Geopolitical tensions remain elevated. The ceasefire is holding, but remains fragile. The US Navy reportedly “boarded a supertanker carrying Iranian oil in the Indian Ocean,” while Donald Trump ordered American forces to shoot boats placing mines in the Strait of Hormuz. Iran, frustrated by Trump’s blockade and public bashing, appears unwilling to return to the negotiating table.
Oil prices are consolidating near the $100 per barrel level. Developed market yields are rising alongside oil prices, fueling inflation expectations, while equities remain hesitant near all-time highs.
PMI data released yesterday confirmed the negative impact of the energy shock on economic activity. European services were particularly affected. The EURUSD has fallen back below its 100-day moving average and is now testing the 200-day moving average to the downside.
A broadly stronger US dollar is also weighing on the global FX complex, with the dollar index testing its own 50-day moving average to the upside as geopolitical tensions persist into the weekend and rising oil prices increase demand for dollars.
As a result, the rally across global equity indices stalled yesterday. The Stoxx 600 closed flat, while the S&P 500 pulled back from all-time highs.
A sharp sell-off in software stocks added to concerns after results from IBM failed to reassure investors that the transition alongside AI would be smooth. The company highlighted slowing software growth and did not upgrade guidance, reinforcing doubts about the sector’s momentum. This revived fears that AI could disrupt traditional software models, prompting broad-based selling across the sector—not just IBM. The iShares Expanded Tech Software ETF fell more than 5%.
This also feeds into concerns around private credit exposure linked to these companies. In short, the software demons were back yesterday.
On the other side of the trade, AI enablers continue to extend gains. Chip stocks moved higher again, with VanEck’s Semiconductor ETF hitting a fresh all-time high as appetite for AI investment remains strong.
Intel earnings after the bell put a cherry on top. The company reported better-than-expected results and guidance, driven by demand for data center chips powering AI expansion, particularly its Xeon server processors.
While Intel has struggled to compete in GPUs against Nvidia and AMD, it remains strong in CPUs. As companies build AI infrastructure, demand for CPUs is also increasing, as they are needed to support systems surrounding GPUs. Nvidia itself launched its Grace CPU earlier this year to tap into that demand. Intel also benefits from its foundry ambitions and US government support to reshore semiconductor production. And if it makes any difference: Elon Musk said he would use Intel tech to build his in-house chip manufacturing plant. Shares rose around 20% in after-hours trading. Intel could benefit further from sustained CPU demand tied to AI expansion.
Across the Pacific, SK Hynix reported similarly strong results. Profit surged significantly, while revenue rose sharply on the back of memory chip demand.
Across the Pacific, the Korean SK Hynix echoed a similar story. Their profit jumped fivefold to over $25bn last quarter while revenue tripled past the $35bn mark. That’s more than half of what Nvidia announced the quarter before and triple the Intel revenue! It’s a big number. SK Hynix investors however were less impressed than Intel’s – as the surge in revenue has been priced. The stock is up by nearly 700% since last year. This surge is partly due to the fact that we’re in a memory chip boom cycle, that SK Hynix expects to last for another 3 years, but after that, if history is any guidance, there will be plenty of chips in the market and that the prices will tank and we will enter the bust cycle. There is a possibility that AI helps memory chip makers break that cycle. But what’s more realistic is that AI demand will make the boom cycle longer, but not keep the sector in the boom phase forever. So profit taking on blockbuster results were on the menu for SK Hynix following the earnings as a sign that it may be time for a certain downside correction and consolidation for memory chip makers
Elsewhere, TSMC reached a fresh all-time high in Taiwan after regulators lifted caps on single-stock holdings. Meanwhile, China’s DeepSeek launched a preview of its anticipated V4 model, lifting Chinese semiconductor stocks. Hua Hong Semiconductor rose sharply, Cambricon Technologies gained, and SMIC also advanced. Alibaba Group—which is reportedly considering an investment in DeepSeek—also saw increased demand.
As a result, the Hang Seng rebounded from early losses, while tech-heavy Nasdaq futures outperformed US and European peers this morning. Geopolitical uncertainty may continue to support demand for technology stocks, as investors remain cautious toward sectors more directly exposed to conflict and global growth risks.
