(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Mike Dolan

July 28 (Reuters) -

What matters in U.S. and global markets today

By Mike Dolan, Editor-at-Large, Finance and Markets

The chip stock correction snowballed again overnight amid

growing concerns about rising competition and circular

financing.

This comes ahead of a set of critical earnings reports from tech

companies on Wall Street and in Asia - and it comes despite a

further slump in oil prices below $90 per barrel amid the tense

pause in the Iran conflict.

I'll get into that and more below.

But first, check out my latest column, where I outline the many

inflationary drivers that central banks may increasingly

struggle to "see through".

And listen to the latest episode of the Morning Bid daily

podcast, where we discuss the many causes of the latest chip

selloff.

Subscribe to hear Reuters journalists discuss the biggest news

in markets and finance seven days a week.

CHIP ROUT SNOWBALLS

Stock markets remained on edge on Monday and heading into

Tuesday due to a host of catalysts. One was a sharp drop in

shares of U.S. chip giant Nvidia - partly on reports of another

round of circular financing with OpenAI.

Another possible trigger was the blowout IPO of China's CXMT on

Monday - a first-day jump of nearly 470% that unveiled a new

chip giant ready to soak up investment funds.

Meanwhile, reports that Chinese firms are developing chipmaking

technology that apes ASML's dominant offering sent the European

tech giant's shares down sharply on Monday.

U.S.-listed shares of South Korea's SK Hynix fell back below

their recent debut price on Monday, ahead of its quarterly

update tomorrow, while Seoul's volatile KOSPI index plummeted

nearly 11% on Tuesday to post its biggest daily loss in nearly

five months. Rival chipmaker Samsung Electronics, which is also

down sharply, is likewise set to report this week.

Both companies' earnings are coming amid reports of heavy capex

by hyperscalers to build out their AI infrastructure. The size

of that spending, and the cash burn that goes with it, look to

be the big theme of the hyperscaler earnings season. Credit

markets are watching warily.

On the energy front, oil slid further heading into Tuesday to

around $86 per barrel. U.S. President Donald Trump said on

Monday that the U.S. was having "good talks" with Iran and that

a deal was possible but reiterated familiar warnings that

strikes would resume if negotiations go nowhere.

Those energy price gyrations will no doubt be a point of

discussion at the Federal Reserve's two-day policy meeting,

which starts today.

Despite the latest oil price retreat, futures markets still

see the Fed gathering as a "live" one, with a one-in-three

chance of a rate hike priced in. An increase in rates by

September is now seen as essentially a certainty in markets.

Chart of the day

Another rout in global chip stocks is unfolding ahead of

this week's U.S. megacap tech earnings, with growing unease at

the cash burn of the so-called hyperscalers, which are spending

hundreds of billions building out their AI infrastructure.

The scale of the debt being incurred is now starting to

unnerve stock and credit markets alike, with borrowing from Big

Tech firms this year now almost twice what it was last year.

Higher capex from here will likely mean even higher debt loads.

Today's events to watch

* U.S. July consumer confidence (10 a.m. EDT), 7-year note

auction (1 p.m. EDT)

* Fed policy meeting begins

* U.S. corporate earnings: Boeing, Coca-Cola, Ford, PayPal,

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