Article by: Tide Research
Last Friday, U.S. stocks rebounded, while weekend news caused oil prices to surge initially and then retreat on Monday. The Riyadh airport in Saudi Arabia was attacked for two consecutive days; the U.S. approved Russian diesel transactions; Trump claimed a “energy ceasefire” had been reached between Russia and Ukraine, though Russia has not confirmed this, while Ukraine stated that its energy facilities continue to be targeted. In the technology sector, NVIDIA is reportedly negotiating to acquire or make additional investments in the AI startup Reflection AI.
Oil prices rose sharply before falling back.
Last Friday, the S&P 500 rose 0.59% to close at 7,811.54; the Dow Jones Industrial Average gained 0.83% to close at 51,654.95; and the Nasdaq Composite increased 0.64% to close at 27,366.17. For the week, the S&P 500 advanced 1.15%. Among sectors, Real Estate led gains with a 1.88% rise, followed by Consumer Discretionary up 1.69%, and Health Care up 1.58%. Communication Services and Energy edged lower. Among the Magnificent Seven, Amazon rose 3.29%, Microsoft gained 2.38%, and Tesla climbed 2.05%, while Meta, NVIDIA, and Apple declined.
During early Asian trading on Monday, attacks on Saudi airports and tankers briefly pushed oil prices higher, with Brent crude rising to $105.48 per barrel and WTI reaching $92.44 per barrel. Prices later retreated, with Brent falling to $103.50 per barrel and WTI dropping to $90.73 per barrel. Market expectations for increased supply gained momentum following approval of Russian diesel trades.
Saudi airports hit again; Russia-Ukraine "energy ceasefire" still pending confirmation
The Riyadh International Airport in Saudi Arabia was attacked on Saturday, resulting in 13 deaths and over 300 injuries. The airport terminal was attacked again on Sunday, causing one additional death and 11 injuries; Dammam Airport also reported an attack. The Houthi group claimed responsibility for Saturday’s attack on Riyadh Airport, and Trump stated that the United States is considering participation in strikes against the Houthis. Markets are concerned that further escalation of the conflict could disrupt Middle Eastern shipping and energy supplies, potentially driving up shipping insurance costs.
On October 9, the U.S. Department of the Treasury issued a general license authorizing transactions related to the sale, delivery, and import of Russian-origin diesel fuel, with authorization valid until April 7, 2027. The timing and extent of actual supply increases following authorized transactions will depend on subsequent deliveries.
Trump said on Sunday that Russia and Ukraine have agreed to immediately cease attacks on each other’s energy facilities. Zelensky stated that Ukraine supports a reciprocal ceasefire but is still awaiting details from the U.S., noting that Russian attacks on Ukrainian energy infrastructure continue. Moscow has not confirmed the agreement, and the energy ceasefire has not been verified by all parties.
NVIDIA is reportedly in talks to acquire Reflection AI
According to the Financial Times, NVIDIA is in preliminary discussions with open-weight model company Reflection AI regarding potential acquisition or additional investment, though no deal has been reached.
Last week, Reflection AI launched its first open-weight model, Beam, primarily targeting programming and agent tasks. NVIDIA has previously invested in this company. If this deal proceeds, NVIDIA will gain another piece of the puzzle in its model business, beyond chips.
This Week's Focus
On Tuesday, JPMorgan Chase released its third-quarter earnings report, kicking off the earnings season for U.S. large banks. The market is focused on net interest margin, investment banking revenue, and loan loss provisions, particularly whether the repayment capacity of businesses and consumers has changed amid high interest rates. Bank stocks were among the few sectors to decline on Friday in the S&P 500; whether earnings can reverse expectations is the first key observation for the financial sector this week.
On Wednesday, the U.S. September CPI was released, and ASML reported its third-quarter earnings. The CPI is the most critical macroeconomic data of the week. Oil prices surged last week and experienced significant volatility over the weekend due to the attack on Saudi Arabia, amplifying the impact of the energy component on inflation. If core CPI continues to exceed expectations, market expectations for an October rate hike may reignite. ASML’s order book and guidance reflect demand for semiconductor equipment, directly influencing the SOX index and the entire AI hardware supply chain.
On Thursday, TSMC held its third-quarter earnings conference call. The market focused on utilization rates for advanced process nodes, AI chip orders, and capital expenditure plans for 2027. As the core contract manufacturer for AI chip companies such as NVIDIA and AMD, TSMC’s guidance is often regarded as the most direct indicator of demand for AI hardware.