1.8 billion, making it one of the largest net-buying days the firm has processed.

• Demand did not come from retail investors alone. ETF analyst Eric Balchunas said 40 actively managed ETFs now hold SpaceX shares.

• Axios expects SpaceX to gradually increase its float as lockup periods expire and the company is added to major indexes.

• SpaceX is expected to enter the Nasdaq 100 in early July, which would force funds tracking the index, including QQQ, to buy the stock.

What to watch

A smooth SpaceX listing could open the door to a new wave of mega-IPOs. If companies such as Anthropic and OpenAI also make successful market debuts this year, the shape of the stock market could start to change, with more of the digital economy and AI sector moving into public trading.

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The latest

Gulf economies have entered a phase of operational and investment caution.

Markets have recovered some of their losses, and oil revenues have eased pressure on state budgets. But businesses are facing rising costs in credit, shipping and insurance.

Iran’s attack on Kuwait International Airport on Wednesday sharpened those concerns. For companies, the war is no longer a distant geopolitical headline. It is a daily risk affecting investment plans, travel, financing and long-term commitments.

Details

* Saudi slowdown: The IMF expects Saudi growth to ease to about 2% this year. The latest PMI improved on domestic demand, but exports contracted for a third month, showing how the war is weighing on external trade.

* The UAE’s strategy: Deals by AD Ports Group and DP World in Brazil and the Dominican Republic point to a broader Emirati push to build logistics and trade depth beyond Gulf waters exposed to security risks.

* Oman as an alternative route: Oman’s location outside the Strait of Hormuz is giving it growing value as an alternative corridor for energy and trade. Muscat is also developing a new financial center to turn that position into a longer-term economic advantage.

* Banks turn cautious: Gulf companies are beginning to face tighter lending conditions. Some banks have reduced or withdrawn credit lines after the outbreak of fighting, moving the risk directly into corporate balance sheets.

* Property pressure: Construction, especially in Dubai, faces a tougher cost environment as raw materials, maritime insurance and air freight become more expensive. Some developers are now studying delays in project handovers.

* Non-oil revenues: Dubai’s move to apply VAT to road tolls and parking fees adds a steadier revenue stream for the government, at a time when tourism and business traffic could be hit by the war.

What to watch

The key indicator is the stability of traffic through the Strait of Hormuz.

A prolonged disruption would accelerate the use of alternative ports in Oman and Saudi Arabia, while pushing the UAE to expand its cross-continental trade networks more aggressively.

The three practical signals to watch are banks’ appetite for lending, shipping and construction costs, and the flow of tourism and business travel into Riyadh and Dubai. Together, they will show whether the slowdown is temporary or more structural.

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• Anthropic announced a $65bn Series H funding round, making it the most valuable AI startup ahead of rival OpenAI.
• Anthropic is best known for Claude, a family of AI chatbots and workplace tools that compete with OpenAI’s ChatGPT. Its recent growth has been driven especially by Claude Code, an AI coding assistant that helps developers write and edit software from plain-language prompts.
• CNBC reported that the round valued Anthropic at $965bn, while The New York Times reported a $900bn pre-money valuation before the new capital.
• The round was led by Altimeter Capital, Dragoneer, Greenoaks and Sequoia Capital, with financing also including previously committed investments.
• CNBC said the financing includes $15bn in previously committed investments, including $5bn from Amazon.
• The latest round marks a sharp jump from Anthropic’s reported $380bn valuation earlier this year.
• Anthropic said demand for Claude Code helped lift its revenue run rate to $47bn, up from $30bn earlier this year and $10bn in annual revenue last year.
• The company also released Claude Opus 4.8, its latest flagship model, with stronger coding and mathematics performance.
• Strategic investors in the round include chipmakers such as Samsung, Micron and SK Hynix, which could help Anthropic expand the computing capacity needed for Claude.

What Else

The funding puts more pressure on OpenAI, which is prioritising its own coding product, Codex, as AI coding tools become a major battleground for enterprise customers. Anthropic, OpenAI and Musk-linked AI ventures are all moving toward possible public listings, making the latest valuation jump another sign of how aggressively investors are pricing future AI dominance.

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• SpaceX is preparing for what could be one of the largest IPOs ever, with the company valued at more than $1.25tn in its filing.
• The filing shows Musk owns more than 5.5bn Class B shares, which carry 10 votes each, giving him control of about 85% of shareholder votes.
• SpaceX also granted Musk 1.3bn restricted shares tied to long-term targets, including building a Mars colony with one million inhabitants and launching high-powered data centres into space.
• Musk has not met those targets, but the filing says he can still vote those restricted shares in shareholder decisions. Governance experts said that arrangement is highly unusual.
• SpaceX does not plan to have a majority- ndependent board or an independent compensation committee to set executive pay.
• The company’s documents also send shareholder claims under federal securities law to mandatory arbitration, a structure critics say could weaken investors’ ability to bring class-action lawsuits.
• The structure gives Musk broad control over board elections, pay decisions and shareholder disputes, even as public investors prepare to buy into the company.
• Fortune also reported that Valor Equity Partners, linked to SpaceX board member Antonio Gracias, is tied to major lease and financing arrangements with the company, raising related-party governance concerns.
• A separate Fortune analysis said $62.8bn of a projected $80bn IPO raise may already be committed to debt repayment, vendor payments and other obligations.

What Else

The IPO could give public investors access to one of the world’s most valuable private companies, but with limited influence over a business still firmly controlled by Musk. The main investor question is whether SpaceX’s growth story in rockets, Starlink and AI outweighs concerns over voting control, insider-linked deals and how much fresh capital remains for expansion after the listing.

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• The International Monetary Fund said the UK economy entered the latest global shock with more momentum than expected, after stronger growth in late 2025 and early 2026.
• The UK economy grew by 0.6% in the first quarter, helped by retail and construction, prompting the IMF to lift its 2026 forecast from 0.8% to 1%.
• The upgrade is still modest. Reuters reported that the new forecast would mark a slowdown from 2025.
• The IMF warned that a prolonged Middle East conflict could weaken growth by pushing up energy and food prices, with the UK especially exposed because it imports more energy than it produces.
• Inflation is expected to rise temporarily and peak at just under 4% later this year, before returning to the Bank of England’s 2% target by the end of 2027.
• The Fund said holding interest rates at 3.75% should be enough if energy prices ease, but the Bank of England should be ready to act if higher costs feed into wages or wider prices.
• The IMF also warned that domestic uncertainty could hold back spending and investment, as Keir Starmer’s government faces political pressure after poor election results.
• Chancellor Rachel Reeves welcomed the upgrade as proof that the government’s economic plan was working, while warning Labour MPs that instability could hurt families and businesses.
• The IMF urged the government to keep deficit reduction on track and said any support for higher energy costs should be targeted and temporary.

What Else

The upgrade gives the government a useful economic boost, but the outlook remains fragile because of war-driven energy risks, political uncertainty, high borrowing costs and weak productivity. Reeves is expected to outline cost-of-living support later this week, but the IMF warned that long-term pressures from ageing, defence and climate costs will force difficult choices.

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