An Interesting Divergence Is Emerging Between The Fed And Other Central Banks

By Benjamin Picton, senior market strategist at Rabobank

Circle Of Life

Active Brent crude futures fell by almost 5% yesterday as the US extended its pause on striking Iran. Donald Trump had indicated that the lull was underway to give diplomacy another chance, claiming that the US was in “very deep talks” with Iran but that his patience for progress was short, saying “either it goes fast or not at all.”

Brent has opened more than 3% higher this morning to follow overnight gains in WTI prices following Iranian missile strikes on a US base in Jordan – the first Iranian attacks since the recent ‘pause’ began – and joint strikes by the US and Saudi Arabia on Iran-backed militants in Iraq. Those Saudi-US came in retaliation for strikes on Saudi oil infrastructure. Israeli Prime Minister Netanyahu met with President Trump at the White House yesterday where the potential normalization of relations between Israel and Saudi Arabia was reportedly discussed.

Equity markets saw divergence yesterday between semiconductor stocks and value plays. South Korea’s KOSPI closed the day down 10.84% after triggering a market circuit-breaker early in the session, while Taiwan’s TAIEX index fell by 4.65%. Korean tech leaders Samsung and SK Hynix both fell by more than 10% as the latter posted record earnings but fell short of analyst estimates.

The chip selloff extended over to US markets, seeing the NASDAQ 100 fall by almost 1% to be off by close to 10% since the June highs. Sandisk, Seagate and Micron technologies were among the worst performers. The explanation offered by various newswires is that investors are becoming anxious about the large CAPEX programs of chip companies, including the ‘circle of life’ series of acquisitions and equity investments across the sector that critics suggest are keeping equity prices inflated beyond reasonable levels and raising the stakes for upcoming earnings reports.

Meanwhile, European stock indices were broadly higher, the S&P500 lifted 0.2% and the Dow Jones closed more than 1% higher. Among Asian indices the Australian ASX200 was a conspicuous outperformer, helped along by a relative paucity of tech names and an 8.6% gain for Viva Energy, who operates one of only two Australian oil refineries and reported an expected doubling of first-half earnings off the back of stronger refining margins. The expected earnings boost comes despite a 2% drop in fuel sales in the June quarter vs the prior corresponding period (June 2025). This was driven by a 4.7% drop in commercial and industrial fuel volumes, which might provide an insight into broader economic activity.

While geopolitical concerns simmer away, market attention will turn today to the FOMC, who meet to decide on the appropriate level of the Fed Funds rate. The overnight index swaps market currency has a touch over 8bps worth of rate hike priced-in for this meeting. The September meeting is now fully-priced for a 25bp hike, with another hike in the curve for March next year. In reality, few expect the Fed to raise rates at this meeting (we Tyler Durden Wed, 07/29/2026 – 10:30

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