CAPITAL SEASONS

Weekly Market Commentary

Week Ending 11 July 2026

Global Context Overview

U.S. equities held their Spring footing this week. The S&P 500 (SPY, $754.95) sits 1.85% above its 50-day moving average and 8.71% above its 200-day line, while the Nasdaq-100 (QQQ, $725.51) is 1.45% above its 50-day and a more emphatic 13.72% above its 200-day — the clearest sign that the longer trend remains intact even as short-term momentum has cooled. The Dow (DIA) is 3.25% above its 50-day, and the Russell 2000 (IWM) is 2.55% above its 50-day and 12.93% above its 200-day — on price alone, small caps are still participating.

The VIX closed the week at 15.03, down from 15.81 seven days ago, with its 4-week average easing to 16.51 from 17.17. That is a calm reading by any historical standard. Gold (GLD, $377.01) continued its multi-month correction, sitting 6.01% below its 50-day and 8.24% below its 200-day — a reminder that even Winter-protection assets move in cycles of their own. The dollar (UUP) firmed, 1.68% above its 50-day, as markets lean toward a higher-for-longer U.S. rate path.

High-yield credit (HYG) is essentially flat against its 50-day (-0.20%), showing no real stress signal from credit markets this week — a useful cross-check against the more cautious tone building underneath equity market breadth, discussed below.

South Africa

The JSE proxy in our data (JSEJF) remains 44.45% above its 200-day moving average — a powerful longer-term trend — but has pulled back 4.37% below its 50-day, a short-term cooling worth watching rather than reacting to. The rand continued to strengthen, up 1.54% against the dollar over the past month and 8.74% over the past year. As always: rand strength is arithmetically negative for the rand value of your offshore holdings, even when it reflects genuine local confidence.

The SARB hiked its repo rate by 25 basis points to 7.00% (prime 10.50%) on 28 May — its first hike since 2023 — as Middle East-driven energy inflation pushed May CPI to 4.5%, up from 4.0% in April and above the Bank’s 3% target. The next MPC decision lands on 23 July, twelve days from today. Consensus currently expects a hold, but the Bank has flagged that further hikes remain possible if the Iran-linked oil shock persists.

GLOBAL & CURRENCY LENS — What This Actually Meant, Depending on Where You Sit Two headlines, same market, very different stories depending on your currency. Over the past month, the FTSE/JSE All Share Index fell roughly 1.4% in rand terms — a mildly disappointing month if you’re reading the local price alone. But the rand strengthened about 1.5% against the dollar over that same stretch. Put those two together and a U.S.-dollar-based investor holding the same JSE exposure was roughly flat — not down 1.4%, not up 1.5%, but close to break-even, because the currency move and the index move worked in opposite directions and nearly cancelled out. Neither headline on its own tells the whole story. The general rule, worth remembering in either direction: when the rand strengthens, it is a tailwind for anyone converting rand-denominated gains back into dollars (or pounds, or euros) — and a headwind for South African investors converting dollar gains back into rand. Same move, opposite effect, depending which side of the conversion you’re standing on.

United States

The Federal Reserve, under new Chair Kevin Warsh, held the federal funds rate at 3.50%–3.75% at its 17 June meeting — but the tone shifted hawkish. Nine of nineteen officials now project at least one rate hike before year-end, versus expectations for cuts earlier in the year, and the Fed’s 2026 inflation forecast was revised up to 3.6% from 2.7%. The next FOMC decision falls on 28–29 July, with markets currently pricing roughly a 25% probability of a hike.

Earnings are the one force clearly improving. FactSet’s Q2 tracking growth rate for the S&P 500 has risen to 23.6% (from 23.2% at quarter-end), with 18 companies reported so far and 89% beating estimates by an average surprise of 14.5%. History suggests the final growth rate could land above 29% — which would be the strongest quarter since Q4 2021.

Initial jobless claims came in at 215,000 for the week ending 4 July, down from 217,000, with the 4-week average at 218,750 — a labour market still describable as low-firing, low-hiring, and largely undisturbed by the AI-driven productivity narrative so far.

