Daily summary: AI slowdown does not slow the rise in yields

USA

• The start of the week in the US market brought a clear selling bias, concentrated mainly in the technology sector. Despite the bearish start to the session, the tech index erased most of its losses later in trading. US100 futures are down about 0.5% near the end of the session. The main index represented by US500 is down about 0.2%. Russell and Dow futures remain close to their opening levels.
• Investor attention was dominated by statements, discussions, and proposals from leaders at several AI companies, namely OpenAI, Anthropic, and xAI. According to a number of public comments, influential figures in the AI industry want to slow the pace of AI development, which in declared terms is intended to allow proper refinement of oversight, deployment, and security audit methods for AI models and agents. The slowdown, complication, and or postponement of AI monetization has weighed on the broader technology sector, which saw a significant but still concentrated sell-off.
• The situation in the Middle East remains difficult to assess. Beyond the Persian Gulf, increasing attention is also being drawn to the Arabian Peninsula and the Red Sea. Yemen’s Houthis are reported to have seized significant stretches of territory, including a large section of coastline. In addition, reports of serious damage to the East-West pipeline have been confirmed. Despite justified concerns, there is currently no confirmed information about attacks or an attempt by the Houthis to block shipping through the Red Sea.
• Fuel markets are also being squeezed from other directions. The Joliet refinery in Illinois was taken offline after a power failure. Reports say a large cloud of black smoke was seen above the refinery, but local company representatives say this is only a safety procedure during an emergency. The refinery is one of the key facilities of its kind in the US, responsible for 264,000 barrels per day of processing capacity.
• Amid concerns about inflation, fuel prices, monetary policy, and the deficit, mainly in the US, the yield on 10-year US Treasuries moved above the psychological 5% level.

Company news, USA

• Semiconductors and AI: Statements from representatives of Anthropic, OpenAI, and xAI triggered a sharp correction in assets linked to growth in the AI industry. Neo Cloud companies are down about 6% to 8%, while memory and semiconductor names are down about 5%. Hyperscale companies do not appear to be reacting to the news.
• Baldwin Insurance (BWIN.US): The Financial Times reports that Michael Dell is nearing the completion of a transaction to buy the company. Shares gain about 5%.
• Palo Alto (PANW.US): Cybersecurity stocks are rising on a presumed reduction in pressure from the AI industry. The company and the SaaS sector are up about 4%.
• HP (HP.US): The PC components maker extends declines versus the rest of the sector due to an additional bearish catalyst, a publication from an investment firm. Shares are down about 8%.
• Rumble (RUM.US): Shares rise by more than 10% at the open after the company announced a computing capacity contract with Anthropic. The AI lab signed a contract worth 13.7 billion USD.
• Oracle (ORCL.US): The company’s CEO, Larry Ellison, reportedly backed away from plans to sell 50 million shares, according to Bloomberg.
• Meta (META.US): Shares gain about 2% after the launch of its AI agent called Muse. Several investment banks reaffirm an optimistic stance on the stock and highlight the strategic importance of the company’s moderate breakthrough in the AI race.
• Abbott Laboratories: The company ended a long-running lawsuit related to defective infant formula. Related entities are to pay about 348 million to the federal government and 36.3 million USD in Medicaid support.
• Pinterest: The platform gains about 2.5% after releasing information about new AI services based on Nvidia infrastructure.
• Google: The company’s Waymo taxis are set to enter the Las Vegas market. Shares rise 2.7%.

Macroeconomic data, USA

• Canada released a series of inflation data that may provide information about the economic situation, also in the US.
• CPI inflation held at 3% year over year.
• Core inflation rose to 2.4% year over year.
• Manufacturing sales fell 0.4% in July.

Europe

• European investors remain focused on gas prices, currently one of the main risks for European assets. The European session saw a clear advantage for declines. France’s CAC40 lost 0.76% and the DAX closed 0.6% lower. Following the US market, however, futures markets signal a moderate improvement in sentiment after trading ended in Europe.
• The situation in the European gas market remains poor. Contract prices are holding above 80 euros. Signs of rising pressure are not limited to Europe. The head of Japan’s JERA warns that reserves in Europe are low and transportation disruptions may persist.

Company news, Europe

• BYD: One of the directors at Chinese group BYD announced a major expansion of the company’s Chinese car factories in Europe to bypass import tariffs. In remarks at a conference in Hanover, particular attention was paid to trucks.
• Semiconductors and software: AI concerns are also materializing in Europe. The expected drop in semiconductor demand pushes ASML shares down 4%. SAP continues to rise on capital inflows into SaaS type companies.
• Antofagasta: Mining conglomerates are down about 4% to 5% due to pressure on industrial metal prices driven by inflation expectations.
• AirBaltic: The Latvian airline filed for Chapter 11 bankruptcy protection in New York. Bankruptcy and restructuring put orders and payments for about 40 Airbus aircraft and engines from an RTX subsidiary, Raytheon, in question.

Macroeconomic data, Europe

• Switzerland’s producer price index fell 0.7% year over year.
• Poland’s trade deficit in goods increased to 1.84 billion in July.

Forex

• Weak production data is putting strong pressure on the Japanese yen, which is down as much as 0.6% against the dollar.
• The Canadian dollar also posts moderate declines, down about 0.3% after inflation came in weaker than expected.

Commodities

• Ongoing conflicts in the Middle East and threats to shipping and industry are supporting gains and high energy prices. Oil and gas are up about 1.5% to 2%.
• Moderate declines are visible in metals, both industrial and precious, as a consequence of a rise in the expected long-term interest rate.
• Concern about the impact of El Niño on crops and climate supports orange juice prices today, up more than 5%.

Crypto

• Despite weak sentiment toward the technology market, cryptocurrencies are performing moderately well on Monday.
  • Bitcoin gains 2% and moves back above 78,900 USD.
  • Solana gains 1.8% and returns above 102 USD.
  • Ethereum gains 1% and returns above 2,530 USD.