RON BOUSSO, ROI Energy Columnist: Renewed U.S. and Iranian blockades of the Strait of Hormuz have sharply cut oil and gas exports from the Middle East, adding pressure to global energy markets that were forced to rapidly adapt earlier this year. But unlike at the start of the war in late February, global oil reserves are now heavily depleted, leaving the world with far thinner buffers to absorb another supply shock.
2. Hyperscalers out, chips in
JAMIE MCGEEVER, ROI Markets Columnist: Hyperscalers’ trillion-dollar capex binge has drained their once-abundant cash flows, which are now essentially being channeled to the semiconductor firms providing the chips for the AI buildout.
The “generational transfer” is playing out in markets: the S&P 500 software and services index .SPLRCIS is down 17% year to date, while the Philadelphia Semiconductor Index .SOX is up over 65%. The latter had a rough week, and is down almost 17% for the month. But the long-term trend is the big story here.
3. China surprise
MIKE DOLAN, ROI Finance & Markets Columnist: China's exports surged in June, buoyed by orders for chips to fuel the global AI boom and by automobile shipments, which topped 1 million for the first time. The stronger-than-expected trade performance keeps China on track to post a surplus above $1 trillion for a second straight year.
However, China also reported that its second-quarter GDP was the slowest in over three years, coming in below target at 4.3%, as concerns about domestic consumption and the housing market continue to weigh on the economy.
4. Soft landing
ANNA SZYMANSKI, ROI Editor in Charge: U.S. consumer inflation slowed more than expected in June as energy prices retreated, while core prices, which exclude food and energy, posted their first monthly decline in more than six years. Core CPI slipped 0.02% month-over-month, which was rounded to zero in many reports, weighed down by a surprisingly large drop in auto insurance and declines in communications, healthcare and hotel room prices.
While the report appeared to quash market speculation about a Federal Reserve rate rise this month, a hike is still expected later this year. Indeed, this inflation respite may prove to be brief given that energy prices could rise again if the U.S.-Iran strikes continue to escalate.
5. Taking stock
RON BOUSSO, ROI Energy Columnist: China's response to the energy supply shock — sharply cutting crude imports, restricting exports of refined fuels and drawing on domestic inventories — marked the culmination of a decades-long campaign to reduce its heavy dependence on overseas energy supplies.
This may signal that China's role has changed. It's no longer simply the biggest energy importer but a new independent, opaque force that could reshape global energy markets for years to come.
Weekly market themes in five charts
By Anna Szymanski
July 17 (Reuters) - Every Friday, Reuters Open Interest (ROI) distills the financial week into five key charts, spotlighting the major trends, surprises and overlooked moves that defined the past five days.
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