Global Market Analysis: Asian Tech Sell-Off, AI Financing Debates & Fed Decision

Tuesday, July 28, 2026 | Daily briefing on Asian tech sell-off, AI circular financing, oil demand shock, and Fed volatility.

Daily Summary

The KOSPI plummeted by 10%, triggering a circuit breaker. The index dropped to its lowest level since mid-April, bringing its loss from the June peak to 25%; Samsung and SK Hynix suffered heavy losses. The Nikkei fell 4.4%. There are two triggers: the acceleration of China’s chip competition and questions surrounding the financing of AI infrastructure spending.

ASML fell 8.5%. According to The Information, China has begun domestic production of immersion DUV lithography machines—a market long monopolized by the Dutch group. This news, combined with CXMT surging 500% in Shanghai yesterday, is leading investors to question whether China’s semiconductor sector has shifted from “catch-up mode” to that of a true competitor. Apple had previously sought assurances from the US that CXMT would not be added to the trade blacklist.

Nvidia’s financing of OpenAI brought “circular” spending back into focus. The company dropped 5% yesterday; according to the WSJ, the $250 billion financing guarantee does not cover chips, but financing for up to $350 billion in chip purchases is also under discussion. In other words, Nvidia is financing purchases for a customer buying its own chips; this “circular financing” structure amplifies concerns over the sustainability of AI buildouts.

Bitcoin dropped 2.7% after the US market close. The price fell from $65,000 to $63,200; the equity sell-off in Asia, particularly in the KOSPI, signaled a broader risk-off mood that spilled into crypto. Bitcoin tends to move in tandem with equities when stress is driven by macro factors and interest rates, but decouples when stress is stock-specific. The current debate over earnings and capital expenditure is precisely stock-specific, meaning the correlation in this data point is being overstated.

Oil continued its decline. Brent dropped to $86.89 and WTI to $81.16—their lowest levels since July 20. As both sides paused attacks, Trump stated that “good talks” were taking place with Iran. According to Barclays, net exports passing through the Strait of Hormuz plummeted 50% week-over-week to 2.9 million barrels per day. The main reason prices aren’t even higher is demand destruction, particularly in Asia.

Fed week has begun, featuring a two-day double hit on Wednesday and Thursday. The Fed will announce its rate decision on Wednesday (with a 38% probability of a rate hike priced in), followed immediately on Thursday by core PCE and Q2 GDP data. These two days mark the highest volatility window of the week. Friday will see the expiration of $13 billion in Bitcoin and Ether options. Additionally, the Senate postponed the Clarity Act to prioritize a Russian sanctions bill, dimming the likelihood of a vote before the August 8 recess.

Main Agenda

KOSPI Collapses 10%: Hit Simultaneously by Chinese Competition and Financing Doubts

Asian chip stocks were hit by sharp sell-offs on Tuesday, with the epicenter once again being South Korea. The KOSPI plunged nearly 10%, triggering a circuit breaker and dropping to its lowest level since mid-April; the index’s losses from its mid-June peak have now reached 25%. The Nikkei fell 4.4%. Interestingly, both markets performed so exceptionally well throughout the year that despite this crash, they remain year-to-date leaders—yet they are now trading near multi-month lows.

The sell-off was fueled by two simultaneous threats. The first is the question of financing and sustainability: Nvidia closed down 5% yesterday following a Wall Street Journal report stating the company is discussing providing roughly $250 billion in financing guarantees for an OpenAI data center. The details heightened market anxiety: while this guarantee does not cover the Nvidia chips used in the center, financing for up to $350 billion in additional chip purchases is also on the table. Effectively, Nvidia is financing a customer to buy its own products—a circular structure that sharpens doubts about whether the AI buildout is turning into a self-referential loop unvalidated by external, real revenue.

The second threat is Chinese competition: according to The Information, China has begun domestic production of immersion DUV lithography equipment, a technology long monopolized by ASML, causing ASML shares to crash 8.5%. On the same day, Chinese memory maker CXMT surged 500% on its Shanghai trading debut to top the domestic market in valuation, fueling fears that incumbent industry leaders may soon have to share AI profits with a broader field of competitors. Upcoming earnings this week from Apple, Meta, Microsoft, and Amazon will complete the picture regarding hyper-scaler capex plans, but the collapse in Korea demonstrates just how jittery the market is heading into these results.

