Morning Forecast: Monday 27 July
A weekend truce sends oil tumbling and stocks flying into the busiest week of the quarter.
This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).
👀 Today’s Stories at a Glance
🛢️ Oil craters on Iran truce: US crude sank about 8% back toward $83 after the US and Iran paused fighting, unwinding July’s supply scare.
📈 Stocks fly into a make-or-break week: Nasdaq-100 futures jumped roughly 1.6% as cheaper oil reset a market that lost ground last week.
🏦 The Fed takes centre stage: A hold looks likely this week, but firmer inflation keeps surprise-hike odds near one in three.
💻 Big Tech’s AI bill on trial: Microsoft, Meta, Apple and Amazon report within a day, after the group shed $800bn last week.
₿ Ether keeps its edge: Bitcoin held above $65,000, flat on the day, while ether outperformed near $1,965 as the war trade cooled.
🥇 Gold firms as fear fades: Bullion rose about 1% toward $4,100, steadying off nine-month lows even as havens sold off elsewhere.
🧱 Tariff wall now in force: New US duties of 10% to 12.5% on 60 partners took effect, covering almost all imports.
💳 Earnings deluge beyond Big Tech: Visa, Coca-Cola, Boeing, Ford and the oil majors also report, a broad read on the real economy.
📈 Chart of the Day, WTI rejected at $92: Crude found resistance exactly where I expected it, and $80 is the level I am watching now.
🧠 One Big Thing
This week asks one question four different ways: is the AI build-out worth it? The Magnificent Seven lost close to $800 billion in a single session last week because Alphabet’s $205 billion spending plan spooked investors even as its cloud sales soared. Now Microsoft, Meta, Apple and Amazon each have to answer the same charge. The signal is not the size of the capex line, it is whether cloud growth and AI revenue are accelerating fast enough to earn it. The market has flipped from rewarding ambition to demanding proof. Watch the cloud growth rates and the 2027 spending guides far more than the earnings beats.
⚖️ Fear & Greed
📉 The Number That Matters
34%
Traders now put the chance of a surprise Fed rate rise this week at 34%, down as oil retreats.
⚔️ Winners vs Losers
Winners
TRAX 0.00%↑: +39.64% First Tracks Biotherapeutics surged on read-across after argenx agreed to buy rival Forte Biosciences in a $2.2 billion cash deal that validates CD122 as a commercially viable drug target, the same mechanism behind First Tracks’ lead candidate ANB033. The San Diego biotech was spun out of AnaptysBio only in April and has more than doubled since early July.
FBRX 0.00%↑: +39.37% Forte Biosciences jumped after agreeing to be acquired by immunology group argenx for $77 per share in cash, valuing the company at roughly $2.2 billion. The price represents an 86% premium to Forte’s average trading level since it reported positive Phase 1b vitiligo data for its anti-CD122 antibody FB102 on July 9.
SAP 0.00%↑: +5.30% SAP extended last week’s post-earnings rally after second quarter current cloud backlog rose 27% to a record 22.9 billion euros, beating expectations on the single metric the market had been watching most closely. The German software group reiterated its full year cloud revenue and roughly 10 billion euro free cash flow guidance.
Losers
DVN 0.00%↑: -4.27% Devon Energy slid with the wider oil complex after the United States and Iran paused military strikes over the weekend, draining the Middle East risk premium and sending Brent crude down as much as 7% to below $90 a barrel.
OXY 0.00%↑: -3.94% Occidental Petroleum fell as the Gulf de-escalation unwound the supply disruption trade that had pushed crude above $100 last week. Brent remains up more than 50% year to date despite today's slide.
FANG 0.00%↑: -3.51% Diamondback Energy dropped in sympathy with the crude selloff, with the Permian pure play among the most oil price sensitive names in the large cap energy group.
