Fed Stands Pat: Tech Earnings Take the Wheel

For the week of Jul 31, global equities finished mostly higher as the Federal Reserve’s hawkish hold and a heavy slate of mega-cap technology earnings dominated sentiment. In the U.S., major indexes advanced despite three FOMC dissents and a sharp steepening in long-dated Treasury yields, with investors scrutinising whether AI capital spending is converting into durable returns. China diverged as a mainland semiconductor sell-off dragged the CSI 300 lower, while Hong Kong rallied on strength in large internet platforms. Singapore’s Straits Times Index edged higher, extending its year-to-date leadership among the markets tracked.

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

 

🇺🇸 United States

Market Overview

U.S. equities closed the week higher but with sharp intraweek swings tied to the Fed meeting, the ongoing U.S.–Iran conflict, and volatility in AI-related shares. The Dow Jones Industrial Average (DJI) gained 1.04%, the S&P 500 (SPX) rose 1.05%, and the Nasdaq Composite (COMP) added 1.59%, with a Thursday rebound in technology stocks helping steady the tape after early-week pressure on AI names.

Index Weekly Performance

– Dow Jones Industrial Average (DJI): +1.04%

– S&P 500 (SPX): +1.05%

– Nasdaq Composite (COMP): +1.59%

Monthly Performance – July 2026

For the month of July, U.S. large caps were broadly flat while tech-heavy segments lagged. The Dow Jones Industrial Average eked out a 0.32% monthly gain and the S&P 500 slipped 0.13%, while the Nasdaq Composite fell 3.20% as the AI-spending debate and the Fed’s hawkish shift weighed on higher-multiple growth names.

(Refer to the major indices’ monthly performance table below.)

Key Highlights and Outlook

1️⃣ Fed Holds Rates, But Three Dissenters Push for a Hike

The FOMC held the funds target range at 3.50%–3.75% for a fifth straight meeting in a 9–3 vote, with three regional presidents favouring a quarter-point hike on concerns about sticky inflation. Chair Warsh reiterated the commitment to price stability but offered limited guidance, leaving the timing of the next move unclear.

2️⃣ Long-End Yields Surge to Post-2007 Highs

Treasury yields rose after the meeting, with the largest moves at the long end steepening the curve. The 30-year yield climbed above 5.2% for the first time since 2007, reaching roughly 5.26% by Friday, as investors reassessed the higher-for-longer path and, in some cases, questioned the Fed’s inflation-fighting resolve.

3️⃣ Mega-Cap Tech Earnings Split the Market

Four of the Magnificent 7 reported. Microsoft and Amazon rallied on stronger cloud growth, while Meta fell on an earnings miss and soft guidance and Apple declined on cost concerns and a cautious outlook. The reaction signalled a shift from rewarding AI spending toward scrutinising the revenue and earnings it generates.

4️⃣ Inflation Cools, But Stays Above Target

Headline PCE eased to 3.7% year over year in June and core PCE edged down to 3.3%, both below expectations but still well above the 2% goal. GDP growth slowed to a 1.5% annualised pace in the second quarter, while consumer confidence dipped to 90.8 as views of current conditions deteriorated.

5️⃣ A Strong, Broad-Based Earnings Season

With over half of the S&P 500 reported, 86% have beaten estimates at an average 31% upside surprise, lifting second-quarter growth forecasts to 37% from 22%. Gains have been broad, with 10 of 11 sectors posting year-over-year increases – breadth that could make the market’s advance more durable.

S&P 500 Sectors in Focus

Consumer discretionary led the S&P 500 sectors, buoyed by a late-week rally in Amazon after its better-than-expected results, with communication services and financials also finishing higher. Defensive and rate-sensitive corners lagged, with utilities the weakest performer and real estate also under pressure as long-end yields climbed. Technology finished modestly lower on the week despite Thursday’s rebound, reflecting the ongoing tug-of-war over AI capital spending.

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

Technical Snapshot

The SPX and COMP both rebounded after two-week consecutive decline and DJI also recorded 1^st weekly gain after three weeks down. Momentum remains constructive but is increasingly sensitive to rate moves and AI-earnings headlines. Structurally, all three indexes have been in consolidating sideways beneath their recent highs as they digest the mega-cap divergence.

📊 Weekly charts:

– DJI weekly chart

– SPX weekly chart

– Nasdaq weeklychart

 

🇨🇳 China / Hong Kong

Market Overview

Chinese equities diverged sharply as a global AI-shares sell-off pressured mainland technology and growth stocks while Hong Kong advanced. The CSI 300 Index fell 1.31% and the Shanghai Composite (SSE) edged up 0.47%, while the Hang Seng Index (HSI) surged 3.69% in local-currency terms, powered by large internet platforms including Tencent and Alibaba.

(Refer to the major indices’ weekly performance tables above.)

Index Weekly Performance

– CSI 300: -1.31%

– Shanghai Composite (SSE): +0.47%

– Hang Seng Index (HSI): +3.69%

Key Highlights and Outlook

1️⃣ Hong Kong Outperforms on Internet-Platform Rotation

The Hang Seng surged as investors rotated into large internet names, with Tencent and Alibaba leading. Gains in more defensive areas, including banks and consumer staples, helped offset technology weakness spilling over from the mainland, leaving Hong Kong the standout among the markets tracked this week.

