This past week felt particularly important after three consecutive weeks of increasing weakness beneath the surface, and as such, I was very interested in understanding how much resilience, if any, the markets could show us in a week where two of the biggest semiconductor names, ASML and TSM, were due to kick off earnings season from a technology perspective.
To put things into perspective, the Nasdaq finished lower in four sessions, three of which were close to a 2% decline. Not promising, to say the least.
Despite the recent trepidation in geopolitics, which pushed WTI from $71 to $81 during the week, the markets have, in my opinion, dismissed the move entirely. At least, I did not see it reflected in any of the three majors' price action.
Korean High Voltage Issues Persist
It is starting to become a habit for Wall Street to wake up with bad news from overseas. Yet again, the two Korean giants SK Hynix and Samsung opened the trading week with -15% and -10%, triggering temporary trading halts in the highly concentrated Kospi.
Later in the week, news that tighter controls on access to and trading of leveraged ETFs will be implemented by the Korean financial services regulator, aiming to curb some (excess) volatility, made me think that the retail investor keeps gaining prominence in the grand scheme of things. Something to keep an eye on, especially for someone who has made leveraged ETFs his own asset class.
If Good Earnings Are Not Enough…
What were considered solid earnings and guidance from ASML and TSM turned out to fail pretty easily and send an ominous signal to an AI trade in desperate need of a lifeline. Now, if this pattern is on the menu for subsequent important AI-related names, then my views on the semiconductor sector will need to be revisited.
Moonshot But Inverted
After the double-whammy moments on the earnings side, Friday arrived with a moonshot made in China that questioned whether the US AI ecosystem is still on the right trajectory — to the moon, as we have heard so many times.
Just as happened last year when an AI model released by the Chinese company DeepSeek shook Wall Street, we still need to observe the markets' reaction to this hypothetical challenge to AI economics.
Jam Packed Agenda
This coming week I will be watching important earnings releases from some big names like SK Hynix, Intel, and Texas Instruments. Will we once again see the market treating good news as bad news? Better buckle up.