The Japanese yen dropped near its lowest level against the U.S. dollar in 40 years on Tuesday, while indexes rose across much of Europe and Asia and U.S. stocks trimmed their losses from a rocky June. The numbers moved, the people underneath them didn’t get a vote. Markets did what markets do: reward capital, punish labour, and call it normal.
The S&P 500 rose 0.6%, though it was still heading for its first losing month after two strong ones. The Dow Jones Industrial Average was up 135 points, or 0.3%, as of noon Eastern time, and the Nasdaq composite was 1.2% higher. That bounce came after June’s weakness, which traders blamed on a fall to Earth for stocks in the artificial-intelligence industry. The whole spectacle is familiar. A frenzy lifts a sector to “tremendous heights,” then the same investors who chased it start worrying it went too high.
The AI Bubble and the Quarter-End Ritual
AI stocks were stronger Tuesday. Nvidia rose 1.6% to trim its loss for the month. Microsoft, which is investing heavily in AI, rose 0.7% to bring its loss for the month back below 18%. Oracle fell 1.6% to bring its drop for June to nearly 36%. Those are the kinds of swings that tell you who gets to gamble and who gets to absorb the fallout when the bet sours.
Tuesday’s relatively quiet trading came as companies closed their books for the quarter running from April through June. Investors wanted strong growth in profits to justify the big gains stocks made early in the quarter. Despite June’s drop, the S&P 500 was still on track for its best quarter since six years ago, when stocks rocketed out of the crash caused by the COVID pandemic. The quarterly calendar keeps turning. The pressure on everyone else keeps turning with it.
Concentrix tumbled 16.7% after the technology company reported profit and revenue for the latest quarter that were just shy of analysts’ expectations. One miss, and the market’s patience evaporates. That’s the discipline of capital in plain sight.
Oil, War and the Price of Movement
In the oil market, prices drifted as two U.S. envoys arrived in Qatar for talks with mediators about the implementation of an initial deal to end the war in Iran. The Americans were not having direct negotiations with Iranian diplomats while in Doha. The price for a barrel of Brent crude oil, the international standard, erased an early, modest rise and dipped 0.6% to $73.47.
The hope is that an end to the war will restore full access to the Strait of Hormuz, allowing oil tankers to move more crude and lower its price. Even here, movement is treated as a privilege to be managed by states and their envoys, not a basic condition of life. The route opens, the price shifts, and the rest of the world is expected to absorb the consequences.
Expensive oil has already sent inflation jumping around the world, which in turn has raised worries that the Federal Reserve and other central banks may have to raise interest rates. Higher rates would keep a lid on inflation, but they would also slow economic growth and hurt prices for investments. The yield on the 10-year Treasury rose to 4.40% from 4.38% late Monday. The central bankers’ answer to instability is always the same: tighten the screws and let everyone else pay.
Europe’s Gains, Japan’s Squeeze
Germany’s DAX returned 1.5%, and South Korea’s Kospi climbed 1% for two of the world’s bigger gains. Japan’s Nikkei 225 rose 0.9% as the value of the Japanese yen dropped near its lowest level against the U.S. dollar in 40 years. U.S. government bonds are paying much higher yields than their Japanese counterparts, and the possibility of rate hikes by the Fed is putting more pressure on the yen.
Speculation is rising that Japan’s government may try to prop up the yen’s value, but Japan’s finance minister said only that the government was ready to “respond appropriately whenever necessary.” That’s the language of managed decline: vague, careful, and useful mainly to reassure the people who already own the assets. Across Europe and Asia, the day’s gains and losses were framed as market weather. For everyone else, they’re the terms of survival.