Morning Wrap: Oil Climbs Back Above $90 as Chinese AI Weighs on Tech Stocks.

📈 US Stock Markets (Wall Street)

• Friday's session on Wall Street ended in a broad sell-off that encompassed almost the entire market.

• The Dow Jones Index fell by 0.8%, the S&P 500 declined by 1%, while the tech-heavy Nasdaq lost 1.4%.

• The heaviest selling pressure was concentrated in the technology sector, where Netflix closed the day with a 7% drop following disappointing quarterly results.

🌍 Geopolitics & Middle East Conflict

• The situation in the Middle East remains at the very center of investors' attention.

• The US conducted a ninth consecutive night of airstrikes on targets in Iran.

• According to CENTCOM, these actions aim to weaken Iranian military capabilities, including their ability to conduct operations against merchant ships in the Strait of Hormuz area.

• The conflict is gradually expanding to other areas of the region.

• Missile launches from Kuwait toward Iran, explosions in the southern part of the country, and further attacks on US-linked targets in Gulf states (including Kuwait, Jordan, and Bahrain) have been recorded.

• Rising tensions increase the risk of further military escalation and disruptions in the transportation of energy commodities.

• According to US sources, Donald Trump's administration is preparing for the possibility of a broader conflict with Iran by accelerating the deployment of military forces in the region.

• The strengthening of the US military presence heightens concerns that actions could exceed previous limited operations.

• Iran's Foreign Minister reported that diplomatic negotiations should only begin after Tehran gains a military advantage, indicating a lack of readiness for a quick compromise.

🛢️ Energy Commodities

• An additional factor increasing nervousness in the oil market was reports from Iran regarding the mining and explosion of two tankers in the Strait of Hormuz—one of the world's most critical oil transit routes.

• Iran also conducted another wave of missile attacks in the Persian Gulf region.

• The market swiftly priced in higher geopolitical risk, given that approximately 20% of global oil trade flows through the Strait of Hormuz.

• Potential transit restrictions could lead to a significant drop in supply.

• As a result, Brent crude once again crossed the $90 per barrel level, and investors began discounting a scenario of further conflict escalation and potential energy supply disruptions.

🤖 Artificial Intelligence & Semiconductor Sector

• The artificial intelligence (AI) sector remains the second key market theme.

• Chinese AI firm Moonshot decided to temporarily limit new registrations for its Kimi K3 model because demand for the product exceeded current computing infrastructure capacity.

• The growing popularity of Chinese AI models intensified fears that they could compete effectively with Western solutions.

• The release of Kimi K3 triggered selling pressure on semiconductor stocks due to investor concerns that more efficient and lower-cost AI models might slow the pace of spending on expensive infrastructure, including GPU chips and solutions provided by companies like Nvidia and Micron.

• The market has begun re-evaluating US dominance in the AI race, fearing a repeat of the "DeepSeek moment"—a situation where Chinese entities demonstrate the ability to create advanced models at significantly lower costs.

🌏 Asian Markets & Monetary Policy

• Asian stock markets closed the session with mixed sentiment, with the strongest selling pressure hitting South Korea and Japan.

• The KOSPI index fell by about 4.5%, largely driven by a sell-off in tech companies and semiconductor manufacturers.

• Investors fear that previous AI enthusiasm led to stretched valuations, and the development of more efficient models will shift expectations for future chip demand.

• China stood out positively relative to the region, as investors identified potential beneficiaries of domestic AI development.

• At the same time, the market remains cautious toward the semiconductor sector as the ongoing re-assessment of AI infrastructure demand continues.

• The People's Bank of China (PBoC) left benchmark lending rates unchanged (the 1-year LPR was held at 3.0%, and the 5-year at 3.5%), signaling a cautious approach by Beijing toward economic stimulus while maintaining yuan stability.

💱 Foreign Exchange Market

• Rising crude oil prices are placing clear pressure on Asian currencies.

• Analysts at MUFG note that Asian economies that are major energy importers are particularly feeling the impact of costlier commodities through higher import costs and a deterioration in trade balances.

• The persistence of geopolitical tensions in the Middle East could intensify pressure on regional currencies, supporting further strength in the US Dollar (USD).

⛏️ Precious Metals

• In the commodities market, gold remains under minor pressure, hovering around the $4,000 per ounce level.

• Silver is posting gains of about 1.3%, holding above the $56 level.

🪙 Digital Assets (Cryptocurrencies)

• The digital asset market is experiencing mild downward pressure.

• Bitcoin is down by about 0.4%, testing the $64,000 level.

• Ethereum is displaying greater stability, logging minor declines around $1,850.