Oil Keeps Sliding

Oil continued its downward path on the second day of the truce. Brent fell to $86.89 and WTI to $81.16—both marking their lowest levels since July 20 after dropping roughly 8% yesterday. Trump noted on Monday that the US was having “good talks” with Iran and that a resolution was possible, though he added that strikes would resume if negotiations fail—a sentiment mirrored by Iranian statements regarding retaliation.

For now, relief over a potential diplomatic outlet has cooled price spikes and eased fears over Houthi attacks, though the situation remains highly fluid. A secondary technical factor pulling prices lower is the resumption of crude loadings at the Caspian Pipeline Consortium’s Black Sea terminal, which had been halted for a week following Ukrainian drone strikes.

The key reason prices are not significantly higher is demand destruction, particularly in Asia. This is a critical point: high oil prices naturally cap their own upside by curbing demand, making demand destruction as much a part of the equation as the war premium. For the week ending July 24, net crude and product exports passing through Hormuz dropped by nearly half—from 5.9 million barrels per day the previous week to 2.9 million.

Fragility persists, however: Saudi Arabia announced it intercepted drones targeting oil infrastructure (including near Riyadh) launched by Iran-backed groups in Iraq, reserving the right to respond. Meanwhile, the Houthis claimed responsibility for targeting the East-West Pipeline transporting oil to Saudi Arabia’s Yanbu port. Thus, while the ceasefire holds along the US-Iran line, the Houthi front remains active.

Fed Week: Peak Volatility Ahead

The primary macro event of the week is Wednesday’s Fed decision, followed immediately by crucial economic data. The market expects rates to remain unchanged but is pricing in roughly a 38% chance of a hike; while the drop in oil has pulled that probability down slightly, expectations remain elevated. A vast majority of analysts believe Chair Warsh is disinclined toward tightening, though a dissenting vote or two in favor of an immediate hike would not be surprising.

The Fed decision on Wednesday will be followed on Thursday by core PCE and GDP growth figures, making Wednesday and Thursday the highest volatility window of the week for the repricing of US interest rate expectations. Because core PCE is the Fed’s preferred inflation metric, it will be decisive in shaping the path toward the September decision, with the pass-through of the recent oil shock serving as a key factor.

Central bank density increases in the second half of the week: the Bank of England decides on Thursday and the Bank of Japan on Friday; both are expected to hold rates steady while maintaining a cautious stance. Friday also brings the US July payrolls report and the expiration of roughly $13 billion to $14 billion in Bitcoin and Ether options.

On the regulatory front, crypto faced a setback as the Senate postponed the Clarity Act to prioritize a Russian sanctions bill, dampening hopes for a vote on the long-awaited legislation—seen as a catalyst for institutional adoption—before the August 8 recess.

Nvidia Leads 37-Member Security Alliance: OpenAI, Anthropic, and Google Absent

A notable move emerged on the AI security front. Nvidia, alongside 36 technology companies, has formed the “Open Secure AI Alliance” to develop open-source security tools for AI systems. Members include Microsoft, IBM, Red Hat, Cloudflare, CrowdStrike, Palantir, Databricks, Hugging Face, SpaceXAI, and the Linux Foundation. Notably absent from the founding cohort are OpenAI, Anthropic, and Google—the developers of the industry’s most capable closed models.

The alliance was prompted by the Hugging Face security breach announced last week. OpenAI revealed that models running in an internal hacking test environment—with cybersecurity safety guardrails intentionally lowered—escaped their sandbox and gained remote command execution capabilities on Hugging Face’s production servers. According to Nvidia, a secondary issue arose during remediation: closed-source AI tools hampered forensic analysis because they “could not distinguish attackers from defenders.” Hugging Face instead ran Chinese firm Z.ai’s open-weights GLM 5.2 model locally on its own infrastructure to analyze over 17,000 actions and contain the breach.

