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Today Fundamental Analysis: Oil prices open higher, stocks decline on AI safety fears
Oil prices surged more than 3% in early trading today, with Brent rising to $107.86 and WTI to $103.24, as fresh Houthi strikes on Saudi Arabia and attacks on shipping in the Gulf intensified supply concerns.
The temporary closure of Saudi Arabia’s East-West pipeline, which can handle up to 4% of global oil supply, further tightened the market, while disruptions around the Strait of Hormuz and Bab el-Mandeb added to fears of prolonged supply constraints. With regional talks over Hormuz postponed, geopolitical risks continue to provide strong upward pressure on crude prices. Higher energy prices are adding to inflation concerns ahead of the Fed’s September meeting, with markets now pricing around an 84% probability of a rate hike.
In the US, stock futures fell sharply in early trading today, led by a 1.3% decline in Nasdaq-100 futures, as investors reacted to uncertainty around the future of major AI IPOs and growing concerns over AI safety. OpenAI said it would not go public this year, while Anthropic’s CEO called for a slower pace of AI development, raising questions about the sustainability of the AI-driven market rally.
Gold remains range-bound after recovering from below $4,300, as investors await key central-bank decisions from the Fed, Bank of England, and Bank of Japan this week. Expectations for a more hawkish policy stance are weighing on the non-yielding metal, particularly after last week’s hotter US inflation data boosted Fed rate-hike expectations.
In the crypto market, bitcoin rose slightly today after 3 days of trading in a tight range. The cryptocurrency broke above $77,00 after facing a strong resistance around $76,000. Negative ETF netflows during the past week reflect market concerns about the effect of a potential rate hike on the crypto market.
Gold buying by central banks has hit its highest rate since 2024.
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