Equities: Chip rebound offsets rates repricing – Deutsche Bank

Deutsche Bank’s Jim Reid notes that despite higher United States (US) Treasury yields and renewed speculation about a July Fed rate hike, US equities advanced, led by a strong recovery in chip stocks. The Philly Semiconductor Index posted its best daily performance in a month, lifting the S&P 500, while markets simultaneously priced a more hawkish Fed path as real yields hit multi‑year highs.

Semiconductors drive equity resilience

"To be fair, equities performed very well considering that, thanks to a chip rebound, but markets still priced in a more hawkish path for central banks, with bond yields moving higher around the world as a result."

"Standby for Alphabet and Tesla's earnings after the US close. The former's capex plans, and the market reaction to them, will be fascinating. "

"Whilst sovereign bonds had a bad day, it was a different story for global equities, which surged thanks to a sharp bounceback in chip stocks. In fact, the Philly semiconductor index (+5.21%) posted its best daily performance in the last month, which helped to lift US equities more broadly. "

"So the S&P 500 was up a sizeable +0.89% on the day, even as a majority of companies in the index lost ground. And over in Europe, tech stocks also helped to power the recovery, with the STOXX 600 up +0.56% on the day, with the STOXX Technology Index up +3.29%."