MARKET WRAPS

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No major economic events or trading updates expected

Opening Call:

European stock futures were mixed after Asia stocks were also mixed. U.S. Treasurys were flat, the dollar strengthened. Gold fell and oil rose.

Equities:

European equity futures were mixed, as worries from calls for a slowdown in artificial intelligence development weighed on sentiment.

However, recent calls by Anthropic, alongside similar caution from Sam Altman and Elon Musk, don't necessarily imply a slowdown in AI capex or a bearish outlook for hardware players, said James Ooi of Tiger Brokers.

Spending could shift from training the next model toward expanding inference capacity and improving reliability, the market strategist said.

That shift could also broaden the set of AI beneficiaries beyond hardware vendors and hyperscalers to cybersecurity and observability providers, which could see greater demand. If regulation and safety requirements become more important, compliance costs could rise, favoring well-capitalized players such as OpenAI, Anthropic and Google, while making it more difficult for smaller frontier labs to compete on the same footing.

Forex:

The U.S. dollar strengthened.

Markets looked ahead to Fed rate hikes that enhance the appeal of U.S. dollar-denominated fixed-income assets.

The latest U.S. inflation prints were broadly in line with expectations, but hot enough to strengthen expectations for a Fed rate hike this week, said Commerzbank Research.

The Fed funds futures raised the probability of a 25 bps hike this week to 88%, compared to 62% last Monday, they noted.

Bonds:

The yield on U.S. Treasurys were flat.

Wall Street now feels fairly confident the Federal Reserve under its new chairman, Kevin Warsh, will start hiking interest rates next week, for the first time since 2023. A hike could provide a strong signal to the market that confronting the nation's inflation problem can no longer wait.

"At this point, the Fed's only choice is to go," said Loren Moran, fixed-income portfolio manager at Wellington Management, following the consumer-price index's climb to a 3.4% yearly rate. That's well above the central bank's 2% target.

"One of the biggest risks would have been a softer CPI that left the market in that 'unhinged moment' in rates," she said.

Energy:

Oil prices rose. Brent crude prices are expected to remain elevated in 4Q, supported by persistent disruptions around the Strait of Hormuz, rising risks at Bab el-Mandeb and constrained Middle East exports, said Hong Leong IB analyst Thye May Ting.

Global oil supply deficits have widened as regional production and exports were disrupted, while recovering Chinese crude imports add further upside risk for Brent prices, she said.

She expects Brent to be at $95/bbl-$100/bbl toward end-2026, and raises her 2026 average price assumption to $90/bbl from $80/bbl.

Metals:

Gold prices were lower.

Gold investors could be looking beyond the next Federal Reserve move, said UBS Global Economics and Strategy Research's Joni Teves.

The precious metals strategist expects the market to have largely absorbed rate tightening expectations and place greater weight on other reasons to buy gold, such as the asset's diversification appeal and intact official-sector buying.

The peak gold demand season is also approaching in India, while investment activity in China appears supportive, she added.

Gold prices are likely to remain volatile but increasingly likely to rise toward the year-end, she said.

Copper fell in early trading. Prices were lower after recent reports suggested that the Trump administration has delayed a decision on import tariffs on refined copper, said ANZ Research.

Traders have been stockpiling a large amount of copper in the U.S. in anticipation of potential tariffs. Still, rising concerns about inflation are making the White House hesitant on tariff plans, ANZ said.

TODAY'S TOP HEADLINES

Widening Mideast Instability Squeezes Global Oil Supplies

DUBAI-Yemen is the latest domino to fall in the chain of instability set off by the U.S. war with Iran, a development that deepens the risk to global energy supplies and complicates efforts to find a diplomatic off-ramp to the conflict.

The impoverished country has long been at war in a forgotten corner of the world. But the lightning offensive by Iran-backed Houthi militants who seized key territory around the strategic Bab al-Mandeb Strait last week has made Yemen an important variable in the growing set of interlocked regional conflicts that are stretching America's military capabilities and handing more leverage to Tehran.

Trump Sees Race Against China as Key Issue on AI Regulation

WASHINGTON-President Trump and White House AI adviser David Sacks this weekend defended the administration's strategy of minimal regulation after the heads of the nation's top artificial-intelligence companies endorsed a coordinated slowdown in the technology's development.

"We can put up guardrails, and we can do this and that, but I think you have a lot of negative forces that are bringing it up," Trump told reporters Sunday while traveling in Ireland. "And they're bringing up things that won't happen."

Pfizer Makes an Unusual Enemy in $2 Billion Fight Over Unwanted Covid-19 Vaccines

Pfizer is taking aim at an unusual target in its quest to get paid for millions of unwanted Covid-19 vaccines: air-traffic controllers.

The drug giant has pursued European governments seeking to enforce pandemic-era contracts to buy billions of dollars' worth of vaccines that haven't yet been made and are no longer needed. In April, it won a yearslong legal fight to hold Poland and Romania to deals for more than 90 million shots.

Amazon Pauses Operations With 21 Air After Miami Crash

Amazon.com is pausing its operations with 21 Air, the cargo carrier that was operating the Amazon-branded plane that crashed in Miami, killing five people.

Amazon said it notified 21 Air leadership of the decision on Sunday.

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Expected Major Events for Monday 05:00/FIN: Aug CPI

06:00/SWE: Aug CPI

06:30/HUN: Jul Construction

06:30/SWI: Aug Import Price Index

06:30/SWI: Aug PPI

07:00/SVK: Jul Employment and average monthly wage in selected branches

07:00/SVK: Jul Turnover in selected branches of economy, incl Industry & Construction

08:00/CZE: Jul Monthly Balance of Payments

10:00/FRA: 2Q OECD Quarterly National Accounts G20 GDP growth

12:00/POL: Jul Balance of Payments

15:59/UKR: Jul POSTPONED: Trade

15:59/ROM: 2Q Employment and unemployment

16:59/SWI: 1Q Locational & Consolidated banking statistics

16:59/SWI: 2Q Exchange-traded derivatives statistics

16:59/SWI: 2Q International debt securities statistics

16:59/SWI: 1Q Domestic debt securities statistics

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