Morning Brief: U.S.-Iran military exchanges intensified for a sixth straight night

Core Snapshot

⚠️ U.S. and Iran traded strikes for a sixth consecutive night. Iran denied U.S. prisoner release claims, with reports it ordered Houthi forces to close the Bab el-Mandeb Strait if U.S. attacks its power grid.

📊 TSMC Q2 net profit jumped 77.4% YoY with a 67.7% gross margin, both beating estimates. Yet the Philadelphia Semiconductor Index dropped 3.1% on profit-taking.

📉 All three major U.S. indexes closed lower. Nasdaq fell 1.47%, S&P 500 lost 0.51%, as strong chip earnings failed to reverse sector weakness.

I. Market Outlook

Key Catalysts

U.S.-Iran hostilities extended into a sixth night with no diplomatic breakthrough in sight. Crude prices edged lower as geopolitical risk premiums failed to expand further, despite the Bab el-Mandeb Strait risk emerging as a new supply threat.

TSMC delivered blowout Q2 results driven by robust AI chip demand, but semiconductor stocks sold off broadly. The pattern mirrors ASML’s post-earnings reaction, suggesting AI hardware upside is already fully priced in.

Exclusive Insight

Strong TSMC earnings could not reverse the semiconductor pullback — a repeat of the ASML pattern showing AI hardware optimism is fully priced. The correction is mainly earnings-season profit-taking rather than deteriorating fundamentals. The Bab el-Mandeb Strait risk adds a second energy choke point to the Hormuz threat, and markets have not yet fully priced this dual supply risk.

II. Overnight Market Performance

— US Stocks: Dow -0.20%, S&P 500 -0.51%, Nasdaq -1.47%. SOX -3.1%, TSMC -3%+, ASML -2%+, Nvidia -3%.

— European Stocks: STOXX 600 +0.16%. Mixed performance across major regional benchmarks.

— Fixed Income: US 10Y yield +1.6 bps to 4.561%, yields ticked higher across the curve.

— Commodities: WTI Crude -0.82%, Brent Crude -0.85%. Spot gold and silver sold off sharply.

— Forex: DXY +0.31%. Euro and Sterling weakened, Yen edged higher.

— Crypto Assets: Bitcoin -1%+, Ethereum -2%+.

III. Macro Headlines

⚠️ U.S.-Iran strikes enter sixth night, Iran denies prisoner release

Military escalation continues with no diplomatic progress. The potential Houthi blockade of the Bab el-Mandeb Strait would compound Hormuz supply risks, leaving energy markets underpriced for dual-chokepoint disruption.

📊 June retail sales rise 0.2%, slowest in five months

Falling gasoline prices dragged headline growth lower, but vehicle and online spending stayed strong. Q2 GDP estimates were revised up to 2.4%, signaling the economy remains above trend with no immediate case for rate cuts.

⚖️ U.S. imposes 25% tariff on Brazilian imports

A broader-than-expected exemption list softens the actual impact, but renewed trade policy uncertainty weighs on market sentiment.

IV. Global Corporate News

💾 TSMC posts blowout Q2 earnings: 77.4% profit growth and 67.7% gross margin beat estimates, yet the market rewarded nothing — the bar for semiconductor outperformance has risen sharply.

🤖 Google delays Gemini flagship model: Programming capabilities fall short, widening the gap with OpenAI as AI competition concentrates further at the top.

🚀 SpaceX cancels Starship test flight: Shares dropped 4%+ after hours, adding pressure after breaking its IPO price earlier this week.

📱 Apple plans OLED iPad mini for fall: OLED transition across product lines supports medium-term display panel supply chain demand.

V. Key Focus Today

· Eurozone June CPI: Verify whether European disinflation continues amid ECB warnings of upside inflation risks.

· U.S. Michigan Consumer Sentiment & Inflation Expectations: A key Fed input for policy path assessment.

· U.S. June Industrial Production: Gauge manufacturing resilience amid energy price volatility.

· U.S. Housing Starts & Building Permits: Assess housing market dynamics under high-rate conditions.

· World AI Conference Shanghai: Track the latest trends in AI applications and regulation.