The U.S. military carried out a new round of strikes on Iran, marking a 12th successive night of American attacks and prompting further Iranian retaliation, while oil prices jumped and Wall Street futures slid on Thursday.
Who Pays for the Power Games
Asian markets rose overnight, but the gains sat beside a widening mess built by states, megacaps, and energy shocks. Brent prices in London jumped almost 5% to more than $98 a barrel, and Germany's 10-year bund yield pushed above 3.2% for the first time since 2011. The European Central Bank held rates at 2.25% after lifting them in June, saying, "Uncertainty remains high and the full inflationary impact of the energy shock has yet to play out," and adding, "The Governing Council is therefore closely monitoring the intensity and duration of the shock, as well as its indirect and second-round effects."
That language sounds tidy enough from the top. Down below, it means more pressure on ordinary people as borrowing costs climb and energy prices keep shaking everything else. Markets had seen just a one-in-five chance of another interest rate hike at the meeting, but they saw a four-in-five chance of a hike in September. Morgan Stanley analysts said, "The messaging remained unchanged and open," and added, "We maintain our call for another rate hike in September, if energy prices remain elevated."
The oil move came as the Iran-aligned Houthis said on Thursday they had struck two Saudi oil tankers as part of a naval blockade on Saudi Arabia, threatening to create a second chokepoint on global oil supplies alongside Iran's near-closure of the Strait of Hormuz. The conflict keeps tightening the screws on everyone who has to live with the consequences while the powerful trade blows and issue statements.
The AI Bill Comes Due
Wall Street futures pointed lower after Big Tech earnings revived worries about heavy AI outlays. Dow futures were down about 0.27%, or 142 points, S&P 500 futures were down about 0.27%, or 20.25 points, and Nasdaq-100 futures were down about 0.28%, or 81.5 points. Later, Wall Street opened lower as concerns over heavy AI spending resurfaced after the first batch of Big Tech earnings, while another jump in oil prices linked to the widening Middle East conflict further dampened sentiment. The Dow Jones Industrial Average fell 463.0 points, or 0.89%, at the open to 51755.54. The S&P 500 fell 80.7 points, or 1.08%, at the open to 7418.29, while the Nasdaq Composite dropped 445.4 points, or 1.73%, to 25245.542 at the opening bell.
Charu Chanana, chief investment strategist at Saxo in Singapore, said, "U.S. megacaps may face more scrutiny because they are writing the cheques, while chipmakers, memory suppliers and infrastructure companies get paid earlier in the investment cycle." That split showed up across the market. Asian chipmakers benefited from the AI spending narrative, while in Europe semiconductor stocks diverged as investors weighed AI demand and growth expectations.
Asian markets gained overnight. The KOSPI surged more than 4% in Seoul, led by 4.8% and 3.7% respective gains for SK Hynix and Samsung. Tokyo's Nikkei and Hong Kong's Hang Seng also ticked higher. The winners were the firms closest to the spending stream. The rest got the bill.
The Convention Center and the Cheque Writers
Advanced Micro Devices is set to launch a raft of AI hardware that will rival Nvidia on Thursday at an event at a downtown convention center in San Francisco. AMD is attempting to capture market share from Nvidia in the fast-growing data center chip sector, especially for so-called inference computing, which is the data crunching that occurs when a user queries a chatbot such as OpenAI's ChatGPT. AMD is expected to show off its data center hardware that includes its first-generation server racks called Helios, which it is marketing as a rival to a similar design from Nvidia, which is rolling out its second-generation product this year. The company also is expected to formally launch its Venice central processing unit for data centers.
At the Moscone West convention center on Wednesday, hundreds of executives and engineers gathered to take in technical presentations and mingle on a showroom floor, according to a Reuters witness. AMD displayed the Helios data center rack amid booths from cloud computing providers such as Vultr and TensorWave, both of which operate data centers with AMD hardware. The whole scene had the polished look of a growth ritual, with the people making the chips, the racks, and the cloud contracts all gathered under one roof.
On Wednesday, AMD announced plans to sell up to two gigawatts of its Instinct MI450 chips to AI lab Anthropic beginning in the first half of 2027. The deal also includes an investment of as much as $5 billion in the Claude maker. In October, AMD announced a multiyear deal with OpenAI that would also bring in tens of billions of dollars in annual revenue while giving the ChatGPT creator the option to buy up to roughly 10% of the chipmaker. The money moves upward, the hardware gets built, and the public gets told this is progress.
The same machinery of concentrated power ran through the rest of the day. In Europe, government borrowing costs moved to long-term highs as the ECB held rates steady and warned about the inflationary impact of the energy shock. In the Middle East, the U.S. military kept striking Iran for a 12th successive night. In the markets, investors watched the whole thing as if it were weather. It isn't.
The numbers moved fast. The people at the bottom always do the paying.