Vitti Capital Markets Update – July 2026

July had two storylines running at once. Old economy and defensive names held their ground: the Dow Jones logged a fourth consecutive winning month, and the ASX 200 did the same, closing the month at 8,976.8 points (IG, 2026; Motley Fool Australia, 2026). Big tech did not fare as well. The Nasdaq-100 fell around 7%, its worst month since March 2025 (CNBC, 2026), as investors stopped rewarding AI spending on faith and started asking which companies could show revenue for it.

Three events set the tone. The US and Iran went back to open conflict after their ceasefire collapsed on 8 July, and Brent crude gained close to 24% over the month (Trading Economics, 2026). The Federal Reserve held rates at 3.50%-3.75% but split 9-3, the most divided vote since 2016 (CNBC, 2026). And South Korea’s KOSPI, which had rallied hard on AI enthusiasm through 2025, lost more than a third of its value in six weeks as investors reassessed semiconductor valuations and the pace of Chinese competition (The Diplomat, 2026). For a portfolio spread across US equities, commodities and the ASX, July rewarded diversification. Energy and financials did well. Long-duration tech and Korean semiconductor exposure did not.

Macro and central banks

The Fed’s July meeting, chaired by Kevin Warsh for the second time since he replaced Jerome Powell in May, produced an unusually split vote: nine members backed holding the target range at 3.50%-3.75%, while three regional presidents wanted a hike (CNBC, 2026). Warsh has also cut back how much the Fed tells markets in advance. His statements are shorter and give less forward guidance than under Powell, in keeping with what he told reporters at an earlier meeting: “I’ve said for years: Inflation is a choice. You bet it is” (Crypto Briefing, 2026).

The data cut both ways. June nonfarm payrolls rose just 57,000, against a consensus of around 115,000, and April and May were revised down by a combined 74,000 (US Bureau of Labor Statistics, 2026). Unemployment fell to 4.2%, but only because the participation rate dropped to 61.5%, its lowest since March 2021. Then June’s CPI came in soft: prices fell 0.4% for the month, the largest monthly drop since April 2020, taking annual inflation down to 3.5% (US Bureau of Labor Statistics, 2026). That combination, a weak jobs report andcooling inflation, is why futures markets still see a real chance of a September hike rather than a certainty.

In Australia, the Reserve Bank held its cash rate at 4.35% through July, following three rate rises earlier in the year and a hold at its June meeting (RBA, 2026; Trading Economics, 2026). The Board’s next decision is due 11 August (Vantage Markets, 2026). Headline CPI eased to 3.8% for the year to the June quarter, with the trimmed mean holding at 3.6% (Vantage Markets, 2026), and Goldman Sachs dropped its call for a further RBA hike, now expecting the cash rate to hold through 2026 before cuts begin in 2027 (Exchange Rates UK, 2026).

US equities and the AI capex reckoning

The S&P 500 closed July at 7,489.72, barely changed from its 7,499.36 close at the end of June (FRED, Federal Reserve Bank of St. Louis, 2026; CNBC, 2026). The Nasdaq Composite fell around 3%, and the Nasdaq-100 dropped closer to 7%, its steepest monthly decline since March 2025 (CNBC, 2026). The Dow rose about 0.3% to 52,485.03, a fourth straight winning month (CNBC, 2026).

Big tech’s Q2 earnings, reported over nine days from 22 to 30 July, decided the month for tech investors. Alphabet, Microsoft, Meta, Amazon and Apple are guiding toward a combined US$725-740 billion of AI infrastructure spending for 2026, up around 77% on 2025 (Yahoo Finance, 2026). The market rewarded the companies whose spending is already producing metered revenue and punished the rest. Amazon rose on results after posting its first ever US$200 billion quarter, with AWS growth accelerating to around 37% (TradingKey, 2026). Microsoft rose too, on the strength of Azure. Meta fell even though revenue grew 28% to US$60.8 billion, because free cash flow collapsed 91% to about US$784 million (TradingKey, 2026; BingX, 2026). Alphabet and Apple also fell on their results.

