AI Doubts and Oil: Wall Street Slips, Asia Climbs

For the week of Jul 24, global markets diverged sharply as renewed scrutiny of AI-related spending and a fresh surge in oil prices drove a risk-off tone across Western equities, even as state-backed buying lifted Chinese shares. In the U.S., disappointing big-tech cash-flow guidance and a jump in Treasury yields sent major indexes lower, led by technology. In China and Hong Kong, coordinated state support and record ETF inflows powered a rebound in semiconductor and technology names despite a Friday pullback. In Singapore, gains in shipbuilders and firm bank shares carried the Straits Times Index higher even as REITs and property counters lagged.

(Refer to the major indices' weekly performance tables below.)

 

🇺🇸 United States

Most major U.S. indexes finished lower as concerns over the returns on heavy AI investment and a sharp rise in oil prices weighed on sentiment. The technology-heavy Nasdaq Composite (COMP) fell 2.13% to lead declines, while the S&P 500 (SPX) eased 0.61% and the Dow Jones Industrial Average (DJI) slipped 0.38%. Declines in Alphabet and Tesla after their results amplified broader worries over big tech's elevated capital spending and weaker cash flow.

Major Indices – Weekly Performance

- Dow Jones Industrial Average (DJI): -0.38%

- S&P 500 (SPX): -0.61%

- Nasdaq Composite (COMP): -2.13%

Key Highlights and Outlook

1️⃣ AI Spending Scrutiny Rattles Big Tech

Investor focus shifted from AI capital expenditure toward monetization and returns. Alphabet beat expectations with cloud revenue up 82% year over year, but its raised 2026 capex guidance of USD 195–205 billion overshadowed the print. Weak cash flow at Alphabet and Tesla fuelled broader concern over whether heavy AI investment will translate into profits.

2️⃣ Oil Surge Reignites Inflation Fears

A re-escalation in the U.S.–Iran conflict pushed crude back toward USD 100, reversing much of the post-ceasefire relief. Houthi attacks on Red Sea shipping threatened a key alternative to the Strait of Hormuz. The move lifted energy shares but pressured travel- and consumer-related industries and renewed inflation concerns.

3️⃣ Treasury Yields Break Higher

The 10-year Treasury yield climbed above 4.70% for the first time since January 2025 before dipping to about 4.68% on Friday. Rising oil and sticky inflation stoked expectations that the Fed could raise rates in the near term. Higher yields pressured bond prices and weighed on richly valued equities.

4️⃣ Jobless Claims Hit 1969 Low

Initial jobless claims fell to 187,000 for the week ended July 18, the lowest since 1969 and well below the roughly 215,000 consensus. Continuing claims edged down to 1.796 million. The stable labour market gives hawkish Fed members more room to prioritise the inflation mandate ahead of Wednesday's decision.

5️⃣ Services Lead PMI to Eight-Month High

The S&P Global Flash U.S. Composite PMI rose to 53.6 in July from 51.9, an eight-month high, as services activity accelerated to 53.6 and offset softer manufacturing at 53.8. The report flagged intensifying pressures, with input-cost inflation at a 14-month high and the most severe supplier delays in nearly four years.

6️⃣ Fed Seen on Hold, September Live

Edward Jones expects the Fed to hold at 3.50%–3.75% on Wednesday, though a dissent is possible. September looks like a live meeting, with markets fully pricing one quarter-point hike by then should oil pressures persist. The firm raised its 10-year yield range to 4.5%–5.0%, citing a higher-for-longer backdrop.

S&P 500 Sectors in Focus

Energy was the standout sector, buoyed by the sharp rise in oil prices amid Middle East tensions, with defensive and cyclical corners such as Utilities, Industrials and Materials also advancing. In contrast, Consumer Discretionary was the weakest sector, followed by Communication Services, as AI-spending concerns and weakness in growth-oriented, technology-adjacent names dragged those areas lower. Technology and Financials finished only marginally higher, underscoring the rotation away from crowded growth trades.

(Refer to the SPX sector ETF weekly performance table below.)

Technical Snapshot

The SPX and COMP both closed the week lower, pressured by heavy selling in mega-cap technology, while the DJI proved more resilient on strength in energy and defensives. Rising yields and oil remain the key overhangs as the market awaits Wednesday's Fed decision. On the charts, SPX, Nasdaq and DJI are drifting into a sideways consolidation after recent highs, with momentum cooling as breadth narrows.

📊 Weekly charts:

- DJI weeklychart

- SPX weeklychart

- Nasdaq weekly chart

 

🇨🇳 China / Hong Kong

China equities advanced despite a broad regional sell-off on Friday, when renewed AI-valuation concerns and higher oil prices weighed on sentiment. The CSI 300 rose 2.65%, the Shanghai Composite (SSE) gained 1.33% and the Hang Seng Index (HSI) added 1.63% in local-currency terms, with state-backed purchases driving a sharp early-week rebound in semiconductor and technology shares. Some gains were pared as valuation concerns resurfaced and crude traded around USD 100. (Refer to the major indices' weekly performance tables above.)

Major Indices – Weekly Performance

- CSI 300: +2.65%

- Shanghai Composite (SSE): +1.33%

- Hang Seng Index (HSI): +1.63%

Key Highlights and Outlook

1️⃣ State Support Extends to Tech Shares

State-owned platforms China Reform Holdings and China Chengtong Holdings disclosed combined equity purchases of nearly RMB 60 billion. The ChinaAMC STAR 50 ETF drew a record RMB 13.8 billion of inflows, and major insurers pledged more long-term equity investment. The STAR 50 Index surged 10.7% on Tuesday before paring gains, underscoring continued volatility in AI-related shares.

