Chip Rout Deepens; Trump Sees 'Good Chance' of Iran Deal | Daybreak Europe 7/28/2026

Market Trends and Regional Performance - South Korea's KOSPI index plummeted more than 10%, triggering circuit breakers twice during the session and heading toward correction territory [2][7][48] - SK Hynix suffered a market value loss of about $570 billion since June highs, driving a broader global sell-off in chipmakers [8] - European Stoxx 50 futures declined by 0.2% and Nasdaq futures dropped over 1%, reflecting contagion fears from Asian markets and tech sector pressures [48][49] Corporate Earnings and Automotive Sector - Mercedes-Benz lowered its full-year guidance and reported a weak second quarter, citing a prolonged property slump and weaker demand in China [3] - BMW previously lowered its profit guidance in June, mirroring the broader downturn and pricing pressures facing European automakers in China [3][62] - LVMH posted a modest 1% rise in its most profitable fashion and leather goods unit, missing analyst estimates as Middle East conflicts deterred wealthy shoppers [52] Technology and AI Financing Risks - Credit spreads for Alphabet and Oracle widened to record levels, while Amazon reached its widest spread since 2018 and Microsoft since 2011 [77] - Market concerns intensified over circular AI financing models, including a $750 billion deal involving Nvidia and its interconnected web of tech customers [10][79] - ASML shares dropped more than 8% in Amsterdam following reports of a Chinese state-backed company beginning production of precision chipmaking tools [14] Macroeconomic and Commodity Outlook - Brent crude oil prices fell 1.3% to $87 per barrel amid discussions of a potential U.S.-Iran deal, though Tehran denied formal talks were taking place [1][19][24] - Markets priced in a nearly 40% chance of a Federal Reserve rate hike, with Citadel Securities expecting a move higher to combat entrenched inflation [18][22] - Johnson & Johnson agreed to a proposed $5.5 billion settlement to resolve the majority of lawsuits claiming its talc products caused ovarian cancer [73]