Global Markets Enter Q3: Record Stock Rallies Face Macro Pressures and Crypto Slump

Wednesday, July 1, 2026 | Daily briefing on record semiconductor rallies, the Doha U.S.-Iran impasse, historic yen weakness, and critical macro data pipelines.

Main Agenda

• New Quarter, Old Pressures: July 1st marks the first day of Q3; however, markets opened with the accumulated agendas of the previous quarter. US-Iran negotiations reached a deadlock in Doha, the yen surged to 162.84, and BTC touched a 21-month low at $57,742. Concurrently, the S&P 500 closed its strongest first half since 1991 at +9.6%, Nasdaq at +12.8%, and Russell 2000 at +22%. On one side, a record stock rally; on the other, a tightening interest rate environment and a slumping crypto market. Today, markets face both record gains that need to be digested and upcoming data and speeches that will determine whether these gains can sustained.
• Doha Deadlock: Trump’s son-in-law Jared Kushner and special envoy Steve Witkoff arrived in Doha for “high-level talks”; however, Iran kept them waiting. Iranian Foreign Ministry spokesperson Esmaeil Baghaei stated: “No meetings at any level are planned with the US side in the coming days.” Qatar, on the other hand, announced that the parties could communicate through mediators rather than directly. The crucial knot of the framework agreement is clear: Iran claims sovereignty over the Strait of Hormuz and declares it will begin charging transit fees when the 60-day temporary ceasefire expires in mid-August. Vice President Vance directly opposed this: “This will not end with a result where Iranians collect fees from ships passing through Hormuz.” The WSJ reported that Trump is considering new offensive options but has decided to give diplomacy time for now.
• Anthropic Export Restriction Lifted: The US Department of Commerce lifted the export controls on Claude Fable 5 and Mythos 5 models that it had implemented in mid-June. Fable 5 is reopening to global users starting Wednesday, while Mythos 5 had already been restored to selected US entities as of June 26. This development is significant in several ways: the two-week implementation of the restriction allowed Chinese open-source models to gain valuable time in the market. This is the industry’s complaint: “The best tools were kept away from users, developers, and defense systems that need them most.” Commerce Secretary Lutnick stated that “appropriate safeguards have been provided”; this phrasing indicates that the government maintains its ongoing claim of oversight over model launches.
• Trump’s Financial Disclosure: The annual financial disclosure document published by the US Office of Government Ethics revealed that Trump holds hundreds of millions of dollars in income linked to crypto token revenues, alongside shares in hundreds of individual companies. While the document drew attention in media and transparency circles, its direct impact on markets remained limited.
• Semiconductor Rally: The Real Story of Q2: To correctly read the equity market narrative of Q2, a single data point is sufficient: the Philadelphia Semiconductor Index surged 88% during the quarter. Intel, Micron, and AMD collectively gained nearly $2 trillion in market value in a single quarter. According to Goldman Sachs’ consensus estimate, earnings per share (EPS) growth is expected to be 22% this year, with AI infrastructure stocks alone contributing roughly 60% to the S&P 500 EPS growth. Micron and Nvidia together account for more than 40% of this 60%. Paul Hickey from Bespoke Investment Group noted that he continues to favor this theme but added a note of caution: “Semis are a bit stretched. This bull market is an AI-driven bull market; if it is to continue, tech and semis will lead the way.”
• First-Half Report Card: Russell 2000 +22% (best first half since 1991), Nasdaq 100 +20%, S&P 500 +9.6%, Dow +8.9%. Sector-wise, Industrials and Technology lead with approximately +19% annually, followed by Energy at +18%. Among the strongest individual stock selections of the year, Applied Materials +180% (Morgan Stanley pick), Lam Research +153% (BofA pick), and Hut8 +151% (Needham pick) stand out. In contrast, Palantir has dropped -43% from its November peak.

Macro Framework

Fed: September Rate Hike Priced In at 67% Probability

According to CME FedWatch data, the probability of a September rate hike skyrocketed to 67% today, up from 20.5% a month ago. A July hike remains on the table with a 33% probability. The 10-year US Treasury yield jumped 9 basis points on Tuesday to 4.55%; this movement, coming without a clear catalyst, demonstrates the markets’ sensitivity to Thursday’s NFP (Non-Farm Payrolls). May JOLTS job openings rose to a two-year high, but hiring remained weak. The ADP consensus estimate is 110,000, down from 122,000 last month.

