Morning Bid: Chip rout snowballs

By Mike Dolan

Tue, July 28, 2026 at 3:38 AM PDT 3 min read

By Mike Dolan

July 28 (Reuters) -

What matters in U.S. and global markets today

By Mike Dolan, Editor-at-Large, Finance and Markets

The chip stock correction snowballed again overnight amid growing concerns about rising competition and circular financing.

This comes ahead of a set of critical earnings reports from tech ‌companies on Wall Street and in Asia - and it comes despite a further slump in oil prices below $90 per barrel amid the tense ‌pause in the Iran conflict.

I'll get into that and more below.

But first, check out my latest column, where I outline the many inflationary drivers that central banks may increasingly struggle to "see through".

And ​listen to the latest episode of the Morning Bid daily podcast, where we discuss the many causes of the latest chip selloff.

Subscribe to hear Reuters journalists discuss the biggest news in markets and finance seven days a week.

CHIP ROUT SNOWBALLS

Stock markets remained on edge on Monday and heading into Tuesday due to a host of catalysts. One was a sharp drop in shares of U.S. chip giant Nvidia - partly on reports of another round of circular financing with OpenAI.

Another possible trigger was ‌the blowout IPO of China's CXMT on Monday - a first-day ⁠jump of nearly 470% that unveiled a new chip giant ready to soak up investment funds.

Meanwhile, reports that Chinese firms are developing chipmaking technology that apes ASML's dominant offering sent the European tech giant's shares down sharply on Monday.

U.S.-listed shares ⁠of South Korea's SK Hynix fell back below their recent debut price on Monday, ahead of its quarterly update tomorrow, while Seoul's volatile KOSPI index plummeted nearly 11% on Tuesday to post its biggest daily loss in nearly five months. Rival chipmaker Samsung Electronics, which is also down sharply, is likewise set to report this week.

Both companies' earnings ​are ​coming amid reports of heavy capex by hyperscalers to build out their AI infrastructure. The ​size of that spending, and the cash burn that goes ‌with it, look to be the big theme of the hyperscaler earnings season. Credit markets are watching warily.

On the energy front, oil slid further heading into Tuesday to around $86 per barrel. U.S. President Donald Trump said on Monday that the U.S. was having "good talks" with Iran and that a deal was possible but reiterated familiar warnings that strikes would resume if negotiations go nowhere.

Those energy price gyrations will no doubt be a point of discussion at the Federal Reserve's two-day policy meeting, which starts today.