📊 Market Snapshot
Cryptocurrencies:
Bitcoin (BTC): $65,244 (▼ 0.14%)
Ethereum (ETH): $1,964 (▲ 0.57%)
XRP: $1.11 (▼ 0.58%)
Equity Indices (Futures):
S&P 500: 7,522 (▲ 1.00%)
NASDAQ 100: 28,743 (▲ 1.63%)
FTSE 100: 10,806 (▲ 0.87%)
Commodities & Bonds:
10-Year US Treasury Yield: 4.64% (▼ 0.90%)
Oil (WTI): $83 (▼ 7.92%)
Gold: $4,103 (▲ 1.23%)
Silver: $59.20 (▲ 1.75%)
Data as of: UK: 12:08pm BST / US: 7:08am EDT / Asia (Tokyo): 8:08pm JST
✅ 5 Things to Know
🛢️ Oil craters as the US and Iran pull their punches
Oil fell hard to start the week after the US and Iran paused their strikes for a second straight day over the weekend, pulling the war premium out of crude. US benchmark WTI dropped about 8% to around $83 a barrel, and Brent gave up its brief push above $100 from late last week to slide toward the mid-$80s, one of the sharpest two-day reversals in months. Tehran said it had halted its retaliatory attacks while a US pause held, and confirmed it was still in talks with Oman over safer passage for ships through the Strait of Hormuz, the choke point for roughly a fifth of the world’s seaborne oil (CNBC).
Cheaper oil takes the heat out of inflation, right as the Fed sits down to decide. Crude had surged close to 40% this month as the conflict spread from Hormuz to the Red Sea, and that spike was the single biggest reason a summer of cooling prices suddenly looked at risk. Take the spike away and the inflation scare goes with it. Watch the Strait, though, because the pause is fragile and unofficial: Iran-backed Houthi forces claimed fresh attacks on Saudi Aramco sites at Jizan and Yanbu over the weekend, so another spike is not off the table (NPR).
Sensei's Insight: It looks like we have put in a lower high at $92. I expect that to come down to $80. Have a look at the Chart of the Day below, I have given my full thoughts on it there, the levels I am watching and where I think it reacts.
📈 Cheaper oil sends stocks flying into a make-or-break week
The oil drop lit a fuse under equities to open a week stacked with the biggest events of the quarter. Futures on the Nasdaq-100 jumped about 1.6% and the S&P 500 climbed around 1%, pointing to a strong open after a bruising stretch. Stocks limped out of last week lower across the board, the Nasdaq Composite off roughly 2% over the five days, dragged down by chipmakers after Taiwan Semiconductor’s bigger spending plans knocked the sector before the weekend (Yahoo Finance).
The week itself is the story. A Fed decision, the June reading of the Fed’s favoured inflation gauge, and four of the five most valuable companies on earth all report inside three days, with the first estimate of second-quarter US growth landing on top. That is a genuine test of the two beliefs holding this market up: that inflation is still cooling, and that the AI trade still pays. A green open built on a fragile oil truce needs those tests to break its way.
Sensei's Insight: I agree with the move, but it does not mean much. There is so much information coming out this week. It all depends on the Fed, the Bank of England, and inflation, PCE is probably one of the biggest ones. Then so many earnings, to see how the market reacts to AI spend. That is what is going to be the real test this week. You can sort of ignore the open.
🏦 The Fed steps into the spotlight with a harder call than it wanted
The Federal Reserve’s two-day meeting gets under way and ends with a decision this week, at 7:00 PM BST (2:00 PM ET), and it has become the most awkward call in months. The central bank is still widely expected to hold its target range at 3.50% to 3.75%, but the oil-driven inflation scare had lifted the odds of a surprise rate rise to about one in three before crude tumbled. New Chair Kevin Warsh, who has said he wants to give markets less hand-holding, then faces the press half an hour later at 7:30 PM BST (2:30 PM ET), and with no fresh rate projections due, his tone will carry the message (CNBC).
This decision sets the price of money for everything from your mortgage to Bitcoin. Cheaper oil hands Warsh cover to hold without looking like he is ignoring inflation, and softer crude has already dragged the 10-year Treasury yield back to about 4.64%, off last week’s highest level since early 2025. The bigger test lands the morning after, when core PCE inflation and the first cut of second-quarter growth print together. A hot inflation number one day after a hold would revive hike talk fast.
Sensei's Insight: We will be covering the Fed this week and I will be putting out a cheat sheet for it. I do not think they will raise rates, but they might concern the market with some of the rhetoric, and they might talk about oil and the war. Let's ignore the decision itself, because we know it is going to be a pause, I do not think it is going to be anything else. If it is a hike, that is not priced, and the market will drop straight away. But it is what he says that matters. How he reacts to the Iran war, and then PCE the next morning, that is what is important.