Fed Governor Warsh will speak in Sintra today. Warsh’s avoidance of “forward guidance” keeps markets cautious; he will likely say little, but everyone will be waiting. Newnaha from TD Securities commented: “The runway is getting shorter for those arguing there is no policy shift—the Fed is hawkish, inflation is above target, and data is beating expectations.”

Yen at 162.84: No Major Obstacle Until the Plaza Accord

USD/JPY reached a new 40-year high at 162.84 during Wednesday morning’s Asian session, a level unseen since 1986. The Japanese Ministry of Finance states they are ready to intervene; however, it remains uncertain when Tokyo will act, given that spending 11.7 trillion yen in April-May failed to alter the direction. Deutsche Bank strategist Tim Baker noted: “The recent move stems more from dollar strength than yen weakness; the yen is actually calm against other currencies. Our fair value model dropped to the low 150s; I think Tokyo is waiting for the dollar strength to halt.” The next major chart level for the yen lies around the Plaza Accord levels near 240, which presents a massive gap.

Wells Fargo APAC strategist Narayanan stated, “We are approaching critical levels for a probable intervention.” Since Friday is a US holiday, thin liquidity conditions could amplify the impact of Tokyo’s intervention, making this window one to watch closely. Analysts emphasize that if the BOJ takes a real and powerful step, a global yen carry trade unwinding could hit equities, bonds, and crypto simultaneously.

ECB Forum Sintra: Central Bankers’ Summit

Today is the busiest day in Sintra. Fed Governor Warsh, ECB President Lagarde, Bank of England Governor Bailey, and Bank of Canada Governor Macklem are sharing the same panel. On the ECB front, markets see the probability of a July hike at just 32%, with a growing consensus that the next hike could mark the end of this cycle. Lagarde signaled in her speech yesterday that “unconventional tools are no longer necessary.” The Eurozone June CPI data will also be announced today, with expectations pointing to a decline to 3.0% from the previous 3.2%.

Divergence Deepens in Asia

South Korea’s export data made history: semiconductor exports surged by nearly 200% in June, making South Korea the fourth country ever to surpass the $100 billion monthly export threshold (following Germany, China, and the US). The KOSPI closed the last quarter with a 68% gain; despite this picture, foreign investors remain net sellers, with BNY data showing an outflow of $17.3 billion since the beginning of the year. This deep divergence between returns and capital flows was described by BNY strategist Geoff Yu: “Strong price appreciation is triggering profit-taking rather than new institutional buying.”

European Equities: Tactical Interest, Structural Skepticism

Following the Iran ceasefire, the return of oil prices to pre-war levels represents a fundamental cost advantage for Europe. As the STOXX 600 approaches record highs, Barclays abandoned its bearish outlook on Europe. Andras Vig from Invesco noted: “Low oil prices reinforce Europe’s investment appeal, particularly against the energy-exporting US.” The STOXX is trading at a 26% discount relative to the S&P 500.

However, structural hurdles persist. Alava from Nordea stated: “Europe may avoid a recession now, but 2026 GDP growth remains very low.” The earnings growth comparison also works against Europe: an expectation of 14.3% for the STOXX compared to 24.5% for the S&P 500. Milali from Edmond de Rothschild believes the consensus remains overly optimistic regarding EPS estimates; while upgrading Europe to neutral, the firm continues to prefer the US and emerging markets. VW summarizes the bleak picture of Europe’s automotive sector—one of its worst-performing—with a -18.9% drop this quarter.

Crypto

BTC at $58,958 – 21-Month Low, Realized Price Approaching

Bitcoin slid to $57,742 during Wednesday morning’s Asian session, hitting a level not seen since September 2024; the current price sits at $58,958. It has been trading below its 200-week moving average of ~$61,000 for weeks. Now, a new level enters the agenda: the realized price (the average price at which the BTC supply last moved), which currently stands at approximately $53,300. BTC is about 10% or $5,000 away from this level. According to a CryptoQuant analyst, “In every bear market, BTC dropped below its realized price, and every time it proved to be the best investment opportunity.” PlanB was more direct: “The probability of falling below the realized price is over 50%; data does not yet indicate a bottom formation.”

