Daily Market Outlook, July 6, 2026

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute — AI Takes A Breather, Oil Loses Its Fear Bid

‘AI is pausing, Korea is taking profits, the Dollar is firmer, oil is losing its Hormuz premium, and the week’s real macro signal sits less in today’s data than in Wednesday’s Fed minutes and tomorrow’s BoE stability review. After a bruising rebound in tech last week, markets are starting Monday with a more selective tone: investors are not walking away from the AI story, but they are asking whether a sector priced for perfection can keep delivering perfection into earnings season.’

Stocks softened in Asia as the semiconductor rally lost momentum and investors took chips off the table after one of the most powerful year-to-date runs anywhere in global equities. MSCI’s Asia Pacific Index slipped 0.3%, with the semiconductor sub-index down 0.7%. South Korea led the pullback, with the Kospi falling 1.4% as Samsung Electronics and SK Hynix both traded lower. The move came despite reports that Seoul may explore an industry investment fund financed by surplus semiconductor tax revenues, a reminder that policy support can improve the long-term backdrop without immunising crowded trades from short-term profit-taking.The Korean wobble needs context. The Kospi is still up close to 90% this year, while Taiwan and Japan have gained around 62% and 37%, respectively. That kind of performance leaves markets vulnerable to any pause in momentum, particularly ahead of earnings season. Samsung reports Tuesday and is expected to deliver an extraordinary profit rebound, with analysts looking for an 18-fold increase in operating profit to around 86 trillion won, according to LSEG SmartEstimate. The bar is therefore high. A big number may not be enough if guidance, AI memory pricing or capex commentary fail to extend the story. Wall Street futures also trimmed Friday’s holiday-thinned gains, while European futures pointed to a softer open after the Stoxx 600 ended last week at a record high. The message is not outright risk aversion; it is consolidation after a stretch of aggressive positioning. S&P 500 and Nasdaq futures were only slightly firmer after the US break, suggesting investors are reluctant to chase the index before the next round of macro and earnings catalysts. Delta Air Lines and PepsiCo will offer an early read on corporate demand this week, before the banks begin reporting next week. Consensus is looking for roughly 25% year-on-year earnings-per-share growth, with semiconductors and energy expected to account for around half of that increase.

Oil is giving the macro tape some relief. Brent eased as shipping through the US-protected corridor in the Strait of Hormuz continued to recover and OPEC+ approved a modest collective quota increase of 188,000 barrels per day from August. That takes the cumulative rise since April close to 800,000 barrels per day. UK Maritime Trade Operations reported that 160 vessels, including 98 tankers, moved through the Strait between Monday and Saturday last week. That remains well below the pre-war daily average of 138 transits, but the direction is improving, and the market is treating Hormuz less like an active supply crisis than a fading risk premium. Brent remains anchored around $72.50 through December futures, suggesting investors believe crude has found a temporary equilibrium. The lower oil impulse matters because it reduces headline inflation pressure and gives central banks more room to avoid overtly hawkish messaging. But the move is also supply-led, with improved tanker flows and higher OPEC+ quotas doing the work. That is helpful for inflation, but it does not remove the geopolitical tail entirely. It simply prices it less aggressively. Gold held near $4,175 an ounce after a three-day rally, supported by the view that the Fed is unlikely to rush into another near-term hike after last week’s soft payrolls report. The metal is consolidating rather than reversing, which fits a market where rate expectations have eased but not collapsed. Treasury yields dipped slightly as investors reassessed the odds of a July Fed move, while the Dollar firmed as broader risk appetite became more selective.