💻 Big Tech’s AI spending goes on trial
The most valuable companies in the world start reporting into a market that has turned nervous about the bill for artificial intelligence. Microsoft and Meta report after the close alongside the Fed decision, with Apple and Amazon the evening after, four firms worth more than $11 trillion between them. The mood shifted last week when Alphabet beat on sales yet fell after lifting its 2026 capital-spending plan to as much as $205 billion, and the Magnificent Seven shed close to $800 billion in a single session as investors recoiled at the scale of the spend (Yahoo Finance).
Same question hangs over all four: does the spending actually convert? Microsoft is expected to steer its own AI build-out toward roughly $220 billion, Meta has already pushed its 2026 capex above $136 billion, and both need cloud growth fast enough to justify it. Amazon reports with AWS growth seen near 33%, and Apple closes the week with iPhone and services numbers, the last set of results under Tim Cook before John Ternus takes over as chief executive on 1 September. Watch the cloud growth rates and next year’s capex guides more than the headline earnings.
Sensei's Insight: We have to keep an eye on these earnings, because investors are getting very cautious about how much is being spent on the AI build-out, even if the earnings are good. They need to beat on earnings, and they probably will. Do not take that as what is important. What is important is how much they are spending on AI. If they are spending too much, investors might not be happy and might sell it off anyway. Look at what happened with Google last week. They grew 82% on their cloud and still got sold off, because of the AI spend.
₿ Ether keeps its edge as crypto steadies
Crypto rode the weekend relief wave, then held it. Bitcoin sat just above $65,000, barely changed on the day after the pop, while ether did the heavy lifting, up around 0.6% near $1,965 and holding above a closely watched trend line to outrun the larger coin. XRP was little changed near $1.11. The trigger was the one lifting stocks and sinking oil at the same time: the US and Iran holding fire pulled the risk-off fear out of the market and put the peace trade back to work (CoinDesk).
Ether’s edge has its own engine underneath the macro. Spot Ether ETFs have started pulling in money again after a long dry spell, helped by the arrival of products that pay a staking yield, giving big institutions an income reason to hold it. The wider prize is still stuck in Washington, where the CLARITY market-structure bill is racing an early-August Senate recess before the window shuts, with a compromise on ethics and enforcement still unresolved. A clean pass would be the sector’s biggest legal step forward in years (CoinDesk).
Sensei's Insight: Have a look at XRP Weekly that came out yesterday, we discussed the CLARITY Act in full there. It just does not look like it will make it through. We might get a vote, but prepare for the worst. It looks like we might get a final capitulation this year on crypto.
Stories You Might Have Missed
🥇 Gold steadies as the war premium leaks out
Gold rose more than 1% toward $4,100 an ounce to start the week, pulling away from nine-month lows even as other safe havens were sold. The move looks odd for a risk-on day until you see the driver: with oil falling and the inflation threat easing, traders are betting the Fed has less reason to keep rates high for long, and lower rates lift gold because it pays no yield of its own. Bullion still finished last week sharply lower, so this is a bounce off a beating more than a fresh charge, and the Fed decision is the next big test (CNBC).
🧱 Trump’s tariff wall clicks into place
A fresh set of US import duties took effect at the end of last week, replacing an expiring temporary tariff with something far broader. The new levies run 10% to 12.5% and hit 60 trading partners covering about 99.4% of US imports, justified by the White House on forced-labour grounds. Partners from the EU to Brazil called the reasoning “unjustified,” and most signalled they would keep negotiating rather than hit back, though the measures were challenged in court within hours of taking effect. It is a slow-burn inflation risk landing at the worst possible moment, days before the Fed decides (CNBC).
💳 The earnings flood goes well beyond Big Tech
The megacaps grab the headlines, but the week buries investors in results from the real economy too. Visa and Mastercard give a read on whether shoppers are still spending as prices climb, Coca-Cola shows whether households are trading down, and Boeing and Ford report into that fresh round of tariffs on their supply chains. Robinhood and Coinbase offer a direct look at how active retail traders have been through a wild month, and the oil majors Exxon and Chevron close the week, reporting just as crude hands back its war-driven gains (CNBC).
📈 Chart of the Day - WTI Crude Oil
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