EU: Tech Selloff Intensifies

**Notes/Observations** - - Tech selloff dominating risk sentiment: US tech weakness from Monday has rolled through into Asia/Europe and is setting a negative tone again for US open.

The Nasdaq closed down 1.3%, led by SpaceX (on its bond issuance) and Google (reports of top AI talent departures), with the Asia tech index falling a further 1.3%.

SpaceX dropped another 16% to close at $155, now below its lowest IPO-day price in pre - notable given the large allocations South Korean and Japanese investors took in the private placement, and SPCX is extending losses in premarket below $150.

Risk-off move was broad: gold, silver, bitcoin and US equity futures unwound all of Monday's US-Iran relief rally, while WTI held its lows around $73/bbl.

The lack of clear Fed guidance from the recent FOMC is amplifying the volatility - - thinks current tech selloff isn't driven by one single event but by the accumulation of quite many small yet highly sensitive cracks - each one quietly undermining the clean narrative that more AI compute automatically equals durable economic value.

Intelligence is shifting from scarcity to spoilage: models keep getting better and more widely used, yet the equity attached to them weakens as the scarce asset moves from raw capability to the controlled conversion of intelligence into clean, net-positive work.

Full data centers, not empty ones, are becoming the bear case - they generate massive activity (tokens, agent loops, reviews, reversals) while enterprises pay for fewer unresolved decisions, creating hidden cleanup debt and friction that the P&L eventually feels.

Google’s talent losses, Meta’s apparent caution on new equity issuance to fund AI Capex, Oracle’s balance-sheet pressures, and xAI openly selling Colossus capacity to Anthropic, Google, and others all signal the same maturing reality: frontier compute now carries real opportunity cost and is increasingly treated as rentable inventory rather than a proprietary moat.

At the same time, Chinese models like GLM, Qwen, DeepSeek and others flood the usable middle market with cheap, good-enough intelligence, accelerating commoditization at the routing and validation layers.

The market could be beginning to price the unbundling: winners will be those who turn abundant intelligence into fewer expensive human decisions, not those with the biggest clusters or prettiest benchmarks. - - Iran pushes back on Vance's narrative: Iran's Foreign Ministry spokesman Baghaei directly contradicted VP Vance's claim that inspectors were being allowed in, stating Iran has no plan to let IAEA inspectors visit the nuclear sites targeted in the conflict.

Aligns with the IAEA's own position that it has been unable to inspect affected facilities (only Bushehr visited recently).

Baghaei added that five parts of the MOU must be fully implemented before any negotiations on the nuclear dossier or IAEA role begin, warned Iran would respond to any Israeli MOU violation (including attacks on Hezbollah in Lebanon), and said the Strait of Hormuz remains open for now but post-60-day arrangements depend on negotiations.

He could not confirm the US claim that unfrozen Iranian funds would be spent on American corn, soy and wheat.

The market has shown limited reaction to reported progress in the Switzerland talks. - - EU PMIs disappoint, services the weak spot: The flash June composites came in soft across the board, with services dragging.

Eurozone Composite was 49.5 (vs 49.2e) but services stayed contractionary at 48.9 for a third month, while manufacturing held up at 51.3.

Germany was the standout weakness: Composite 48.0 (vs 49.7e), manufacturing slipping to exactly 50.0 (lowest since Jan 2026, avoiding a fifth expansion month) and services collapsing to 46.8 - the lowest since Nov 2022.

The UK was similarly mixed, with manufacturing resilient at 53.1 (8th month of expansion) but services dropping into contraction at 48.7 and the composite at 49.4.

ECB commentary leaned cautious on inflation: Lane sees energy prices keeping inflation well above target into H1 2027 and flagged second-round effects, echoed by Escriva and Kazimir on services-price persistence - though the broader market read is that ECB hike expectations are cooling with Lagarde downplaying second-round risks.

The BoE is expected to hold a wait-and-see stance through the summer. - - President Trump signed an executive order updating the National Quantum Initiative, directing the US to deliver a scientifically useful quantum computer by 2028 and mandating post-quantum cryptography migration for high-value federal systems by 2031.

This echoes IBM’s detailed public roadmap: it targets first examples of quantum advantage by the end of 2026 using its Nighthawk processor (starting at 120 qubits, scaling to multi-module systems with up to 1,080 qubits and 15,000 gates by 2028).

In 2028–2029, IBM plans Starling, its first large-scale fault-tolerant quantum computer with ~200 logical qubits capable of running 100 million gates. - -Asia closed lower with KOSPI underperforming -10.0%.

EU indices -0.5% to -1.6%.

US futures -2.6% to -0.7%.

Gold -2.0%, DXY +0.2%; Commodity: Brent -0.6%, WTI -0.6%; Crypto: BTC -2.7%, ETH -5.5% - - Asia: - - Japan Jun Preliminary PMI Manufacturing: 54.9 v 54.5 prior (6th month of expansion) - - Australia Jun Preliminary PMI Manufacturing: 51.2 v 50.7 prior (3rd month of expansion) - - Australia ANZ Roy Morgan Weekly Consumer Confidence Index: 72.9 v 70.7 prior - - South Korea Jun Consumer Confidence: 106.6 v 106.1 prior - - Japan Fin Min Katayama confirmed held online talks with US Tsy Sec Bessent on Monday; remain aligned on the possibility of currency intervention if needed - - Global Conflict/tensions: - - Iran press noted technical talks on implementing MOU concluded; groups would be formed on sanctions and nuclear issue - - Europe: - - UK Labor MP Burnham to use a speech next week to pledge to grow the economy and commit to Labour’s fiscal rules - - Americas: - -