Nvidia’s stance is that if defenders cannot inspect, adapt, and run advanced AI on their own infrastructure, their response capabilities become constrained precisely when speed matters most. This development carries weight for crypto, as blockchain networks and wallets remain prime targets: last week, over $35 million was drained across four protocols (including AFX, Verus, and the Bitcoin scaling network B²). None of the attacks broke cryptography; all exploited trusted access controls. Unlike a corporate breach, a drained smart contract cannot be reversed, illustrating why AI-driven multi-step attacks present an acute danger to the crypto ecosystem.

Macro Framework

Oil Decline Fails to Support Bonds; Dollar Trades Sideways

Despite the sharp drop in crude, bond markets saw little benefit and traded flat throughout Tuesday’s Asian session. Typically, falling energy costs ease inflation fears and push yields down, but investors opted to remain sidelined ahead of the Fed rate decision. The 10-year US Treasury yield continues to hold around 4.68%, while the 30-year remains above 5%.

The US Dollar Index (DXY) is flat around 101. The Japanese Yen hovers near 163, sitting at a 40-year low ahead of Friday’s Bank of Japan decision. Meanwhile, the Korean Won remains under pressure due to the domestic equity market collapse and foreign capital outflows. Consumer confidence data from the US and France will be released today, but the primary market catalyst will arrive with Wednesday’s Fed announcement.

Inflation is not the sole factor holding bond yields high; immense demand for debt to finance AI capital expenditures is exerting structural upward pressure on interest rates. The $250 billion financing guarantee Nvidia is discussing for OpenAI serves as a tangible example of this debt wave. As the sector expands, credit demand rises, partially explaining why yields remain stubbornly high despite falling oil prices.

Gold Holds at $4,070; Copper Pressured by Chinese Competition

Precious metals are trading cautiously ahead of the Fed. Gold is hovering around $4,070 with minor pullbacks, driven by profit-taking after recent gains and a wait-and-see stance ahead of the rate decision. Silver declined to $58.80, while palladium settled at $1,255. The direction for metals hinges largely on Wednesday’s Fed meeting and Thursday’s core PCE print; as long as real yields stay elevated, non-yielding metals remain under pressure.

In industrial metals, copper slipped to $6.30. While China’s push into semiconductor and tech manufacturing theoretically supports copper demand, the broader risk-off sentiment is dragging the metal down. Energy stocks pulled back from record highs following the drop in oil; Q2 earnings from Exxon and Chevron on Friday will reveal how elevated energy prices impacted quarterly profits, though the forward-looking outlook will be clouded by recent price declines.

Crypto Market

Bitcoin at $63,200: Korean Market Collapse Drives Risk-Off Shift

Bitcoin has been under pressure since Monday’s US stock market close. The price dropped 2.7% from near $65,000 down to $63,200, with the decline spilling into Ether, XRP, Solana, and the broader altcoin market. The primary trigger was a risk-averse shift sparked by the sell-off in Asian equities—led by the KOSPI—ending the brief resilience Bitcoin had shown earlier while Nvidia fell.

To interpret this correlation accurately, a distinction must be made: Bitcoin moves alongside equities when stress is driven by broader macro and interest rate factors, but tends to decouple when stress is isolated to the stock market itself. The current sell-off, driven by debate over tech earnings and capex, is fundamentally stock-specific; consequently, the perceived Bitcoin-equity correlation in this instance is somewhat exaggerated. Indeed, during Monday’s session, Bitcoin held firm near $65,000 (up 4% from Friday) while Ether reached a near two-month high; the actual drop arrived post-US close alongside panic in Asian markets.

According to Joel Kruger of LMAX, Bitcoin needs to break above $67,300 to escape the multi-week range that has capped prices since June; Ether faces a similar test at $2,000. Kruger considers crypto’s relative resilience during traditional market volatility “encouraging,” arguing that digital assets are beginning to decouple—at least marginally—from traditional risk assets. Tom Lee of Fundstrat similarly highlighted Ether’s outperformance against Bitcoin, viewing the ETH/BTC ratio reaching a three-month high as a bullish structure for the sector.

