Asian stocks rose for the first time in four days. Brent crude eased below $88 as U.S. strikes on Iran entered a tenth night. Bitcoin held near $64,700 as spot ETFs posted a second straight week of inflows. Tesla and Alphabet now face the AI trade's biggest earnings test of the summer.
Tuesday opens with the chip trade trying to recover.
Asian markets bounced after last week's heavy selling. The MSCI Asia Pacific Index rose 1.7%. South Korea and Taiwan both gained more than 2.5%, led by Samsung Electronics and Taiwan Semiconductor (TSM). Japan's Nikkei 225 climbed 2.2% after reopening from Monday's holiday.
The rebound followed one of the biggest AI selloffs of the year.
Moonshot AI's Kimi K3 erased roughly $3.3 trillion in global semiconductor value on Friday. The Philadelphia Semiconductor Index is now more than 20% below its June peak, putting it in a bear market.
U.S. chip stocks began recovering Monday. Micron (MU) gained almost 2%. Astera Labs (ALAB) rose 1.9%. Teradyne (TER) climbed 3.5%. AMD (AMD) added 1.6%.
Markets are now shifting their attention.
Tesla (TSLA) and Alphabet (GOOGL) report earnings this week. Intel (INTC) follows soon after. Together they will test whether AI spending can still support today's valuations. The Federal Reserve meets July 29.
The Signal
Last week's selloff was never about AI demand alone. It was about who controls the technology behind it. This week's earnings will decide whether investors focus on demand again.
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The rhetoric cooled.
The conflict did not.
Brent settled at $87.72 on Monday after briefly trading above $90 over the weekend. WTI also eased as President Trump shifted from promising retaliation against Iran to saying the country had been "very, very badly damaged."
The military picture changed little.
The United States carried out a tenth straight night of strikes. Houthi forces announced a maritime embargo on Saudi Arabia, creating another threat to regional shipping alongside the Strait of Hormuz.
Commercial tanker traffic through Hormuz remains severely disrupted. The UAE continues expanding alternative export routes while U.S. gasoline prices remain just below $4 a gallon, roughly one-third higher than before the war.
Energy Signal
The headlines became calmer. The supply system did not. Oil still follows inventories and shipping, not political language.
The July Fed meeting is almost here.
Markets still assign an 87.7% probability that the Fed leaves rates unchanged on July 29. At the same time, expectations for a September hike have climbed to about 53%, up from 47% a day earlier.
That is the market's tension.
Investors expect a hold next week while becoming less confident that rates have peaked.
Fed Chair Kevin Warsh has continued repeating that inflation remains too high. The Fed now enters its blackout period with elevated oil prices, weak chip stocks, and continued conflict in the Middle East.
Macro Signal
A July hold remains the base case. September becomes more likely if oil stays elevated.
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The AI trade has a new question.
Moonshot AI showed Kimi K3 designing and verifying a chip using open-source tools in about 48 hours. The demonstration bypassed traditional electronic design automation software from Cadence (CDNS) and Synopsys (SNPS).
Both stocks fell about 9% to 10% on Friday.
The technology still has limits. The design used a 45-nanometer process, far behind today's leading 2 and 3 nanometer chips. Moonshot also plans to release full model weights on July 27 while pursuing a Hong Kong IPO near a $30 billion valuation.
Taiwan Semiconductor also remains under pressure.
The company raised 2026 capital spending guidance to $60 billion to $64 billion from $52 billion to $56 billion after reporting record quarterly revenue. Investors still sold the stock as they questioned how quickly that spending becomes profit.
SpaceX closed at $123.99, about 8.2% below its $135 IPO price, adding to concerns around high-growth technology valuations.
Capital Signal
The debate is changing. Investors are asking who owns the AI tools, not just who builds the best models.
Bitcoin continues holding its ground.
BTC traded near $64,700 while Ethereum stayed around $1,870.
U.S. spot Bitcoin ETFs have now posted two straight weeks of inflows totaling $273 million after eight weeks of roughly $8 billion in outflows. BlackRock's IBIT generated more inflows than the rest of the ETF market combined.
Liquidity tells another story.
Binance and Bybit have seen nearly $2.3 billion in stablecoin withdrawals over the past 30 days. That leaves less buying power if markets weaken. Large leveraged long positions remain concentrated between $55,000 and $57,000.
Washington remains the biggest catalyst.
Lawmakers are expected to release a unified Clarity Act draft this week, though ethics provisions tied to elected officials' crypto holdings remain the largest obstacle before the August recess.
Zcash (ZEC) traded near $555 ahead of the July 28 Ironwood upgrade. Strategy (MSTR) continues holding about 843,775 BTC.
The Verdict
ETF inflows are improving. Liquidity remains thin. Regulation is getting closer. Bitcoin has absorbed all three without breaking support.
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Markets have absorbed another difficult week.
A $3.3 trillion semiconductor selloff did not end the AI trade. It changed the debate from demand to competitive advantage.
Ten nights of strikes did not reopen the Strait of Hormuz. They also failed to push Brent above $90 for long.
Bitcoin held above $64,000 despite weaker liquidity and unfinished regulation.
Now the calendar takes over.
Moonshot releases Kimi K3's full weights on July 27.
The Ironwood upgrade follows on July 28.
The Fed announces its decision on July 29.
Before all of that, Tesla and Alphabet report earnings.
The market has learned to ignore many headlines. This week will reveal which deadline it cannot ignore.