2️⃣ CXMT Debut Euphoria Gives Way to Chip Sell-Off

Memory-chip maker ChangXin Memory Technologies closed roughly 466% above its IPO price on its Monday debut – Asia’s largest listing of 2026 – briefly the most valuable A-share at a market cap near RMB 3.3 trillion. Euphoria faded as selling spread across semiconductor and AI-infrastructure names on valuation concerns, though a Friday rebound trimmed the CSI 300’s weekly loss.

3️⃣ Politburo Signals Targeted, Not Sweeping, Support

The Politburo reaffirmed a proactive fiscal stance and moderately loose monetary policy, pledging stronger countercyclical adjustments, faster fiscal spending, and support for AI and computing infrastructure. Crucially, the readout stopped short of a broad new stimulus program, signalling that policy support will remain targeted and incremental.

4️⃣ Manufacturing Slips Back Into Contraction

The official manufacturing PMI fell to 49.2 in July from 50.3, its first contraction since February, as production, new orders, and export orders all weakened. The non-manufacturing index dropped to 49.0 – its lowest since December 2022 – underscoring persistent softness in domestic demand, investment, and construction.

5️⃣ Maybank KE: Rotate to Financials, Buy Quality AI on Dips

Maybank KE views this week’s tech volatility and rotation into financials as consistent with its preference for the sector, reading the AI pullback as a healthy correction rather than a fundamental deterioration. It would accumulate quality beneficiaries such as ASMPT and SMIC on weakness – the latter the HSI’s weakest constituent this week – and also flags CATL (power-infrastructure and energy-storage growth) and Trip.com (a lifted antitrust overhang plus resilient travel demand) as constructive ideas.

Technical Snapshot

The Hang Seng broke decisively higher, clearing prior resistance on strong breadth as internet heavyweights led the advance. The mainland CSI 300, by contrast, remains capped by its semiconductor-heavy composition and slipped despite the Friday bounce. Near-term, the HSI’s momentum looks constructive, though follow-through will hinge on the durability of the global AI-earnings recovery and the pace of southbound flows.

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

📊 Weekly charts:

– SSE weekly chart

– HSI weekly chart

 

🇸🇬 Singapore

Market Overview

The Straits Times Index (STI) rose 0.72% on the week to close at fresh highs, extending its strong year-to-date run and remaining the top performer among the markets tracked. Gains were broad but shallow across constituents, led by consumer and property-linked names, while a small group of industrial and technology-exposed stocks weighed.

(Refer to the major indices’ weekly performance tables above.)

Index Weekly Performance

– Straits Times Index (STI): +0.72%

Key Highlights and Outlook

1️⃣ STI Extends Year-to-Date Leadership

The STI added 0.72% for the week and now sits up more than 21% year to date, comfortably the strongest performer among the indices tracked. Weekly gains were broad but shallow, with most constituents posting small positive moves rather than a single sector driving the advance.

2️⃣ DFI Retail Leads Constituents Sharply Higher

DFI Retail (D01) was the standout, jumping 15.16% on the week, well ahead of the next-best movers CapitaLand Investment (9CI), up 6.83%, and UOL (U14), up 5.32%. Property-linked and consumer names featured prominently at the top of the weekly leaderboard.

3️⃣ ST Engineering and Yangzijiang Lag

ST Engineering (S63) was the weakest constituent, falling 4.91%, followed by Yangzijiang Shipbuilding (BS6), down 2.00%, and Venture (V03), down 1.30%. The declines were concentrated in a handful of industrial and technology-exposed names against an otherwise firm tape.

4️⃣ Local Banks Little Changed on the Week

The three local banks were near-flat, with UOB (U11) up 0.18%, OCBC (O39) up 0.14%, and DBS (D05) up 0.11%. Despite muted weekly moves, OCBC and DBS continue to lead the trio year to date, up 47.42% and 31.33% respectively.

Technical Snapshot

The STI continued to grind to fresh highs, holding a well-established uptrend with support building on pullbacks. Breadth remains healthy, though the pace of gains has moderated as the index trades at elevated levels. Near-term, the STI’s structure stays constructive, but stretched year-to-date returns leave it more vulnerable to consolidation on any external risk-off shift.

(Refer to the STI weekly performance table below.)

📊 Weekly charts:

– STI weekly chart

 

📅 Week Ahead (03–07 August 2026)

The U.S. calendar features the July employment report, the marquee release after a hawkish Fed hold, alongside ISM services and further second-quarter earnings. With three FOMC members already dissenting toward a hike, wage and payroll data will shape expectations for a potentially live September meeting. Any upside surprise in inflation-sensitive prints or energy prices could reinforce the higher-for-longer narrative.

In China, markets will digest the weak July PMIs and watch for follow-through on the Politburo’s targeted-support pledges, including the pace of fiscal spending and bond issuance. Caixin private surveys and trade data are due, offering a cross-check on the official activity readings. Sentiment in Hong Kong will remain closely tied to global AI-share direction and southbound flows.

In Singapore, attention turns to the local banks as the second-quarter results season approaches, with DBS, OCBC, and UOB due to report in the coming weeks; NIM trajectory, fee income, and dividend guidance will be in focus. Regional PMIs and the broader ASEAN earnings flow will also guide sentiment.

🗓️ Overarching Watchpoint

The July U.S. jobs report is the week’s key binary risk: a hot print would harden the case for a September rate hike and could extend the long-end yield surge, pressuring rate-sensitive equities globally, while a soft reading would ease tightening fears and support the broad risk rally.

 

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