That same scepticism, combined with reports of faster progress by Chinese chipmakers, hit South Korea harder. The KOSPI had risen roughly 270% from the start of 2025 to a peak of 9,385.59 on 19 June, then lost more than a third of its value by the end of July (The Diplomat, 2026). On 28 July alone the index fell more than 10% and trading was halted, as Samsung Electronics and SK Hynix both dropped more than 10% in a single session (Outlook Business, 2026).

Commodities

Oil was July’s biggest mover. Brent crude gained close to 24% over the month, its strongest monthly rise since March, after the US-Iran ceasefire broke down on 8 July (Trading Economics, 2026). Iran attacked tankers in the Strait of Hormuz, the US carried out fresh strikes on Iranian targets, and Yemen’s Houthis threatened to blockade Saudi shipping (CNBC, 2026). Brent finished the month near US$88 a barrel.Gold spent July consolidating rather than rallying. It is still well below January’s intraday record above US$5,500 an ounce, having fallen to a trough near US$4,000 in June, and it closed July in a US$4,000-4,100 range (World Gold Council, 2026; Fortune, 2026). Central banks kept buying through the correction. China’s central bank has now added to its gold reserves for 20 straight months (GoldSilver, 2026).

Copper rose about 5% for the month, closing near US$6.44 a pound and up 45.74% on a year earlier, as the Fed’s hold eased some concern about demand even though LME inventories sit at an eight-year high (Trading Economics, 2026). Iron ore was the weak spot. CNY-denominated prices fell 2.3% in July as Chinese steel mills went into seasonal maintenance and hot metal output dropped for a third straight week (Trading Economics, 2026). In US dollar terms, iron ore was trading close to US$98 a tonne heading into month end (ts2.tech, 2026).

Currencies, rates and the ASX

The Australian dollar spent most of July range bound and closed the month at US$0.7030 (RBA, 2026). US Treasury yields moved more than the currency did. The 10-year yield topped 4.7%, its highest since January 2025, and the 30-year touched around 5.25%, a level last seen in 2007, as investors questioned whether Warsh’s Fed would hold the line oninflation (CNBC, 2026).

The ASX 200 closed July at 8,976.8 points, a fourth consecutive monthly gain of roughly 2% (IG, 2026; Motley Fool Australia, 2026). Financials led, up more than 6% month to date at one point, while resources lagged as lithium and iron ore names came under pressure from softer commodity prices (IG, 2026).

Digital assets and trade policy

Bitcoin rose about 8% in July while Ethereum gained closer to 19%, a rare month where Ethereum beat Bitcoin by a wide margin (KuCoin, 2026). Fund flows told a sharper story. Bitcoin ETFs took in just US$172.43 million for the month, their weakest total since launch in January 2024, while Ethereum ETFs pulled in US$365.17 million, their best month of the year (CryptoSlate, 2026).

On trade, the Trump administration let its temporary 10% Section 122 tariff expire on 24 July and replaced it the next day with new Section 301 tariffs of 10-12.5% on around 60 trading partners, including China, Vietnam and Thailand (CNN, 2026). Separately, on 20 July, the administration invoked Section 338 of the Tariff Act of 1930, a provision that had gone unused for decades, to impose an additional 50% tariff on a range of Canadian goods, including cars, alcohol and dairy products, effective 19 August (The White House, 2026). The EU’s negotiated 15% tariff arrangement on most goods entering the US, formally adopted by the Council of the EU earlier in the year, stayed in place through the month (Baker Botts, 2026).

Key dates for August

● US nonfarm payrolls: Friday 7 August (US Bureau of Labor Statistics, 2026)

● RBA cash rate decision: Tuesday 11 August (Vantage Markets, 2026)

● US CPI: Wednesday 12 August (US Bureau of Labor Statistics, 2026)

● FOMC minutes: Wednesday 19 August (Vantage Markets, 2026)

Whether the Fed’s three dissenters get their hike in September depends largely on what oil does next. The ceasefire that broke down on 8 July has not been replaced with anything sturdier, and another leg higher in crude would make it harder for Warsh to hold the position he took in July