Global Markets

Europe was volatile but resilient. Early-week declines (Germany’s DAX -2.76%, France’s CAC 40 -1.99%, the UK’s FTSE 100 -1.70%) tied to renewed Middle East tension and rising ECB tightening expectations gave way to a Thursday bounce, with the pan-European Stoxx 600 closing up 0.8%. German inflation cooled to 2.3% in June from 2.6%.

China remained the softer spot. The Shanghai Composite fell 1.17% on the week and the Shenzhen Component slid 3.53%, as investors took profits following an AI-driven technology rally. June CPI rose just 1.0% year-over-year, slowing from May’s 1.2%, consistent with still-subdued domestic demand. Hong Kong outperformed the mainland, helped by internet and healthcare names.

Oil (WTI) traded around $71.40/barrel, firmer on the week as renewed U.S.-Iran strikes kept a risk premium in the Strait of Hormuz corridor, even as both sides continue talks toward a longer-term arrangement.

The Three Forces — Summary

Region	Earnings	Inflation	Interest Rates
South Africa	Stabilising	Under pressure	Under pressure
United States	Improving	Under pressure	Stabilising
Global	Mixed	Stabilising	Under pressure

NEW FEATURE — THE SILICON SEASON: An AI Infrastructure Watch This week gave us a genuine marker worth building a regular feature around. On 10 July, SK Hynix — the South Korean memory-chip giant behind much of the world’s AI memory supply — completed the largest-ever Nasdaq listing by a foreign company, raising $26.5 billion and closing its debut session up roughly 13%. It is a landmark moment for a sector that has quietly become the market’s clearest source of leadership. Our own Sector-Sensei screen this week ranked semiconductor and AI-infrastructure funds at the very top of a 202-name universe — five independent providers, each tracking a different slice of the chip industry, all confirming the same trend. What stands out is that the leadership is backed by genuinely accelerating earnings underneath the price moves, not momentum alone — several of the sector’s largest names have posted forward earnings growth rates well above 100% this year, a pace that is unusual even by AI-boom standards. There is a second thread here too: SpaceX, which went public last month in its own record-breaking listing, leased data-centre capacity from its Colossus facility to a major AI company for over a billion dollars a month through 2029 — a tangible sign that the AI buildout is now spilling well beyond the chip companies themselves and into energy, real estate, and infrastructure. Our take, in keeping with the season: this is real leadership, not a story built on hope alone — but as the note below on small caps makes clear, it is still leadership concentrated at the very top of the market. We will be tracking this as a regular feature in the weeks ahead, watching for the moment strength here starts (or fails) to broaden.

The Small-Cap Canary Isn’t Singing for Tech

What happened?

Semiconductors and AI names have been the market’s clearest leaders for months, and this week was no exception — the chip-heavy funds sit at the very top of our sector table again. But walk the same sector picture down from the biggest companies to the smallest, and Information Technology is the one that fades fastest. Financials, Health Care, and Energy, by contrast, hold up far more evenly all the way down the cap ladder.

Why did it happen?

The mega-cap chip names carrying the AI trade are still the best-rated stocks in our whole universe — that part of the story is real. But by the time you get down to small-cap technology, that strength has largely drained away. It’s leadership from a handful of giants, not a sector broadening out underneath them. Financials, Health Care, and Energy don’t grab headlines the way AI does, but quality stays reasonably consistent whether you’re looking at the biggest company in the group or the smallest — a sign the strength is coming from real, distributed fundamentals rather than a story a few giant companies are carrying alone.

What does it mean for my portfolio?

If your technology exposure is concentrated in the same handful of mega-cap leaders everyone else owns, this week’s data doesn’t change that thesis — those names still look genuinely strong. But it’s a useful moment to check how much of your broader growth exposure is quietly leaning on the same few giants versus sitting in sectors where the strength is more evenly spread.

What should I watch next?

