Rethink on AI knocks chip stocks; oil prices push up bond yields

The rethink on the pace of artificial intelligence development continued to linger in financial markets, with US chip stocks such as Nvidia and Intel on the slide, while software names – whose business models are threatened by the technology – including Salesforce were on the rise as investors ponder the massive spending on data centres, chips and energy infrastructure.

US President Donald Trump continued to play down AI concerns, while China criticised the moves as seeking to nobble its open-source models, even as the Asian powerhouse’s top spy warned of the threat posed by the technology to the Chinese Communist Party’s grip on power.

Meanwhile, oil prices remained elevated as Iran pulled out of talks with Gulf nations to reopen the Strait of Hormuz, while UK prime minister Andy Burnham mulls whether to send help to Saudi Arabia in fending off growing attacks by Iran-backed Houthi militants on the Red Sea.

That instability in the Middle East pushed up the yield on US 10-year treasuries above 5% for the first time in three years, with the Federal Reserve increasingly seen as hiking its key interest rate this week.

It’s about control

Microsoft threw its weight behind Anthropic chief executive Dario Amodei’s call to slow down the pace of AI development, with the software giant releasing a new set of guiding tenets to make clear that people matter more than AI.

US President Trump called the safety fears a hoax and said AI didn’t need guardrails, while China’s foreign ministry criticised the calls to slow development as fearmongering that sought to curb cheaper Chinese models.

Meanwhile, the New York Times reported head of China’s Ministry of State Security Chen Yixin warned AI could pose a direct threat to the CCP’s hold on power in the world’s second-biggest economy.

Stocks in Europe and Wall Street started the week on the back foot amid the AI rethink, which has been fuelling massive capital spending programmes to build data centres and energy infrastructure to support the burgeoning technology.

Nvidia was down 2.1% in late trading and Intel declined 4.4%, although software firms such as Salesforce were among beneficiaries.

“AI hardware and infrastructure stocks were heavily sold, with semiconductor names among the major casualties,” Moomoo market strategy consultant Greg Boland said in a note. “The market is effectively asking whether the enormous capital spending on data centres, chips and power infrastructure can continue at its current pace.”

And amid the calls for a slowdown, Anthropic launched a new set of tools for financial advisers, while Reuters reported DeepSeek planned to hire a new chief financial officer ahead of a potential listing on Shanghai’s tech-heavy Star Market and X Corp and SpaceXAI settled their claims against Apple, accusing the iPhone maker of conspiring with OpenAI to monopolise markets for smartphones and chatbots.

And The Australian reported that OpenAI was seeking to force the Australian federal government to water down copyright laws in return for domestic investment in AI model training and renewable energy.

Going nowhere

Brent crude oil futures rose 0.3% to US$104.91 a barrel – easing from earlier highs – as Saudi Arabia was forced to shut down a key pipeline in response to drone attacks. Iran pulled out of proposed talks with Gulf partners to reopen the Strait of Hormuz, while Bloomberg reported Saudi was seeking to boost shipments through the maritime channel.

Meanwhile, UK PM Burnham was reportedly mulling options to support the Saudis in countering the growing attacks from Houthis in Yemen, amid concerns of a sharper hit to the economy from the Middle East conflict.

The oil price squeeze pushed government bond yields higher, with the yield on US 10-year treasuries climbing above 5% for the first time since 2023 before easing back to 4.96% at 7am in Auckland. New Zealand’s equivalent was at 5.02%.

Stocks on Wall Street were modestly weaker in the uncertain environment, with the S&P 500 and tech-heavy Nasdaq Composite both down 0.3% in late trading, while the Dow Jones Industrial Average slipped 0.2%, with Goldman Sachs, Caterpillar and Nvidia at the bottom of the leaderboard. Abbott Laboratories rallied after agreeing to a US$385 million settlement with the Department of Justice over its management of a baby formula facility, where bacteria was suspected of causing deaths.

Across the Atlantic, the UK’s FTSE 100 rose 0.4%, while Germany’s DAX fell 0.5% and France’s CAC 40 slipped 0.8%.

Meanwhile, Sweden’s general election remained too close to call after more than 90% of the ballots counted, with the left-wing bloc marginally ahead. No media have called a winner, and coalition negotiations would likely drag on.

And Danish drugmaker Novo has dropped the Nordisk part of its name for day-to-day use.

Australian futures are pointing to a 0.1% gain for the S&P/ASX 200 index when trading opens across the Tasman, while the kiwi dollar traded at 57.86 US cents from 57.84 cents yesterday.

Chinese retail sales and industrial production figures today will be in view for exporters, while local data today include Statistics New Zealand’s monthly spending on electronics cards. Stock market operator NZX sheds rights to its upcoming dividend.

Reporting by Paul McBeth. Image from Aerps.com on Unsplash.