Chip Selloff Deepens as Oil Climbs | Horizons Middle East & Africa 7/17/2026
Speakers
Janet Mui
— Market Analyst, RBC Brewin Dolphin
Paul Dobson
— Executive Editor, Bloomberg
Mehran Kamrava
— Professor
Summary
Global markets came under pressure as a semiconductor selloff deepened in Asia, while US-Iran conflict pushed oil prices higher. Investors questioned AI spending despite strong TSMC earnings. RBC's Janet Mui maintained an overweight on global equities, affirmed that the AI structural trend remains intact, and expressed a preference for UK gilts over corporate credit.
- Asian equities sold off sharply, led by Japan and Taiwan, as chipmakers slumped on AI spending worries.
- TSMC delivered solid earnings but failed to ease investor concerns over future demand for AI infrastructure.
- US strikes on Iran continued for a sixth day, escalating tensions and lifting Brent crude above $85.
- RBC analyst Janet Mui stays overweight global equities, citing robust earnings and expanding economy.
- She sees the AI ecosystem demand as firmly intact, driven by strong ASML and TSMC reports.
- UK gilts are favored over US Treasuries on expectations of BoE easing and relative economic weakness.
- Corporate credit is underweighted due to tight spreads and inadequate compensation for risk.
- President Trump accused China of election interference, adding political uncertainty.
Ideas
Global economy supports modest equity overweight
Global economy is still expanding, US growth remains solid, and corporate earnings are robust, supporting a modest overweight position in global equities despite volatility and stretched valuations.
UK gilts have scope to rally
UK gilts have underperformed due to energy-price sensitivity, but with oil retreating and UK economic data weak relative to the US, the Bank of England has more scope to ease policy. This creates potential for gilt yields to move lower, making gilts attractive relative to US Treasuries.
Corporate credit likely to underperform
Corporate credit is likely to underperform because spreads are very tight and do not reflect the risks being taken. The firm holds an underweight position and prefers government bonds, which would act as a hedge against equity risk.
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