Overview
Equity markets opened the week with a burst of optimism for semiconductor names in the United States, but that advance lost traction as markets in Asia turned lower on Tuesday. The U.S. jump on Monday was tied to a high-profile corporate deal; the subsequent pullback in Asia highlighted lingering concerns about whether the current surge in demand for AI-related chips is fully sustainable.
Chip sector moves
Monday's gains among U.S. chip stocks coincided with reports that Broadcom agreed to extend a deal to supply Apple with custom chips through 2031. The news helped lift major U.S. indices, with both the S&P 500 and the Nasdaq finishing the day higher. By Tuesday, however, Nasdaq futures were trading more than 1% lower before the bell as Asian technology stocks faltered.
In Seoul, memory chipmaker Samsung Electronics disclosed a 19-fold increase in second-quarter operating profit, a stark jump in earnings. Despite the profitability surprise, Samsung's share price fell nearly 7% on Tuesday. Rival SK Hynix also declined, contributing to a drop of roughly 5% in South Korea's chip-heavy KOSPI index.
These moves came against a backdrop of very strong year-to-date returns for both companies. Samsung's shares have more than doubled so far this year, while SK Hynix's share price has more than tripled. The retreat in Asian chip equities on Tuesday suggests some investors may be pricing in much of the upside from elevated chip demand already, while concerns about the durability of that demand persist.
Other market developments
Microsoft's stock fell almost 1% on Monday after the company announced it would cut about 4,800 jobs as part of a reorganization of its gaming division. The company has experienced a roughly 20% decline in its share price in the first half of 2026.
In currency markets, the Japanese yen strengthened slightly on Tuesday but remained near multi-decade lows, trading around 162 per U.S. dollar. Market participants continued to watch for any sign of intervention from Japanese authorities to support the currency.
Oil prices moved higher after reports that Iran fired missiles at commercial vessels in the Strait of Hormuz. Brent crude approached $73 per barrel amid the elevated risk premium tied to security in a key shipping choke point.
Geopolitical and policy calendar
The NATO summit opened in Ankara, Turkey on Tuesday, with European defence spending appearing high on the agenda. Leaders are expected to demonstrate how they will meet increased NATO spending targets highlighted by U.S. political pressure. On the sidelines of the summit, a meeting between U.S. President Donald Trump and Ukrainian President Volodymyr Zelenskiy is planned for Wednesday. President Trump reiterated on Monday that an end to the Ukraine war could be near, a claim he repeated in public comments.
NATO leaders began unveiling multi-billion dollar arms deals in Ankara as a signal they are responding to calls for higher defence expenditures. NATO Secretary General Mark Rutte said European countries had made "staggering" increases in defence spending, attributing the rise to both heightened fears of Russia since Moscow's 2022 invasion of Ukraine and strong encouragement from the U.S.
Events to watch
- U.S. May trade balance report at 8:30 a.m. EDT
- U.S. 3-year Treasury note auction at 1 p.m. EDT
- SpaceX scheduled to join the Nasdaq 100 index
- Ongoing NATO summit in Ankara, Turkey
Context and closing
The patchwork of market moves this week underscores how corporate announcements, geopolitical developments, and macro signals can interact to shape investor sentiment. The initial U.S. chip rally tied to a major corporate supply extension illustrates how single deals can drive short-term optimism. The subsequent pullback in Asian markets, led by steep declines in major memory names despite strong reported profits, highlights investor wariness about whether recent gains in chip demand will persist.
Traders will continue to monitor corporate earnings and profit statements for further clarity on demand, watch central bank and currency-related signals for potential intervention, and track geopolitical developments that can affect energy markets and defence-related spending commitments.