Global risk assets rise on policy confidence and expansion of AI infrastructure

Huo Xing Finance reports: On August 5, global markets continued their strong performance in risk assets, but the true driver of capital flows is no longer merely corporate earnings or AI-themed narratives—it is the synchronized intervention by governments across energy, exchange rates, supply chains, and monetary policy, prompting a reassessment of institutional credibility and policy execution capability. AI capital expenditures remain the most critical growth engine for markets. Anthropic’s signing of a $10 billion computing services agreement with Volta Infra, combined with Samsung’s launch of its new V10 V-NAND technology significantly boosting storage density, once again demonstrates that AI infrastructure is still in a phase of rapid expansion. The market’s continued willingness to pay premiums for compute, storage, and semiconductor supply chains reflects corporate readiness to accept higher capital costs in exchange for future competitive advantages. However, Federal Reserve officials have simultaneously signaled a more hawkish stance, asserting that current interest rates remain insufficient to effectively curb inflation, resulting in a coexistence of AI investment and a high-rate environment. Going forward, markets will increasingly focus on whether companies possess sufficient cash flow and profitability to support massive capital expenditures, rather than relying solely on valuation expansion to drive stock prices. Another notable shift is emerging in energy markets. Substantial progress has been made in negotiations concerning the Strait of Hormuz, with the contours of a U.S.-Iran agreement gradually taking shape—even discussions have begun regarding European participation in mine-clearing and the establishment of a joint security mechanism, signaling a transition from military confrontation to negotiations over shipping order and energy governance. If the strait resumes normal navigation, even with added maintenance costs, it would still be far less risky than the supply disruptions caused by war, suggesting that energy market risk premiums may continue to decline. Meanwhile, the U.S. government is considering extending the Jones Act waiver, further leveraging administrative tools to reduce domestic energy costs—indicating that energy prices are no longer merely an economic issue but directly impact political support and policy stability. Additionally, while the Bank of Japan has not yet intervened in currency markets, U.S. Treasury Secretary Bessent has publicly stated that necessary measures will be taken to support the yen, implying that exchange rates are increasingly becoming a policy instrument rather than being entirely market-determined. On another front, the U.S. continues exploring expansion of metal tariffs, signaling that supply chain protection policies will persist; global manufacturing costs and inflationary pressures are unlikely to fully dissipate in the near term. Although Michael Burry has once again warned of a potential 1987-style market crash, his concerns are primarily rooted in structural risks arising from market leverage and compressed volatility—not in deteriorating fundamentals. Notably, while U.S. equities hit new highs, the VIX has also risen simultaneously, indicating that markets have not entirely ignored potential risks but are instead driving asset price increases through a combination of options hedging and leveraged trading. This structure implies that as long as AI capital spending, corporate profitability, and policy credibility remain intact, the market retains an upward foundation; however, if inflation reignites, the Fed tightens further, or Hormuz negotiations stall again, overvalued tech stocks and highly leveraged strategies will become the primary sources of renewed volatility expansion. In the short term, market focus will center on whether the Hormuz Strait agreement is formally implemented, the latest remarks from Fed officials on the interest rate path, and whether AI infrastructure investment continues to accelerate. These three themes will jointly determine the new equilibrium among global capital costs, energy prices, and technology valuations—and will become the core basis for pricing risk assets going forward.