Fed & BoE hold steady as an AI hedge fund unwind rattles semiconductor stocks
This week @ 15:30 pm Friday 31st July in London.
Markets:
- FTSE 100 rose 1.02% this week to 10,845.69, supported by strength in energy majors after oil spiked on renewed Iran-related tensions early in the week, with Shell’s strongest quarterly profit since 2022 also lending support.
- S&P 500 rose 0.35% this week to 7,437.63, in a volatile week bookended by a sharp semiconductor-led selloff, worsened by hedge fund Situational Awareness LP unwinding its AI-related public equity holdings, and a rebound on Thursday following stronger-than-expected results from Microsoft.
- Nasdaq Composite rose 0.46% this week to 25,090.557, as heavy swings in chip stocks, including forced selling tied to Situational Awareness LP’s public equity unwind, were offset by gains in mega-cap technology names, including Microsoft, following upbeat earnings.
- STOXX Europe 50 rose 0.14% this week to 5,436.73, tracking the same global tug-of-war between semiconductor volatility and steadier broader tech sentiment into Friday.
Bonds:
- UK 10-year gilt yields rose 0.3bps this week to 5.05%, little changed after the Bank of England’s hold, with dissent within the MPC continuing to build.
- US 10-year Treasury yields rose 4.8bps this week to 4.73%, as the Federal Reserve’s hold and a divided vote kept yields elevated.
Commodities:
- Brent crude fell 3.47% this week to $88.50/bbl, as a Saudi-led proposal for a multinational naval coalition to protect shipping through the Strait of Hormuz and Red Sea eased some supply concerns, despite ongoing US-Iran hostilities.
- Gold rose 0.37% this week to $4,085.90/oz, recovering modestly after the Federal Reserve’s decision to hold rates steady.
- Copper rose 1.40% this week to $6.45/lb, tracking a broader rally in industrial metals and mining stocks.
FX:
- GBP/USD rose 0.94% this week to 1.34505, supported by the Bank of England’s hold and a hawkish shift in the MPC’s voting split.
- GBP/EUR fell 0.23% this week to 1.16905, as the euro held relatively firm against sterling.
Macro:
- US Federal Reserve held the federal funds rate at 3.50%-3.75% on 29 July, a 9-3 vote, with three regional presidents dissenting in favour of a hike as inflation has remained above target.
- Bank of England held Bank Rate at 3.75% on 30 July, a 6-3 vote, after UK CPI eased to 2.6% in June, though policymakers flagged that risks to energy prices remain skewed to the upside.
- Renewed US-Iran hostilities and disruption to shipping through the Strait of Hormuz continued to weigh on sentiment through the week, before easing slightly on Saudi Arabia’s naval coalition proposal.
Company news:
- Microsoft reported fiscal fourth-quarter revenue of $90.0bn, up 18% year-on-year, with Azure cloud revenue surpassing $100bn for the full fiscal year; shares rose sharply in aftermarket trading.
- Shell reported second-quarter adjusted earnings of $9.84bn, its strongest quarterly profit since 2022.
What we will be keeping an eye on next week…
w/c 3rd Aug 2026
- US July non-farm payrolls, due Friday 7th August.
- US ISM Manufacturing PMI and Eurozone flash Q2 GDP, both due early in the week.
Enjoy the weekend
Markets move constantly and the numbers in this update will change. This is a snapshot only, pulled together from a range of sources, and is meant as a quick guide rather than a precise record. It’s not investment advice and shouldn’t be used to make trading or investment decisions. If you need more accurate or specific data over a defined period, please get in touch with a member of the team who will be happy to help.
Important Information
This article is for information only and does not constitute advice or recommendation and you should not make any investment decisions based on it. The views and opinions of this article are those of Casterbridge at the time of writing and may change without notice. Any opinions should not be viewed as indicating any guarantee of return from investments managed by Casterbridge nor as advice of any nature. It is important to remember that past performance and the value of an investment, and any income from it, may go down as well as up and the investor may not get back the original amount invested.