US stock indices closed lower on Friday amid a fresh selloff in chipmakers and renewed geopolitical tensions. The S&P 500 lost 1%, the Nasdaq shed 1.5%, and the Dow Jones retreated 407 points. Semiconductor manufacturers plunged on concerns that AI hyperscalers may scale back investment in AI infrastructure, reversing part of this year's rally. Fears of weaker capital expenditure were also fueled by improvements in Chinese AI models, including Moonshot's latest Kimi release. Nvidia lost 2.2%, Broadcom shed 1%, AMD fell 1%, and Intel retreated 2%. Meanwhile, inflationary risks gained momentum as the war in the Middle East continued and fuel prices rose. Economic headwinds were also reinforced after US President Trump claimed China had interfered in the 2020 US presidential election, raising concerns over the durability of the trade truce reached following last year's tariff exchanges. On the earnings front, Netflix sank 7.3% after forecasting another quarter of slowing sales.

Developments between the US and Iran will remain in the global spotlight after strikes escalated, impacting energy prices and interest rate outlooks for central banks. Meanwhile, the AI trade will be further tested with a batch of earnings from hyperscalers, chip producers, and infrastructure operators, including Alphabet, Intel, Tesla, and GE Vernova. A softer week of US data will be headlined by leading indicators in S&P PMIs, the CB leading index, and results from regional Fed surveys. Meanwhile, the ECB will deliver a rate decision and Europe will see a batch of sentiment indicators, while the UK will unveil inflation rates, the unemployment rate, and retail sales. In Japan, the trade balance and CPI are due. Elsewhere, South Korea will post its Q2 GDP and Canada will publish consumer inflation data. On the political front, Labour Party leader Andy Burnham is due to become the UK Prime Minister.

Crude oil extended its gains to above $82 per barrel on Friday, reaching its highest level in a month, after Kuwait said Iran had attacked a power and water desalination plant. Meanwhile, reports indicated that Iran launched strikes against US targets in Bahrain, Jordan, Kuwait, Oman, Qatar and Syria in retaliation for Washington's latest round of military attacks. The US Central Command said it had completed its sixth consecutive night of strikes against Iran, targeting dozens of military sites. Also, reports indicated that Iran had instructed Houthi forces to prepare to disrupt shipping through the Red Sea if the US targets Iranian power infrastructure. Meanwhile, commercial traffic through the Strait of Hormuz has remained largely limited. Oil prices have risen more than 14% this week as hostilities intensified, raising fears of a broader regional conflict. Early this week, the US reinstated a naval blockade targeting Iranian ports near the Strait of Hormuz.

US industrial production rose 0.1% month-over-month in June 2026, matching May’s pace but falling slightly short of the 0.2% market forecast. Manufacturing output remained flat, as a 0.1% decline in durable goods, led by drops in wood products, nonmetallic mineral products, machinery, and electrical equipment, offset a 0.2% gain in nondurables, driven by a 2.1% surge in petroleum and coal production. Mining and utilities each increased by 0.4%, with electric utilities’ gains outweighing a decline in natural gas. For Q2 2026, industrial production expanded at a 4.0% annualized rate.

Foreign investors acquired C$7.9 billion in Canadian securities in May 2026, down sharply from C$46.9 billion in April and well below market expectations of C$15.21 billion. Non-resident investors sold C$16.1 billion of Canadian equity securities, marking the largest monthly divestment since February 2025. The selloff was concentrated in the energy and mining (C$7.7 billion) and manufacturing (C$4.9 billion) sectors. Despite the equity outflows, foreign investors remained net buyers of Canadian securities for a fifth consecutive month, supported by acquisitions of federal government bonds (C$7.8 billion) and provincial government bonds (C$7.1 billion). Foreign investors also increased their holdings of money market instruments by C$6.0 billion, the largest investment since September 2025, driven primarily by purchases of private corporate paper (C$3.7 billion) and federal government business enterprise paper (C$2.8 billion).

Prices of goods imported into the US rose by 0.3% from the previous month in June of 2026, slowing from the revised 1.7% in May but contrasting sharply with market expectations of a 0.7% decline. Imports of fuel and lubricants fell by 0.4% as the momentary pickup in tanker volumes leaving the Persian Gulf allowed for some relief in wholesale fuel oil and refined fuel costs. The slight drop compared to a 12.6% surge in May and an 18.9% jump in April. In turn, non-fuel import prices rose by 0.4%, extending the 0.7% increase in the previous month to mark a seventh consecutive period of higher prices. The increase in import costs do not include tariffs that have recently been raised by the presidential administration. From the previous month, import prices rose by 7.1%, the highest in nearly four years.