The Fed remains the key macro hinge. Wednesday’s minutes should offer the first deeper look at the Warsh-led FOMC debate, though the market may have to work harder than usual to extract a clean signal. Warsh has made a point of reducing guidance, leaning on taskforces and avoiding unnecessary pre-commitment. The minutes may still read hawkish given that nine officials previously pencilled in at least one hike this year, but that discussion took place before the latest payroll disappointment and before the renewed fall in oil prices. Futures now price around a 22% chance of no change at the July 29 meeting, with September still seen as the more likely window for tightening. Fed communication will therefore matter around the minutes. Governor Christopher Waller speaks in Rome today, New York Fed President John Williams appears Thursday, and Chair Kevin Warsh testifies before the House Financial Services Committee next week. The market is still trying to establish how much of the new Fed regime is genuinely hawkish and how much is simply less willing to hand investors a road map. That distinction matters enormously for equities, FX and gold. Today’s US ISM services release is the main data point, with consensus looking for a small dip to a still-healthy 54.0. After the payroll miss, the services employment and prices-paid components will matter more than the headline. A resilient activity number alongside sticky prices would complicate the dovish read. A softer employment component would reinforce the idea that labour-market momentum is fading beneath the surface.

In the UK, tomorrow’s Bank of England Financial Policy Committee review is the more interesting domestic event than the second-tier data calendar. The market is focused on the leverage framework review launched after the December 2025 capital assessment, when the FPC lowered its system-wide Tier 1 benchmark from 14% to 13% of risk-weighted assets after concluding UK banks were comfortably capitalised. The key question is whether the FPC reforms the Additional Leverage Ratio Buffer and Countercyclical Leverage Ratio Buffer to reduce how often leverage constraints bind for banks holding larger volumes of lower-risk assets. That matters because Basel 3.1 is expected to reduce average risk weights, which could make leverage requirements bind more often without recalibration. A reform package would be modestly constructive for banks and gilts by increasing balance-sheet capacity, supporting intermediation and potentially improving demand for government bonds. It would also fit the political direction set by the Chancellor’s Mansion House speech, which pressed the FPC to embed its secondary objective of supporting growth and competitiveness. Narrowing the gap between the UK’s leverage framework and less restrictive peer regimes would be consistent with that mandate. Still, the gilt implications should not be overstated. Buffer reform, or the less likely option of a partial gilt exemption from leverage calculations, would help at the margin. But the scale of outright gilt demand and fiscal savings is likely to be smaller than some market estimates imply. The impact would also be spread across the curve and over time, and could easily be overshadowed by political uncertainty, fiscal headlines or shifts in global duration.

The rest of the week’s calendar is mostly second tier. In the UK, construction PMI today, the REC jobs report Wednesday and the RICS survey Thursday are the main points of interest. In the euro area, the early-week slate includes Sentix, retail sales, PPI and German factory orders, followed by German industrial production Tuesday and trade data Thursday. The ECB minutes and a steady run of speakers should add colour but are unlikely to dislodge the broader rate narrative. The RBNZ meets Wednesday and is expected to resume tightening with a 25bp hike to 2.5%, with markets assigning roughly a 75% probability to that outcome.

The market starts the week calmer, but not complacent. AI remains the dominant equity story, yet the chip complex is now priced for flawless execution just as earnings season begins. Oil is offering disinflation relief as Hormuz traffic improves and OPEC+ adds supply. Gold is steady because Fed tightening fears have cooled, but not vanished. The Fed minutes, ISM services, Samsung earnings and the BoE stability review will decide whether this is simply a healthy pause in risk appetite or the start of a more serious test of the AI-led rally.

Overnight Headlines

Germany Plans To Boost 2027 Borrowing On Weak Tax Revenues
OPEC, Allies Hike Output Again As Hormuz Traffic Starts Recovering
Trump Heads To NATO Summit To Meet Zelenskyy, Face Wary Allies
Trump’s War Means Higher Global Interest Rates For Years To Come
Canada To Choose Between Germany, SK For Submarine Contract
Lockheed Martin Leading $3.5B Deal To Buy Defense Firm Ultra Maritime
Cargo Ship Reports Attack Off Yemen, Adding To Red Sea Risks
S Korea Eyes Growth Fund From Chip Tax Windfall, Yonhap Says
SK Hynix Seeks Access To AI Investors In $29B US Listing
ByteDance, Alibaba Pull AI Companions As Beijing Tightens Rules
Foxconn Q2 Revenue Jumps, Company Cautions On Geopolitics
China Steps Up Financial Risk Cleanup Under New Top Regulator
RBNZ Shadow Board Recommends Rate Remain On Hold This Week
Weaker Commodity Prices Set To Tip Australia Into Trade Deficit
Goldman Cuts Yen Forecast To 165 Per Dollar, Likes Carry Trades
Carry Traders Shift Away From Dollar For Emerging-Market Bets

