Written by Ashwin Gurung
Global equity markets fell last week, with the MSCI All Country World Index, a broad measure of global shares, down 1.8%.
Selling pressure had been building across global semiconductor shares throughout the week, driven by concerns over the return on record AI spending and questions over how quickly those investments will pay off. TSMC, the world’s largest chipmaker, reported record quarterly profits but raised its spending plans, unsettling investors already concerned about the returns from such large investments. The weakness was then amplified on Friday, when Chinese AI startup Moonshot unveiled Kimi K3, the largest openly available AI model in the world, claiming performance to rival the leading US systems. The concern is that a credible alternative could force US AI leaders to reassess their investment plans, making the significant spending on chips and data centres harder to justify.
As a result, the Nasdaq 100, a measure of the largest technology and growth-focused companies listed in the US, fell -4.4%, while the broader S&P 500, a measure of 500 of America’s largest companies, declined -1.8%. However, Asia’s chip-heavy markets bore the brunt. MSCI Taiwan fell -6.7%, MSCI Korea fell -9.1%, and the MSCI Emerging Markets index, a broad measure of shares from developing economies, fell -4.4%, though it remained up +16.8% for the year. Interestingly, Chinese equities held up better, slipping just -0.8%, as the launch was viewed as evidence of China’s growing AI capability.
Renewed conflict between the US and Iran also contributed to the decline, even as encouraging inflation data showed US consumer prices fell -0.4% in June, the largest monthly decline since April 2020, bringing annual inflation down to 3.5%. However, strength in energy markets helped commodities emerge as the week’s standout performer, with the Bloomberg Commodity Index, a broad measure of commodity prices, rising +3.7% and gaining +22.3% over the year, both in GBP-hedged terms.
At home, the economy grew 0.1% in May, better than expected, with growth of 0.7% over three months, among the fastest in the G7, the group of seven major economies. On the political front, Andy Burnham officially became leader of the governing Labour Party and is set to become prime minister this week. Markets will watch closely for signals on spending, taxation and borrowing from the new government, as concerns persist over the UK’s high borrowing costs. Nonetheless, UK equities outperformed their global peers, with the FTSE 100, made up mostly of large UK companies that earn much of their revenue overseas, rising +1.0%, supported by energy and utility companies and its limited exposure to technology. The FTSE 250, a measure of medium-sized UK companies with greater exposure to the domestic economy, also gained +1.0%.
With so many forces at play, no one can reliably predict the path markets will take. That uncertainty is precisely why we hold diversified portfolios: to ensure that, whatever direction markets move, part of the portfolio is positioned to participate.
All performance figures are stated in Sterling terms, unless otherwise specified.
Any opinions stated are honestly held but are not guaranteed and should not be relied upon.
The information contained in this document is not to be regarded as an offer to buy or sell, or the solicitation of any offer to buy or sell, any investments or products.
The content of this document is for information only. It is advisable that you discuss your personal financial circumstances with a financial adviser before undertaking any investments.
All the data contained in the communication is believed to be reliable but may be inaccurate or incomplete. Unless otherwise specified all information is produced as of 20th July 2026
© 2026 YOU Asset Management. All rights reserved.