1. U.S. Direct Lending Volume Drops 55% in Q2 Despite Record Fundraising

U.S. private credit activity contracted sharply in the second quarter even as capital inflows remained robust. U.S. direct-lending volume fell approximately 55% quarter-on-quarter to $33.59 billion in Q2 2026 from $74.67 billion in Q1 — the lowest level since Q2 2023, according to PitchBook/LCD data. The divergence between supply and deployment was stark: direct lending by U.S. private credit firms fell sharply even as fundraising rebounded, with North America-focused closed-end direct-lending funds raising $16.25 billion in Q2, up from $1.3 billion in Q1 — the highest in two years, per Preqin. The slowdown followed increased scrutiny after defaults, concerns over software exposure, and redemption pressure from retail investors in some semi-liquid vehicles; EY's Jun Li attributed the pullback to softer M&A activity, borrower delays, competition from the broadly syndicated loan market, and greater selectivity among managers. Separately, HSBC Holdings halted lending to riskier private credit funds after high-profile corporate bankruptcies exposed shaky underwriting standards, informing clients it will not renew certain credit facilities or provide back leverage, the Financial Times reported.

Sources: Reuters / PitchBook LCD, 9 July 2026; Bloomberg / Financial Times, 7 July 2026

2. Semiconductor Stocks Sustain Sharp Selloff on AI Spending Doubt

Global chip equities came under significant pressure in the week to 8 July. Semiconductor stocks experienced a sharp downturn wiping out over a trillion dollars in market value, as Wall Street questioned the sustainability of record AI capital spending, with concerns including dot-com-era valuations, a hawkish Fed, and doubts about AI infrastructure returns. The Philadelphia Semiconductor Index fell 10.8%, the VanEck Semiconductor Index dropped 13% over ten sessions, and the iShares Semiconductor ETF declined 8% in a single week; Reuters estimated roughly $1.3 trillion in semiconductor market value was wiped out, with Intel, Micron, AMD, and Samsung all under pressure. Despite this, many analysts characterised the selloff as a "mid-cycle reset," maintaining substantial 12-month price targets for chipmakers like Nvidia and Micron, citing strong earnings growth. TSMC and Intel earnings, due shortly, are regarded as potential pivots for the sector's near-term direction.

Source: Forbes / Peter Cohan, 8 July 2026

3. SK Hynix Makes Largest-Ever Foreign Listing on U.S. Markets

In a landmark capital markets event, SK Hynix raised $26.5 billion in its U.S. debut, marking the largest foreign listing in American history, while simultaneously committing $8.6 billion to acquire advanced EUV lithography equipment from ASML. The listing comes alongside broader Korean market turbulence: Samsung Electronics reported a 19-fold increase in quarterly operating profit, a milestone that initially fuelled market fears of a peak in the semiconductor cycle and triggered a significant selloff in Korean stocks. As reported earlier in the week, the Kospi jumped 5.8% to 8,088 in a rebound, after a 7.9% plunge, as Samsung and SK Hynix each climbed over 10% on reports that Anthropic is in talks with Samsung on a custom AI chip.

Source: Distill Intelligence Semiconductors & AI Chips Weekly Briefing, 10 July 2026; Saxo Hong Kong Asia Market Quick Take, 6 July 2026

4. Fed Holds Rates but Hike Risk Rises Ahead of July 29 Meeting

The Federal Reserve held its benchmark federal funds rate unchanged at 3.50%–3.75% at its June meeting, but the policy debate has shifted toward further tightening. FOMC participants generally assessed that upside risks to inflation remained elevated; a few indicated there was a case for raising rates, and most pointed to scenarios — involving strong AI-related demand, the Middle East conflict, or tariff effects — in which some policy firming would likely be warranted to return inflation to 2%. Fed Chair Kevin Warsh, speaking at the ECB's annual forum in Sintra, acknowledged that inflation risks have eased in recent weeks but stressed that delivering price stability remains the Fed's primary objective. Market pricing reflects the uncertainty: as of early July, futures markets show a 74.9% probability the Fed holds steady at the July 29 meeting, with a 25.1% probability of a quarter-point hike. The June Summary of Economic Projections projected 2026 PCE inflation at 3.6% and core PCE at 3.3%, well above the 2% target.

Sources: Trading Economics / FOMC Minutes, 8 July 2026; Forbes Fed Meeting Tracker, July 2026; Motley Fool Money / CME FedWatch, early July 2026

5. APAC Capital Market Confidence at Multi-Year High; Hong Kong Sees Landmark Listing

Despite near-term volatility, structural capital market confidence across Asia-Pacific reached a notable milestone. Confidence in Asia-Pacific capital markets reached its highest point since the ASIFMA survey was first published, with two-thirds of financial firms planning regional expansion over the next three years, according to the 2026 ASIFMA/KPMG Asia-Pacific Capital Markets Survey released on 30 June. In Hong Kong specifically, Luxshare Precision, Apple's key supplier, began trading in Hong Kong after raising HK$24.3 billion in the city's biggest listing of 2026. Regional indices reflected mixed sentiment: Asia-Pacific markets closed lower on 7 July, with South Korea's Kospi leading declines — falling 4.91% to 7,656.31 — as the Korea Exchange activated circuit breakers, pausing trading for 20 minutes after the index fell more than 8%. The IMF kept its 2026 global growth forecast at 3% and lifted its 2027 projection to 3.4%, citing resilience to the Iran conflict and strong AI investment, while projecting global inflation at 4.7% in 2026.

Sources: ASIFMA / KPMG 2026 Asia-Pacific Capital Markets Survey, 30 June 2026 (via Caproasia, 1 July 2026); Saxo Hong Kong Asia Market Quick Take, 7–9 July 2026; IMF World Economic Outlook Update, July 2026

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