FX Options Expiries For 10am New York Cut

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

EUR/USD: 1.1400 (EU1.77b), 1.1500 (EU1.76b), 1.1450 (EU1.25b)
USD/JPY: 161.75 ($2.48b), 160.00 ($2.2b), 160.50 ($1.99b)
AUD/USD: 0.6450 (AUD1.05b), 0.7000 (AUD731.4m), 0.6885 (AUD706m)
USD/BRL: 5.8000 ($462.1m), 5.1500 ($347.3m)
USD/CAD : 1.3675 ($322m)
USD/MXN: 17.50 ($362.2m), 17.95 ($301.4m)

CFTC Positions as of June 26 - UPDATE DELAYED DUE TO PUBLIC HOLIDAY

Equity fund speculators have made some strategic adjustments, reducing their net short position in the S&P 500 CME by 146,022 contracts, bringing the total down to 355,669. Meanwhile, equity fund managers have taken a more bullish stance, increasing their net long position in the S&P 500 CME by 4,547 contracts, now totaling 987,977.
In the realm of Treasury futures, speculators have also been busy. They've trimmed their net short position in CBOT US 5-year Treasury futures by 48,908 contracts, resulting in a new total of 1,301,269. Similarly, the net short position for CBOT US 10-year Treasury futures has been reduced by 75,816 contracts, now standing at 835,266. However, it seems that the sentiment for CBOT US 2-year Treasury futures has shifted slightly, as speculators have increased their net short position by 48,339 contracts to reach 1,318,846.CBOT US UltraBond Treasury futures saw a slight decrease in net short positions, with a trim of 3,727 contracts down to 318,100. In contrast, there’s been an uptick in the net short position for CBOT US Treasury bonds futures, which rose by 16,492 contracts to a total of 176,043.
In the cryptocurrency arena, Bitcoin's net long position stands at a solid 3,524 contracts. Currency positions tell an interesting story as well: the Swiss franc shows a net short position of -41,094 contracts; the British pound is at -105,719 contracts; while the euro shines with a net long position of 30,158 contracts. Lastly, the Japanese yen finds itself in a net short position of -146,104 contracts.

Technical & Trade Views

SP500 - 7400 weekly bull/bear level

Daily VWAP Bullish
Weekly VWAP Bearish>Bullish
Above 7410 Target 7575
Below 7400 Target 7285

DXY - 100 weekly bull/bear level

Daily VWAP Bearish
Weekly VWAP Bullish
Above 100 Target 102.50
Below 99.40 Target 98.40

EURUSD - 1.15 weekly bull/bear level

Daily VWAP Bullish
Weekly VWAP Bearish
Above 1.15 Target 1.1780
Below 1.1490 Target 1.1270

GBPUSD - 1.33 weekly bull/bear level

Daily VWAP Bullish
Weekly VWAP Bullish
Above 1.34 Target 1.35
Below 1.33 Target 1.3050

USDJPY - 160.50 weekly bull bear level

Daily VWAP Bearish>Bullish
Weekly VWAP Bullish>Bearish
Above 162 Target 163.75
Below 159Target 157.95

XAUUSD - 4100 weekly bull bear level

Daily VWAP Bullish
Weekly VWAP Bearish
Above 4200 Target 4500
Below 4100 Target 3569

BTCUSD - 60.5 weekly bull bear level

Daily VWAP Bullish
Weekly VWAP Bearish
Above 67.2k Target 70.5k
Below 60.5k Target 52.2k