Samsung’s earnings update was, for all intents and purposes, strong, with the company projecting earnings to increase nearly 19-fold (details in company news below). However, that wasn’t enough to satisfy investors. Shares fell in South Korea, dragging the Kospi down -5% as expectations had already been set exceptionally high. The weakness spread across global tech markets, with Nasdaq futures giving back yesterday’s gains and trading down -1% this morning. S&P 500 futures are also lower, while TSX futures are pointing to a higher open. SpaceX shares are lower in pre-market trading ahead of the company’s official inclusion in the Nasdaq-100 today. Investors holding index-tracking ETFs and mutual funds will gain exposure to the stock, whether they intended to or not. For now, SpaceX will represent a relatively small portion of the index, with an initial weighting of less than 1% after adjusting for the shares available for public trading. In Europe, tech stocks are also under pressure, led by ASML, Europe’s largest company by market cap, which is down more than -5% at the time of writing.
The NATO summit has kicked off with the alliance facing pressure from Russia’s war in Ukraine, U.S. demands for more European defense spending, Greenland, and lingering tensions over the war with Iran. The meeting comes after Russia launched a major attack on Kyiv, increasing pressure on NATO members to strengthen Ukraine’s air defenses, though Trump continues to argue that Putin wants to end the war. Trump is scheduled to meet Turkish President Erdogan, Volodymyr Zelenskyy, and Syrian President Ahmed al-Sharaa, with Ukraine expected to dominate discussions. NATO members agreed last year to raise defense spending to 5% of GDP by 2035, but the Trump administration wants Europe to move faster and assume greater responsibility for the continent’s defense. Expectations for the summit are mixed, with many hoping for even incremental progress on Ukraine and military spending while trying to avoid a major rupture with the U.S.
Tale of two service sectors. The service sector in the U.S. continued to expand in June, though at a slightly slower pace, with the ISM services index slipping to 54 from 54.5. Hiring improved, with the employment index posting its biggest increase since 2024 and signaling payroll growth for the first time since February, although official government data showed broader job creation slowing. Inflation pressures also moderated as the prices index fell to a four-month low, helped by lower oil and gas costs following the interim U.S.-Iran agreement. The data also found that businesses continued to flag tariffs, labour costs, semiconductor and memory shortages as areas of concerns. It was a different story across the pond, with Germany’s services sector contracting for a third consecutive month in June, although the pace of decline moderated. Demand remained weak, with new business falling for a fourth month as higher prices, tighter financial conditions, and poor confidence weighed on domestic and international orders. Still, Germany has a chance to revive its economy with the help of lower oil prices, a Middle East ceasefire, and major government stimulus. While upcoming data is expected to show a mixed picture, with factory orders rebounding, industrial production stagnating, and exports declining, economists expect Germany to grow 0.5% in 2026, its strongest performance since the pandemic, with defense and infrastructure spending supporting a modest industrial recovery.
Emerging-market investors have begun using currencies such as the euro, Australian dollar, Canadian dollar, and yen instead of relying exclusively on the U.S. dollar to fund high-yielding carry trades. The shift reflects the dollar’s recent rebound under a more hawkish Fed, which can erode returns from positions in currencies such as the Brazilian real, Colombian peso, and Turkish lira. Investors still see more opportunities in EM carry trades but are diversifying their funding sources to reduce exposure to unpredictable dollar moves and potential U.S. rate hikes.
Mag to lag. The Mag Seven have lost their dominance as investors shift toward companies benefiting most directly from the AI infrastructure boom, particularly memory and storage chipmakers such as Micron and Sandisk. While the Nasdaq 100 has gained almost 18% and the S&P 500 about 10% this year, the Mag 7 are up just 1.1%, as concerns grow that massive AI spending by Microsoft, Amazon, Alphabet and Meta is hurting cash flow without producing clear returns. Meanwhile, semiconductor earnings expectations have rallied, helping drive the sector up 82% this year and attracting billions of dollars away from large-cap technology funds. The Mag 7 continues to be a large part of major indexes, but their earnings growth forecasts have been cut while estimates for chipmakers have risen. Some strategists expect the gap to eventually narrow as hyperscalers improve AI monetization, but for now investors seem to be favouring companies supplying the AI buildout over those paying for it.
U.S. administration policies are contributing to a fall in U.S. tourism, as tougher border and visa rules, tariff disputes, and geopolitical tensions deter foreign visitors. The U.S. is estimated to have lost up to $16.6 billion in potential tourism revenue in 2025 and could miss out on another $21 billion this year, with international arrivals still not expected to return to their pre-pandemic peak until 2029 despite the World Cup. High-spending visitors from Canada, Europe, and China are vacationing elsewhere, with destinations across Europe and Asia benefiting from travelers choosing alternatives. Canadian visits plunged 21% last year, costing U.S. businesses about $4 billion, while proposed tougher visa-waiver requirements could deter millions more visitors. Even the World Cup is providing less of a boost than expected, with nearly four-fifths of surveyed hotel operators in host cities reporting bookings below expectations.
End of an era. Staying with the World Cup, Cristiano Ronaldo’s final appearance didn’t end with the fairytale finish fans had dreamed of, but it does little to diminish the global legacy of his storied career, even if some will argue that the absence of a World Cup title separates the greats from the greatest. After confirming before Portugal’s Round of 16 match against Spain that this would be his final World Cup, Ronaldo’s tournament career ended with a 1-0 defeat. Elsewhere in the Round of 16, Belgium eliminated the U.S. in a match that drew added attention after FIFA reinstated U.S. forward Folarin Balogun, overturning his suspension following a review that came after Trump publicly urged the organization to reconsider the decision. FIFA insisted the review was conducted independently, but several European football associations questioned the process and raised concerns about political influence. Belgium’s victory likely ends any debate over the impact of the controversial reinstatement. The Round of 16 continues today with Argentina facing Egypt at 12:00 p.m. ET, followed by Switzerland taking on Colombia at 4:00 p.m. ET. If you’ve noticed more World Cup coverage than usual, you’re not imagining it. Canada’s role as a co-host, combined with a tournament that has delivered stories beyond the pitch, from Canada’s historic run and Cape Verde’s near upset of Argentina to the Balogun controversy and Ronaldo’s farewell, has made this World Cup about more than just the scoreboard.
Diversion: Well played
