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Edgen Stock·Jul 24 2026, 18:09
AI-driven demand for semiconductors pushed three sector funds — JNGTX, PRSCX, and KTCAX — to fresh highs in 2026, as chipmakers from TSMC to IQE reported record sales tied to artificial intelligence infrastructure. "The demand for our Indium Phosphide solutions, a key component in optical photonic products used in AI infrastructure and data centers, accelerated in the first half," IQE said in its July 21 trading update, as the UK wafer maker raised its 2026 revenue growth forecast to above 30 percent from 20 percent. TSMC, the world's largest contract chipmaker, increased its US investment by $100 billion after posting record AI-driven earnings. European semiconductor stocks diverged as investors weighed AI demand against growth expectations, while IQE said first-half revenue reached at least 64 million pounds ($86 million), exceeding management expectations across all core businesses. The sustained AI-led expansion is reshaping the semiconductor investment landscape. JNGTX, PRSCX, and KTCAX offer diversified exposure to a sector where AI infrastructure spending is projected to keep growing, with TSMC's capacity expansion and IQE's upgraded guidance signaling that demand remains robust through at least the second half of 2026. **TSMC's $100 Billion Bet on US Capacity** TSMC's decision to invest an additional $100 billion in American manufacturing underscores the scale of AI-driven chip demand. The Taiwan-based foundry, which counts Nvidia and AMD among its largest customers, posted record earnings in its most recent quarter as AI chip shipments surged. The investment expands TSMC's US footprint at a time when supply chain diversification has become a priority for technology companies. **IQE's Indium Phosphide Surge** IQE's upgraded forecast — revenue growth above 30 percent, up from a prior outlook of 20 percent — reflects accelerating demand for compound semiconductor wafers used in AI data centers. The company's Indium Phosphide solutions are critical for optical photonic products that enable high-speed data transmission between AI servers. IQE also cited strength in aerospace, defense, 3D sensing, and wireless markets, suggesting the AI tailwind is broadening beyond cloud infrastructure. **Fund Performance and Investor Implications** JNGTX, PRSCX, and KTCAX have captured the sector's momentum as semiconductor stocks benefit from AI-led demand. The funds provide exposure to companies across the chip supply chain — from design leaders Nvidia and AMD to manufacturers TSMC and Samsung Foundry to equipment suppliers Applied Materials and ASML. With IQE raising guidance and TSMC expanding capacity, the AI semiconductor cycle shows no signs of peaking in 2026. This article is for informational purposes only and does not constitute investment advice.
The probability that the Strait of Hormuz returns to normal traffic within the next 12 months collapsed to 47% on Kalshi from nearly 70% two days earlier, as traders repriced the likelihood of a prolonged disruption to the world's most critical oil chokepoint. "The market is finally accepting that this is not a short-term disruption — the overlapping risks across Hormuz, Bab el-Mandeb and the Black Sea are creating a supply shock that has no obvious off-ramp," said Tony Sycamore, market analyst at IG. Brent crude settled above $100 a barrel on Thursday for the first time since May, closing at $100.69 before slipping to $99.97 on Friday. The benchmark still posted a 13.5% weekly gain, its largest in months, while West Texas Intermediate rose 10.9% to $91.49. The odds of the Strait reopening at any point in 2026 now stand below 40%, while chances of a return to normal before April 2027 are at 48%, according to Kalshi data. The Strait of Hormuz handles about 21% of global oil trade, and its effective closure — compounded by Houthi attacks on tankers in the Red Sea and a separate supply outage from Kazakhstan's Caspian Pipeline Consortium terminal — has tightened prompt supply faster than most forecasters anticipated. Kazakhstan's oil output fell to roughly 1.63 million barrels per day from a July average of 2.07 million, with production at the Chevron-led Tengiz field more than halved to about 406,000 barrels per day after suspected drone attacks forced the CPC terminal to halt loadings. **The supply shock is metastasizing across multiple chokepoints** The Red Sea attacks have put Saudi Arabia's main alternative export route at risk. The kingdom has relied on its East-West pipeline to bypass Hormuz, moving crude to Red Sea ports for onward shipment. But Houthi forces said they attacked two tankers carrying Saudi crude this week, threatening that corridor as well. Two Chinese supertankers carrying 4 million barrels of Saudi crude successfully exited through the Bab el-Mandeb Strait on Thursday, but isolated crossings have not reassured shipowners, who face rising insurance premiums and the prospect of longer voyages around southern Africa. Mizuho energy-futures director Bob Yawger said crude was now within reach of the four-year high of $126.42 as available supplies shrink across two major chokepoints simultaneously. Goldman Sachs retained an $80 fourth-quarter base case but warned Brent could exceed $120 if Hormuz disruption persists and risks spread across Bab el-Mandeb and the Suez route. **Inflation risks are compounding the oil shock** The prolonged disruption is feeding into broader inflation expectations. Ten-year Treasury yields have risen 6 basis points since July 14 as investors shift focus from a softer-than-expected June CPI — which printed core inflation at 2.6% year-over-year — to the potential deterioration in supply chains and energy production. Core personal consumption expenditures, the Fed's preferred inflation gauge, is expected at 3.4% when released Thursday, having crept higher through 2026 after ranging between 2.6% and 3.0% in 2024 and 2025. The last time a comparable oil supply shock unfolded — during the 2019 attacks on Saudi Aramco's Abqaiq and Khurais facilities — Brent spiked 15% in a single session but reversed within weeks as spare capacity was deployed. This time, spare capacity is thinner, strategic petroleum reserves are near multi-decade lows after repeated releases, and the disruption spans three separate chokepoints simultaneously. The Kalshi probability shift suggests traders see no equivalent circuit-breaker on the horizon. This article is for informational purposes only and does not constitute investment advice.