Whether small-cap Information Technology stabilises or keeps fading over the coming weeks — one week is a signal, not yet a pattern. And whether Financials, Health Care, or Energy start attracting the kind of headline attention their underlying breadth would justify.

None of this means walk away from technology — the leaders there remain genuinely strong. It means: know which kind of strength you’re looking at. A garden where every plant is thriving is a different thing from a garden where three tall trees are blocking the sun from everything smaller. Right now, tech is the second kind. Financials, Health Care, and Energy are closer to the first.

Guidance For Investors

• Broad indices are healthy, but breadth beneath the surface is narrowing — our Small Cap Canary flipped negative sentiment this week for the first time in over a month. One week is a signal, not yet a pattern — worth watching, not reacting to.
• Don’t mistake mega-cap strength for broad participation. This week’s data shows Financials, Health Care, and Energy holding up far more evenly down through smaller companies than Information Technology does.
• Two central bank decisions land within a week of each other — the SARB on 23 July, the Fed on 28–29 July. A natural point to review rate-sensitive positions before the news, not after it.
• Earnings season is confirming genuine strength (89% beat rate so far) — a supportive backdrop, but not a reason to chase names that have already run hard.
• Rand strength remains a headwind for the rand value of offshore holdings — a reminder to think in both currencies, not just the one your statement is printed in.
• The AI infrastructure story (chips, memory, data centres) is showing real earnings support, not just enthusiasm — but treat it as leadership to monitor for broadening, not a signal to chase at the top.

Capital Seasons Weather Map

This week’s Capital Seasons Weather Map registers Late Spring, with Mostly Calm conditions and a Strengthening posture.

Trend: Both the S&P 500 and Nasdaq-100 remain comfortably above their 50-day and 200-day averages — the underlying uptrend is intact and, on the index level, showing no signs of rolling over.

Participation and rotation: Semiconductors and AI infrastructure lead decisively at the sector-ETF level, with biotech showing a sharp (and as-yet unconfirmed) one-month spike. Beneath the surface, small-cap sentiment turned negative for the first time in several weeks — a rotation signal worth tracking, not yet a trend.

Volatility and stress: The VIX at 15.03 and its 4-week average at 16.51 both sit in genuinely calm territory. Credit markets (HYG) show no stress.

Liquidity backdrop: The dollar is firming as markets lean toward a higher-for-longer U.S. rate path, with two live central bank decisions (SARB, Fed) inside the next three weeks.

Tactical discipline: Stay planted through genuine Spring strength, but let this week’s small-cap signal earn a second week before treating it as anything more than a note in the margin.

Website Weather Commentary

Markets held their Spring footing again this week, with major indices comfortably above their long-term trend lines and volatility staying low. Underneath that calm surface, smaller companies showed the first signs of cooling after weeks of steady strength. Semiconductor and AI-related shares continued to lead, highlighted by a landmark stock market debut in the memory-chip sector. Gold continued a multi-month pullback after an extraordinary run. The picture remains one of a garden still growing, with a few leaves at the edges just starting to turn.

JUST STARTING OUT You’ll have seen “50-day” and “200-day moving average” a few times in this issue — here’s what that actually means. Take a stock’s closing price every day for the last 50 (or 200) trading days, and average them. That average forms a smooth line that filters out the day-to-day noise, so you can see the underlying trend instead of getting distracted by every up-and-down. When a share price is above that line, the trend is generally up. Below it, generally down. The 200-day line shows the longer story; the 50-day line reacts faster to recent changes — which is exactly why you’ll sometimes see a stock sitting above its 200-day (a healthy long-term trend) while dipping just below its 50-day (a short-term wobble). It’s not a contradiction — it’s just two different timeframes telling you two different things. Worth sharing with anyone just starting to read a chart for the first time.

Capital Seasons | Invest with the seasons. Not the noise.

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Disclaimer: Capital Seasons is an educational platform. Content does not constitute personal financial advice or a solicitation to buy or sell any security. Always consult a licensed financial advisor before making investment decisions.