Financial Markets Daily Report29 July 2026
Markets weighed lower geopolitical risk and falling energy prices against growing concerns over AI-capex returns. Brent oil fell to $84/barrel, lowering inflation expectations (especially in the short-term) and sovereign yields on both sides of the Atlantic.
ECB and Fed policy-rate expectations shifted lower, although the broader outlook changed little, with markets continuing to price two ECB hikes (the first one in September); and two Fed hikes, assigning roughly a 33% probability to a hike later today.
Tech and AI-exposed companies fell sharply as concerns over AI-capex returns were compounded by China's chipmaking advances. Asian equities posted heavy losses, while European indices managed modest gains thanks to their lower exposure to tech. In the US, the Nasdaq fell while the S&P 500 edged higher, as defensive sectors offset the technology drag.
In FX markets, the euro appreciated against the dollar, while the yen weakened slightly ahead of Friday's BoJ meeting.