**The dollar index surged through the 101.80 Fibonacci resistance on July 24, extending a rally that began after the June FOMC meeting and setting up a pivotal test for the Federal Reserve's July rate decision.** The dollar broke above the 101.80 Fibonacci resistance level on July 24, extending a rally that began after the June FOMC meeting as traders priced in an 81.4% probability of a rate hike by September, up from 52.4% a week ago. "The breakout above 101.80 confirms the bullish momentum that started after the June FOMC meeting, and the question now is whether the Fed delivers a hawkish surprise next week," said Joseph Trevisani, senior analyst at FXStreet in New York. The dollar index rose 0.36% to 101.47, on track for its biggest daily gain in a month. The euro fell 0.33% to $1.1372 after the European Central Bank held rates steady but left the door open for a September increase, with markets pricing a 71% chance of a hike, according to LSEG data. The yen weakened 0.41% to 163.79 per dollar, touching 163.98, its softest level since November 1986, as expectations of a gradual approach to rate hikes at the Bank of Japan contrasted with the Fed's hawkish repricing. Oil prices added to the dollar's strength, with Brent crude touching $100 a barrel for the first time since May 26 after geopolitical tensions escalated in the Middle East. The breakout sets up a binary event for the FOMC decision on July 30-31. Markets now price a 35.8% chance of a hike at next week's meeting, up from 11.8% a week ago, according to CME FedWatch. If the Fed delivers a hawkish hold or a surprise increase, the dollar could extend its gains against the euro, yen, and sterling, with the 101.80 level shifting from resistance to support. A dovish outcome risks a sharp reversal that would test the bull flag's validity. The rally in the dollar has been fueled by a confluence of factors beyond the FOMC. U.S. economic data continues to surprise to the upside, with weekly initial jobless claims dropping by 22,000 to 187,000 in the latest reading, well below the 212,000 estimate from economists polled by Reuters. The labor market resilience, combined with the recent rebound in oil prices, has fanned inflation fears and pushed up expectations for rate hikes from the Federal Reserve. The last time the dollar traded at these levels against the yen was in November 1986, when the Plaza Accord was still reshaping global currency markets. Japan's 2-year government bond yield hit a 31-year high on July 24 on growing bets that the BOJ would accelerate the pace of interest rate hikes, yet the yen continued to weaken as the rate differential with the U.S. widened. Akira Otani, senior Japan research economic adviser at Goldman Sachs, said in a note the bank expects the BOJ "will maintain the status quo at the July meeting, and continue to expect the next rate hike in January next year," but cautioned that the timing of hikes is "likely to be significantly influenced by market developments and the degree of progress in communication with the government." Japan's finance minister reiterated the government was prepared to take decisive action on foreign exchange as needed, after carrying out yen-buying operations in April and May. Across the Atlantic, the ECB's decision to hold rates at its July meeting kept the euro under pressure. President Christine Lagarde said "while developments in underlying inflation have remained contained, the full effects of the energy shock have yet to play out," leaving the door open for action in September. Analysts at Morgan Stanley said in a note that a hike from the central bank would be positive for the euro, as markets are not pricing in a deep enough restriction to hurt the currency. For the dollar, the immediate catalyst remains the FOMC. Multiple Fed officials, including Chair Kevin Warsh, have highlighted concerns about inflation pressures over labor market concerns, helping push up market expectations for rate hikes. The 81.4% probability of a September hike, up from 52.4% a week ago, reflects a rapid repricing that has caught many currency traders off guard. If the bull flag breakout holds, the dollar could target the next resistance zone above 102.50, a level not seen since the early 2000s. If it fails, the 100.80 support level becomes the first line of defense. This article is for informational purposes only and does not constitute investment advice.