Global tech stocks faced selling pressure last week amid concerns over Big Tech cash flows but rebounded after the FOMC meeting. The three major U.S. indexes gained about 1%, while the Philadelphia Semiconductor Index fell 4.3%. Coordinated U.S.–Japan intervention pushed the yen toward 157 per dollar and the U.S. Dollar Index below 100. The 10-year Treasury yield remained near 4.7% despite the Fed’s decision to hold rates steady, while renewed volatility in the U.S.–Iran conflict caused sharp swings in WTI crude prices.
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1. Big Tech Cash Flow & Capex
- Capex guidance raised again; 2027 CSP spending heads above $1trn. Google, Meta and Amazon lifted 2026 capital expenditure guidance to $195–205bn, $130–145bn and $220bn respectively.
- Free cash flow at cyclical lows. Heavy upfront spending on compute, power and data centers pushed Q2 free cash flow to cyclical lows, turning negative at Google and Amazon. Google suspended buybacks and raised $70bn via global equity and debt markets. Still, backlog/ARR coverage improved at three of the four hyperscalers, indicating monetization is broadly keeping pace with spend.
2. Korea Memory: Record Quarter, Falling Shares
- Samsung and SK Hynix both post record results. Samsung's Q2 revenue rose 130% YoY to KRW 171.5trn with operating profit up 1,814% to KRW 89.5trn, 99.7% of it from Device Solutions, on DRAM ASPs up over 40% and NAND over 60%. SK Hynix posted revenue of KRW 79.32trn (+257% YoY) and operating profit of KRW 60.54trn.
- Share weakness reflects deleveraging, not demand. SK Hynix fell 9.6% and the KOSPI 6% on results day, driven by record forced liquidation in single-stock leveraged ETFs. Falling AUM suggests the stress is now easing.
3. FOMC: The Bond Market Did the Hiking
- A 9-3 hold, the widest split since 2016. The Committee held at 3.50–3.75%, with Hammack, Kashkari and Logan dissenting for a 25bp hike. Statement language was left almost unchanged, showing no tilt toward the dissenters.
- Long-end yields are substituting for a hike. The 10-year touched 4.7% with tightening coming entirely from the long end, while June core PCE rose just 0.13% MoM and services ex-shelter swung to -0.2%. That removes the data case for hiking and lets the Fed hold through four inflation prints before September. Iran remains the key variable.
4. Yen: A Record Intervention That Buys Time, Not a Reversal
- Record single-day action, jointly executed. Japan spent JPY 8.45trn (about $52.8bn) buying yen on July 30, the largest single-day intervention on record, alongside a New York Fed rate check. On July 31 the U.S. Treasury reportedly directed Goldman Sachs and Morgan Stanley to sell euros for yen, pushing USD/JPY back toward 157. Japan later confirmed the coordination.
- Limited U.S. firepower; structural yen weakness intact. The ESF held only about EUR 13bn and $24.5bn, too little for sustained large-scale action, leaving Japan the primary participant. Wide rate differentials, U.S. hike risk and earthquake-related fiscal spending keep the yen structurally soft.5bn, $130–145bn and $220bn respectively.
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