Date: 17th July 2026.
Global Markets Fall as AI Stocks Slide, While Oil Prices Surge on Middle East Tensions.
AI Sell-off Deepens as Global Markets Retreat, While Oil Prices Continue to Climb
Global markets ended the week on the back foot as investors continued to move away from technology and AI-related stocks, triggering another wave of selling across major equity markets. At the same time, renewed tensions in the Middle East pushed oil prices higher, adding another layer of uncertainty for investors.
Asian markets led the decline on Friday, with Japan’s Nikkei 225 dropping more than 5% in its worst session since March. Taiwan also suffered heavy losses, while Hong Kong and mainland China closed lower as investors reduced exposure to semiconductor and technology companies.
The weakness follows another soft session on Wall Street, where the NASDAQ underperformed after several of this year’s strongest-performing AI stocks extended their recent decline.
Investors Continue to Take Profits from AI Leaders
After months of exceptional gains, investors are becoming increasingly cautious towards companies driving the AI boom.
The latest earnings season has shifted attention away from impressive revenue growth and towards one key question: will the enormous investment in AI infrastructure generate enough profits to justify current valuations?
That uncertainty has led many investors to lock in profits after one of the strongest technology rallies in recent years.
Semiconductor companies were once again among the biggest losers. Taiwan Semiconductor Manufacturing Company (TSMC) fell sharply despite reporting strong quarterly earnings, while several Japanese chipmakers also recorded double-digit losses. The move suggests investors are becoming more selective, rewarding future profitability rather than simply strong earnings.
This doesn’t necessarily signal the end of the AI story. Instead, markets appear to be taking a breather after a remarkable run higher, with investors reassessing how quickly AI spending can translate into sustainable returns.
Rising Oil Prices Shift Attention to Geopolitics
While equities struggled, oil continued to move in the opposite direction.
Brent crude traded around $85 per barrel, while WTI crude approached $80, putting both benchmarks on track for their strongest weekly gains since April.
The rally comes as military tensions between the United States and Iran continue to escalate, raising concerns about potential disruptions to global energy supplies.
Investors remain focused on the Strait of Hormuz, one of the world’s most important oil shipping routes. Any disruption to traffic through the region could tighten global supply and push energy prices even higher.
Higher Oil Could Keep Inflation Elevated
The rise in oil prices has also revived concerns about inflation.
While recent US economic data suggested inflation pressures were gradually easing, higher energy costs could slow that progress and complicate the Federal Reserve’s policy outlook.
Recent economic reports paint a mixed picture. Consumer spending has softened slightly, but the labour market remains resilient and manufacturing activity continues to show signs of improvement. Overall, the US economy remains relatively stable, although investors are increasingly questioning whether interest rates may need to stay higher for longer.
Dollar Holds Firm as Gold Weakens
The US dollar remained well supported as investors sought safer assets amid the recent increase in market volatility.
Meanwhile, gold came under pressure as stronger bond yields and expectations for higher interest rates reduced demand for the precious metal.
The Japanese yen also remained near multi-decade lows against the dollar, despite renewed warnings from Japanese officials regarding possible intervention in the currency market.
What Markets Are Watching Next
The current market move appears to be driven more by positioning than panic.
Investors are rotating out of this year's biggest winners, particularly AI and semiconductor stocks, while closely monitoring upcoming earnings for signs that massive AI investments can deliver long-term profitability.
At the same time, developments in the Middle East remain a key risk for financial markets. Any further disruption to oil supply could keep energy prices elevated, increase inflationary pressures, and add further volatility across global markets.
For now, traders are likely to remain cautious as they balance corporate earnings, geopolitical developments, and expectations for future central bank policy. Until there is greater clarity on all three fronts, volatility is expected to remain a dominant feature across global markets.
Always trade with strict risk management. Your capital is the single most important aspect of your trading business.
Please note that times displayed based on local time zone and are from time of writing this report.
Click HERE to access the full HFM Economic calendar.
Want to learn to trade and analyse the markets? Join our webinars and get analysis and trading ideas combined with better understanding of how markets work. Click HERE to register for FREE!
Click HERE to READ more Market news.
Andria Pichidi
HFMarkets
Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.