Nick Spencer-Skeen, Senior Executive Officer, Lunaro Financial Markets
The key theme that dominated markets last week was positioning pressure in AI and semiconductors, where weakness in SK Hynix and Samsung spilled quickly into US mega-cap tech. Rising concern around memory pricing and stretched valuations turned into a wider de-risking of the AI complex, spreading even to the industry poster child Nvidia.
That pressure hit the index level hard. The Nasdaq Composite fell 4.6% on the week, while the S&P 500 dropped around 2% and closed below its 50-day moving average for the first time since April. Yet beneath the surface, the tape was healthier than the headline suggested. Equal-weighted equities hit record highs. Industrials and airlines, among others, actually benefited from falling oil prices and a rotation away from crowded tech exposure.
Rates provided some relief after May US Personal Consumption Expenditures (PCE) came in below consensus, briefly pulling Treasury yields lower and trimming Fed hike expectations. In FX, the dollar remained firm as markets leaned toward Fed resilience and fading ECB hike risk, pushing the euro lower. Commodities remained geopolitically driven, with oil first falling on progress around the US-Iran interim deal before rebounding as attacks in the Strait of Hormuz revived supply concerns.
The week ahead will focus on US-Iran peace talks that are set to resume in Qatar, along with central bank chatter and US Non-Farm Payroll data.
Payrolls in The Spotlight
Due to the Independence Day holiday on Friday, the June US employment report will come out on Thursday. This is arguably the key macro release for the week, with markets looking for evidence that the labour market is cooling without cracking. Consensus expects the headline nonfarm payrolls print to rise by 115,000, down from May’s 172,000 gain and April’s upwardly revised 179,000 increase. That would still be comfortably above most estimates of breakeven payroll growth, but a clear step down from the stronger spring run-rate.
The unemployment rate is expected to hold at 4.3%, where it has sat for three consecutive months. Wage growth will matter almost as much as the payrolls number. Average hourly earnings rose 0.3% month-on-month in May and 3.4% year-on-year, with another firm print likely to keep the Fed focused on inflation persistence rather than labour-market softness.
Even though a payrolls miss would support US Treasuries and pressure the US dollar, the main risk for traders is a hot report that would further revive Fed-hike pricing.
Sintra And The Rates Reset
The European Central Bank (ECB) annual forum in Sintra kicks off this week, with Wednesday’s panel featuring leaders including Lagarde, Warsh, Bailey and Macklem likely to set the tone for global rates and FX.
Sintra is the European version of the US Jackson Hole symposium, being a high-profile central banking conference where major policymakers give speeches and can steer market expectations. The main focus this time around will be whether central bankers push back against the recent easing in hike expectations, particularly in Europe, where falling oil prices have led traders to price out some of the aggressive ECB moves by year-end.
For markets, the key risk is that Lagarde and other ECB officials use Sintra to re-anchor expectations around still-sticky inflation and the need for further tightening. This would most likely be felt via higher front-end Bund yields, a bid in the Euro and weigh on European equities, particularly rate-sensitive sectors. On the other hand, a softer tone may be adopted, with greater emphasis on the oil-driven easing of inflationary pressures. Either way, Sintra headlines should be watched carefully.
Bitcoin Remains Exposed
Bitcoin’s 7.7% fall last week started with the broader risk-off move in the equity space, triggered by the AI and semiconductor sell-off. But crypto quickly developed its own problems. The coin dropped from $64,372 to a low of $59,364 on Thursday, extending June’s drawdown to more than 19% and leaving it over 50% below its October 2025 high.
Spot Bitcoin ETFs, once the cleanest source of institutional dip-buying, saw more than $1.3bn of net outflows. Further, retail demand was also notably absent, with speculative attention still crowded into AI.
The coming few trading sessions will be key, with a focus on holding $60,000. A clean reclaim would stabilise sentiment, but a hot US payrolls print (previewed above) would keep the pressure firmly on.