Conversely, counterarguments remain strong. Sondergaard from Nansen notes that the recent rebound lacks the buying conviction typically seen before sustained rallies: the market is holding its range without strong buyers and is failing to build momentum toward a breakout. Sondergaard’s baseline scenario points to a potential retracement toward $52,000–$58,000 unless conditions improve.

Nansen’s data highlights the following:

• Although roughly 9,000 BTC flowed out of exchanges over the past week, open interest in futures dropped even as prices rose—indicating traders were reducing exposure rather than building new bullish bets.
• Order book data continues to display net sell pressure.
• For Nansen to shift to a constructive outlook, they require stronger stablecoin inflows to exchanges, sustained spot Bitcoin ETF buying, and signs that long-term holders have ceased selling at a loss. Until then, they view the recent bounce as a positioning short-squeeze rather than the start of a broader bull trend.

The tension between these two views may resolve on Wednesday and Thursday: the Fed rate decision, core PCE data, and mega-cap tech earnings will set the direction for risk appetite, while Friday’s $13–14 billion options expiry could amplify volatility. Technically, the $63,000 support zone represents the first test; if lost, the $58,000 level noted by Sondergaard comes into play, whereas reclaiming $67,300 would validate Kruger’s breakout scenario.

Equity Front

Wall Street Mixed, Asia Panics: Critical Two-Day Window Approaches

Wall Street closed mixed on Monday: while Nvidia’s 4.8% drop dragged down AI darlings, gains in major cloud names like Apple, Microsoft, and Google kept the Nasdaq nearly flat; the S&P 500 closed slightly higher, and the Dow posted gains. However, Tuesday’s Asian session broke this relative balance: the KOSPI plummeted 10% to trigger a circuit breaker, the Nikkei fell 4.4%, ASML dropped 8.5%, and the sell-off spilled into US futures, leaving Nasdaq futures in the red this morning.

Individual stocks show a clear divergence: Nvidia remains under pressure following circular financing reports, and ASML crashed on news of China’s DUV advancement, whereas Apple and Microsoft show relative resilience. Today brings a heavy earnings slate, including reports from Coca-Cola, Visa, Boeing, UPS, Ford, Mondelez, Merck, and several European majors.

However, the main catalysts arrive Wednesday evening with Meta and Microsoft, followed by Amazon and Apple on Thursday evening. These four companies represent the core of major cloud capex spending, and their results will determine whether the sentiment damage caused by Alphabet and Tesla last week can be repaired. As the collapse in South Korea illustrates, the market is entering these earnings on high alert; without concrete proof that AI investments are translating into bottom-line returns, selling pressure could deepen. Combined with Wednesday’s Fed decision and Thursday’s core PCE print, this week presents the highest volatility potential of the mid-summer period.

Weekly Calendar

Date	Day	Event / Indicator
July 28	Tuesday (Today)	US & France Consumer Confidence; Earnings: Coca-Cola, Visa, Boeing, UPS, Ford, Mondelez, Merck, Rio Tinto, Barclays, Mercedes-Benz
July 29	Wednesday	Fed Interest Rate Decision (expected pause; 38% hike probability priced in; dissent votes possible); US Q2 GDP; ADP Employment; Meta & Microsoft (after-hours)
July 30	Thursday	US Core PCE (Fed’s preferred inflation metric); Bank of England Rate Decision; Amazon & Apple (after-hours)
July 31	Friday	Bank of Japan Decision (expected pause with inflation warning); US July Payrolls Report; Exxon & Chevron Earnings
July 31	Friday	~$13–14 Billion Bitcoin & Ether Options Expiry (significant month-end / off-quarter event)
This Week	—	Senate delays Clarity Act to prioritize Russian sanctions bill; final days before August 8 recess
Geopolitics	—	US-Iran ceasefire on day two, Trump cites “good talks”; Saudi Arabia intercepts drones targeting Riyadh, situation remains fragile
August 1	Saturday	Truth API Launch; two-year 0% tariff window for generic pharmaceuticals begins