The Closer
Published
The session's defining tension between AI optimism and AI caution carries into the overnight session largely unresolved, with energy markets adding fresh pressure as oil extends its rally.
Brent rises 0.7% and WTI reaches around $102.12, reviving inflation concerns ahead of Wednesday's Federal Reserve decision. Traders are now pricing a 95% chance of a rate hike, up from above 85% during the regular session, and the 10-year Treasury yield remains near 5%. Iran's top security official Rezaee reiterates that Iran will not engage with the US until its conditions are fully met, calling Trump's signals mixed, which leaves the Hormuz and East-West Pipeline disruptions with no near-term diplomatic off-ramp. Two Iranian fishing boats were also hit by drones in southern Iran, with several fishermen missing. A NATO fighter shot down a drone over Lithuanian airspace, an episode with no confirmed origin but a reminder that the conflict's spillover risk extends beyond the Gulf.
Asian markets reflect the day's semiconductor selloff. The MSCI Asia Pacific Index slips 0.1%, with Japan and South Korea edging lower after the Philadelphia Semiconductor Index fell 5.9%. The iShares MSCI South Korea ETF adds 2.1% in after-hours trade. Nikkei futures slide 0.46% and 10-year JGB futures drop 0.18 point. China's Ministry of Industry and Information Technology says it will boost AI chip design and computing technology, a direct policy response to the pressure on semiconductor development globally.
After-hours US equity moves are narrow. Sysco falls 2.7%, the sharpest individual move in the session. The broader market is essentially flat, with semis modestly firmer in after-hours, partially retracing the day's losses.
On the AI governance front, Trump AI Czar David Sacks calls for greater transparency and audits of AI labs while opposing government control over the pace of development. Trump separately called Nvidia CEO Jensen Huang on Monday to discuss artificial intelligence, according to the New York Times. The Supreme Court rejects Trump's mail ballot curbs for the midterms, a political setback with longer-term electoral implications. lululemon athletica names Heidi O'Neill as CEO effective September 8, ending the interim co-CEO arrangement. Enova International withdraws its bank charter applications and says its growth does not depend on becoming a bank, reaffirming full-year 2026 guidance of 20% to 25% revenue growth and 30% to 35% adjusted EPS growth, with accelerated buybacks planned from its $349 million authorization.