2️⃣ State Council Urges Faster Fiscal Execution

Beijing called for stronger budget management and more effective fiscal spending to meet annual growth targets. First-half general public budget expenditure rose just 1.5% year over year, while government-fund spending fell 16.4%. The PBOC made a net RMB 100 billion MLF injection, its largest in five months, ahead of the Politburo meeting — signalling targeted support rather than sweeping stimulus.

3️⃣ LPR Held for 14th Straight Month

The PBOC left its one-year and five-year Loan Prime Rates unchanged, the 14th consecutive month on hold. Maybank KE notes the steady stance supports stabilising net interest margins, a positive backdrop for China Construction Bank. The measured tone reinforces expectations of targeted easing over broad rate cuts.

4️⃣ Copper Strength and Consumer Rotation

Maybank KE highlights that China's copper prices hit a more-than-one-year high after tax reforms tightened scrap supply, benefiting Jiangxi Copper. On the growth side, Xiaomi raised its full-year smartphone shipment target on easing memory-chip costs, while Anta Sports stands to gain share after Nike ended its Topsports partnership.

5️⃣ July Rotation Into Internet Names

Maybank KE observes that China equities rallied in July as investors rotated from crowded AI-hardware plays into China internet stocks. The move may extend, though volatility could stay elevated amid an uncertain macro backdrop. The house favours a barbell of high-yield defensives and selective growth opportunities.

Technical Snapshot

The HSI extended its recovery on state buying and strength in financials and select cyclicals, though breadth was uneven as large internet platforms lagged — NetEase and Tencent were the heaviest constituent decliners. Onshore benchmarks outperformed, led by the CSI 300 as semiconductor and technology names rebounded. Near term, the index looks to consolidate recent gains, with oil prices and AI-valuation swings the key factors.

(Refer to the Hang Seng Index constituents' weekly performance table below.)

📊 Weekly charts:

- SSE weekly chart

- HSI weeklychart

 

🇸🇬 Singapore

The Straits Times Index (STI) rose 1.43% over the week to 5,588.34, extending its year-to-date advance to above 20% — among the strongest in the region. Gains were led by shipbuilders, with YZJ Shipbuilding and Seatrium the top performers, while the local banks firmed. Property counters and several S-REITs lagged, capping the index's advance.

Major Indices – Weekly Performance

- Straits Times Index (STI): +1.43%

Key Highlights and Outlook

1️⃣ Shipbuilders Lead the Index Higher

YZJ Shipbuilding (BS6) rose 10.19% and Seatrium (5E2) gained 7.04% to top the STI this week, extending a strong run for the marine and offshore names. The two shipbuilders were the standout performers and helped offset weakness among property and REIT counters.

2️⃣ Banks Firm Ahead of Results Season

The three local lenders advanced, with DBS (D05) up 2.75%, UOB (U11) up 2.00% and OCBC (O39) up 1.86%. The gains came ahead of the second-quarter earnings season, with all three banks due to report over the coming weeks.

3️⃣ REITs and Property Counters Lag

S-REITs were mixed to weaker, with Keppel DC REIT (AJBU) down 3.02% and CapitaLand Ascendas REIT (A17U) and the Mapletree trusts also lower — a soft patch consistent with the week's rise in global bond yields. Among developers, City Developments (C09) fell 2.86% and UOL (U14) slipped 2.08%.

4️⃣ Breadth Mixed as Index Grinds Higher

Advancers and decliners were fairly balanced across the STI, with strength in shipbuilders, banks and ST Engineering (S63, +1.63%) offset by weakness in REITs, developers and DFI Retail (D01), the worst performer at −4.72%. The index's steady climb left its year-to-date gain well ahead of regional peers.

Technical Snapshot

The STI closed the week near 5,590, sustaining its uptrend and a year-to-date gain above 20%. Momentum remains constructive, led by banks and shipbuilders, though a heavy REIT and property complex could cap further upside if yields stay elevated. The index looks to consolidate its gains, with global risk sentiment and the Fed decision the near-term guides.

(Refer to the STI weekly performance table below.)

📊 Weekly charts:

- STI weekly chart

 

📅 Week Ahead (27–31 Jul 2026)

In the U.S., the Federal Reserve's policy decision on Wednesday headlines the week; Edward Jones expects a hold at 3.50%–3.75%, though the statement and any dissents will be scrutinised for a September tilt. A heavy slate of mega-cap technology earnings follows Alphabet, with Amazon, Meta and Microsoft due to report, keeping the AI-monetization debate in focus. June PCE inflation and the first read on second-quarter GDP round out a data-rich week.

In China and Hong Kong, the late-July Politburo meeting takes centre stage as investors look for the economic-policy tone for the second half. Official July PMIs are due at month-end and will test the durability of recent momentum. Continued state-support signals and any follow-through in AI and semiconductor names will guide sentiment.

In Singapore, attention turns to the approaching second-quarter results season, with the three local banks set to report over the following weeks and REITs likely to stay sensitive to the yield backdrop. Regionally, the path of oil prices and Middle East headlines will remain a key swing factor for energy-importing markets.

🗓️ Overarching Watchpoint

The Fed's Wednesday decision is the week's biggest binary risk: a straightforward hold would likely steady sentiment, but any hawkish signal that validates September rate-hike bets — especially if oil holds near USD 100 — could pressure richly valued equities and push yields higher still.

 

Source: Some content and data are excerpted from publicly available market reports.