Four-Layer Structural Pressure

1. Dollar Strengthening: USD/JPY hit a new 40-year high at 162.84. Risk of a yen carry trade unwind: when the yen appreciated from 152 to 142 in July 2024, BTC dropped from $65,000 to $50,000. That unwinding could return this time with a broader positioning base.
2. ETF Outflows Continue: A net outflow of $4 billion occurred in June—the worst month since the January 2024 launch. BlackRock’s IBIT contributed significantly. The eight-day consecutive outflow streak looks structurally different from previous episodes where dip-buyers returned within 2-3 days.
3. Strategy’s Liquidation Program: MicroStrategy’s $1.25 billion liquidation program hangs over the market. Saylor’s “never sell” commitment held since 2020 has been broken. The sharp decline in MSTR (preferred stock) in recent weeks effectively closes its primary funding channel.
4. On-Chain Demand Fails to Revive: The number of active addresses stands at 618,000, and transaction fees are contracting. According to CryptoQuant, the vast majority of coins entering exchanges were purchased during the cycle peaks 6-12 months ago; this indicates that “cycle-top buyers” are selling at a loss. While this condition coincided with bottom formations in the 2018 and 2022 cycles, it is not yet proving valid for the current environment.

Commodities

Oil: Doha Deadlock Suppresses Prices

WTI is at $70.05 (daily -0.99%), Brent is at $73.31 (daily +0.22%). Both benchmarks have returned to pre-war February 27 levels. Brent dropped -20% in June, marking its sharpest monthly decline since March 2020. Directional uncertainty persists: Iran rejected the talks, but Gulf producers continue loading, and Hormuz traffic reached its highest level since the conflict began last week. While the market prices in peace, Iran is rewriting the rules of engagement; if the transit fee claim in mid-August materializes, a repricing for oil will be inevitable. Chevron and ExxonMobil have each retreated -23% from their March-May peaks.

Gold: Worst Month and Quarter Since 2008

Spot gold is at $3,970 (daily -0.56%, monthly -12.3%). This marks the sharpest monthly decline since October 2008 and the worst quarter since 2013. OCBC strategist Wong outlined the framework: “Gold bulls depend on at least one of three things: falling real yields, a weakening dollar, or a break in hawkish Fed expectations. If these three fail to manifest, rallies will be met with selling.” High inflation + high interest rate expectations + a strong dollar: this combination crushes all of gold’s traditional strengths. Silver is at $57.44 (weekly -6.5%, monthly -23.3%), marking its sharpest monthly loss since September 2011.

Equity Front

Record First Half, Expectations for the Second Half

Tuesday’s close: S&P 500 +0.79%, Nasdaq +1.52%, Dow +0.26%. The Dow concluded the first half of the year with its best performance since 2021 at +8.9%. The Russell 2000 recorded its strongest first half since 1991 at +22%. On Wednesday morning, futures are slightly negative: Dow -0.2%, with the S&P 500 and Nasdaq-100 trading flat. Asia shows a positive trend, with Japan’s Nikkei up +1.8% and the KOSPI up +1.5%.

The defining factor for Q3 will be the earnings season. Beginning the week of July 13 with major banks, the season will focus heavily on tech and semiconductor profitability. Goldman Sachs’ consensus EPS growth estimates stand at 22%.

Calendar of the Week

Date	Day	Event
July 1	Wednesday (Today)	Fed Governor Kevin Warsh speaks at the ECB Forum Sintra panel
July 1	Wednesday (Today)	Eurozone June CPI data; Eurozone and US Manufacturing PMIs; US ISM Manufacturing
July 1	Wednesday (Today)	ADP Private Sector Employment Report (Consensus: 110,000)
July 3	Thursday	US June Non-Farm Payrolls (NFP)—critical Fed expectation determinant
July 4	Friday	US National Holiday—thin liquidity, window of opportunity for yen intervention
July 6	Monday	SpaceX enters the Nasdaq-100—technical buying expected from index funds
Week of July 13	—	Q2 earnings season kicks off, starting with major banks