Chipmakers, Mag7, Lead Narrow Equity Recovery Ahead of Big-Tech Earnings: July 20, 2026

The Nasdaq is leading a narrow equity recovery to start the week as chipmakers and the Mag7 bolster the index amidst a lack of sectoral participation. Indeed, just tech, communication services and energy are advancing out of the 11 major categories, with investors bracing for mega-cap earnings beginning Wednesday after the bell while increasingly worrying about US-Iran tensions. Minimal light at the end of the geopolitical tunnel drove WTI to a jump north of $84 yesterday evening, which is raising yields and strengthening the greenback, as fixed-income and currency watchers stress that persistently elevated oil charges could compel Fed Chair Kevin Warsh to hike as soon as September, an action that has a 63% likelihood. Meanwhile, climbing inflation expectations are dealing losses to duration, which are modestly worse than those occurring at the monetary policy sensitive shorter tenors, as price pressure progress may be derailed by ongoing Middle East violence. Still, there’s some hope for a truce as crude fell below $80 in the morning from almost $85 last night on unconfirmed news that a 10-day ceasefire is being negotiated between Washington and Tehran. In trading, risk-on sentiments aren’t supporting the cyclically oriented Dow Jones Industrial and Russell benchmarks because rising rates and pricier fuel are quelling appetites for economically delicate names. Volatility protection instruments are seeing lightening premiums on the back of reduced hedging demand, and the revival in speculative enthusiasm is lifting cryptocurrencies, prediction market volumes and most commodities, including precious metals.

Lack of Econ Data Puts Focus Squarely on Profits, Geopolitics

A dearth of high-priority econ data this week is positioning investors’ focus squarely on profits and geopolitics. On the earnings calendar, participants are looking to separate the winners from the losers regarding AI capital expenditures, with firms that show monetization progress amidst strong return yields poised to be rewarded by shareholders. Conversely, companies that struggle to present robust payouts from these substantial outlays or reflect confusion on what to do next with the modern technology are likely to be punished by Wall Street. The stakes are in the nosebleeds, as many businesses are going all in on AI, engaging in heavy borrowing, secondary equity offerings and free cash flow depletions to incrementally scale operations and lift top- and bottom-line performance, leaving narrow margins for error. Separately, US-Iran hostilities offer a distinct set of potential headwinds, as a lack of relief from oil price pressures and closely related interest rates cause problems for risk sentiments by potentially slowing the consumer, lifting energy expenses, raising credit charges, draining profitability prospects, and extending the goalpost for achieving further valuation expansion.

International Roundup

China Holds Key Interest Rates

Despite recently reporting a quarter of disappointing economic growth, the People’s Bank of China (PBOC) decided yesterday to maintain its key interest rates. The central bank’s one-year and five-year prime rates are 3% and 3.5%, respectively. Economists anticipated that the organization would maintain its rates, which have been in place for 14 months. Just last week, China reported that its second-quarter gross domestic product (GDP) climbed only 4.3% year over year (y/y), which missed the country’s target of 4.5%. Economists had anticipated a 4.5% expansion following the 5% growth in the preceding period. On a quarter-over-quarter (q/q) basis, furthermore, GDP decelerated from 1.3% in the first three months of the year to only 0.9% higher, but it matched the economist consensus estimate.

Consumer Prices Fall in Canada

The June Consumer Price Index (CPI) declined 0.1% m/m in Canada, a steeper drop than the 0.2% descent anticipated from a consensus of economists and the first episode of deflation since April 2025, according to Statistics Canada. In May, the gauge climbed 1%. June prices, nevertheless, were still up 2.8% y/y following the 3.2% jump in the preceding month. The lower annualized rate was driven by gasoline prices, which after jumping 33.2% in May climbed only 20.5% in June 

For the seasonally adjusted monthly print, a 1.4% drop in transportation fees resulting from lower fuel costs pushed the headline into negative territory. Indeed, when excluding food and energy, the CPI was up 0.3% m/m, matching May’s result. Household operations, furnishings and equipment, furthermore, cost 0.1% less than during May and food stickers were unchanged.

Categories with m/m inflationary pressures and the extent of their price changes included the following:

• Recreation, education and reading segment, 0.6%
• Alcoholic beverages, tobacco products and recreational cannabis group, 0.6%,
• Shelter, 0.1%
• Clothing and footwear, 0.1%
• Health and personal care, 0.1%

Euro Area Construction Activity Picks Up

Construction output grew 0.4% m/m in the euro area during May after expanding by only 0.1% in April, according to Eurostat. When compared to May 2025, output was up 1.2% after growing only 0.2% in April. Within the m/m metric, specialized construction climbed 1.4%. The category consists of work that requires unique skills, such as pile driving, infrastructure and large projects. The gain was partially offset by 0.7% and 0.5% slips in construction of buildings and civil engineering.

UK Summer Doldrums Hit Housing Market Harder than Normal

The UK’s housing market faced a hattrick of challenges this month, causing pricing for newly listed houses to fall 1%, a considerably worse decline the summer months’ 10-year average of 0.2%, according to Rightmove. The organization maintains the steeper-than-normal decline was driven by home sellers facing strong competition because potential buyers were distracted by the World Cup, the intense heat wave and the change in prime ministers. Labor Party leader Andy Burnham is moving into 10 Downing St. today. He replaces fellow Labor Party member Keir Starmer, who is scheduled to render his resignation to King Charles III at Buckingham Palace today. Burnham will be the country’s seventh prime minister in only 10 years. Rightmove also says that the highest level of inventory in nearly 12 years provided further downward pressure on listing prices.