Wall Street spent last week wondering whether the artificial intelligence boom was running out of road. On Monday it got its answer, at least for now. Anthropic filed to list on the Nasdaq and showed investors the kind of revenue growth that makes the spending look sensible, Broadcom lined up a huge financing package so Anthropic can lease its chips, and overnight South Korea’s economy grew far faster than expected on the back of semiconductor exports. Seoul’s KOSPI has jumped more than 3 per cent and Tokyo’s Nikkei is up about 1.7 per cent. Oil, meanwhile, is easing again as Qatar works on a plan to reopen the Strait of Hormuz. It is a better morning than most this month, but it arrives on the day the Fed starts its meeting and Israel goes to the polls.
The 60-Second Market View
US shares rose across the board on Monday. The S&P 500 gained 0.70 per cent to 7,676.77, the Nasdaq Composite added 0.82 per cent to 26,169.38 and the Dow Jones rose 0.28 per cent to 52,361.58. The VIX, Wall Street’s fear gauge, fell more than 5 per cent to 18.39. In London the FTSE 100 climbed 0.72 per cent to 10,767.33.
This morning US futures are flat to slightly higher, with Nasdaq futures a touch softer after Monday’s run. Asia is split: Korea and Japan are rallying hard, Australia is up about 0.4 per cent, while Hong Kong, Shanghai and Taiwan are slightly lower. Brent crude is down about 1 per cent near $114.70 and US crude is just above $100. Gold futures have slipped to about $4,024, the dollar is a little firmer, sterling sits near $1.333 and the US 10-year Treasury yield is just under 5 per cent at 4.97 per cent. Bitcoin is steady just below $80,000.
What Happened Overnight?
The headline in Asia is South Korea. Third-quarter growth came in at 1.0 per cent on the quarter, well ahead of forecasts, with exports up 2.3 per cent and investment in equipment up 4.1 per cent. Chips did much of the heavy lifting, and the KOSPI responded with its biggest gain in weeks, touching about 5,716 at its high. Japan’s Nikkei rose about 1.7 per cent to above 63,000 on the same AI optimism and the relief of cheaper oil.
China offered a two-speed picture. Industrial profits rose 15.5 per cent in the first nine months of the year, with high-tech manufacturing doing most of the work, but mainland shares barely moved and Hong Kong slipped. China’s own technology stocks have had a rough few months, which is a useful reminder that the AI trade is not one trade everywhere.
In the Gulf, Qatari mediators are working on a phased deal in which Iran would reopen the Strait of Hormuz to commercial shipping in return for the US lifting its blockade of Iranian ports. Iranian state television has suggested a shorter timetable of four to five days. Nothing has been agreed, and the order in which each side makes concessions is still the sticking point, but the direction of travel is enough to keep oil off last week’s highs.
The Big Story: AI Gets a Fresh Set of Numbers
For most of October the worry about AI has not been whether the technology works. It has been whether anyone can pay for it. Companies have committed hundreds of billions of dollars to data centres and chips, and last week investors punished Meta for spending too much without enough to show for it. That is the doubt Monday’s news went straight at.
Anthropic, the company behind the Claude models, filed its listing papers and reported first-half revenue of about $16.3 billion, more than ten times the same period a year earlier, according to the filing. It also disclosed enormous long-term computing commitments. On the same day Broadcom announced a $63 billion financing arrangement, backed by several large banks and Blackstone, so that Anthropic can lease Broadcom’s chips rather than pay for them up front. Broadcom shares rose after hours. Put simply, one of the biggest buyers of AI hardware showed it is earning real money, and the people selling the hardware showed they can get the purchases funded.
Korea’s growth figures add the real-economy side of the same story. When a country’s GDP surprises because the world wants more of its memory chips, that is not a sentiment trade. It is orders, shipments and factory investment.
The reaction has been strongest where the AI supply chain lives: Seoul, Tokyo and US chip names. It has been weaker where investors are less convinced, including China’s tech stocks. And it has not yet spread into US futures this morning, which are taking a breather after Monday’s gains.
The implication is that the market has found a reason to believe again, but it has not been tested. Microsoft and Alphabet report on Wednesday evening, a few hours after the Fed decision. Their spending plans and cloud growth will tell investors whether Anthropic’s numbers are a sign of the whole industry or one exceptional company. Lock-up terms in the Anthropic filing that let some insiders sell soon after listing are also attracting attention, which is worth remembering before treating the listing as pure good news.
FX
The dollar index has edged up to about 102.07. EUR/USD is near 1.117 and GBP/USD is around 1.333, with sterling marking time before Wednesday’s Budget. Reports that the national living wage will rise to about £13.20 an hour from next April are a reminder that the Budget will be judged on growth and borrowing, not just headline giveaways. USD/JPY is near 157.6, close to the area that has made Japanese officials uneasy before, with the Bank of Japan deciding on Friday. EUR/GBP is steady near 0.837.
Equities
Monday’s rally was broad, but leadership came from technology. That matters after the chip sector’s long losing run earlier this month: a market that can rally on good AI news is healthier than one that only reacts to bad news. Intel also rose sharply on Monday after an analyst upgrade ahead of its results on Thursday.
In Europe, the FTSE 100’s gain on Monday put it back above 10,700. London has more energy, banks and miners than technology, so it tends to benefit from calmer oil and a steadier mood rather than from AI headlines directly. The bigger test for UK shares is Wednesday, when the Budget and gilt reaction land on the same afternoon as the Fed.
Bonds
The US 10-year yield is 4.97 per cent and the 2-year is 4.70 per cent, with the 30-year at 5.28 per cent. The 5 per cent line on the 10-year has been the market’s comfort threshold all month, and yields are sitting right underneath it. The Fed is expected to hold rates at 3.75 to 4 per cent on Wednesday, so the question for bonds is tone: how worried Chair Kevin Warsh sounds about inflation with oil above $100.
In the UK, the 10-year gilt yield is about 5.35 per cent and the 30-year about 5.76 per cent, still the highest borrowing costs in the G7. That is the backdrop for the Chancellor, John Healey, on Wednesday. German 10-year yields are near 3.37 per cent and Japanese 10-year yields near 2.79 per cent.
Commodities
Brent is down about 1 per cent at $114.68 and US crude about 1 per cent lower near $100.70, as hopes for a Hormuz deal take a little more of the risk premium out. Gold futures are 0.4 per cent lower near $4,024 and silver has dropped about 1.5 per cent to around $53.50, which fits a morning when investors feel less need for protection. Copper is up about half a per cent, helped by the stronger growth news from Asia.
Crypto
Bitcoin is near $79,700 and ether around $2,310, both broadly flat. Crypto has not joined in the AI rally, which says something about where the risk appetite is going this week. The $80,000 level remains the nearby reference.
Today’s Economic Calendar
All day — Israel’s general election — a tight race in which no bloc is expected to win a majority outright; the result matters for how the conflict with Iran is handled and so for oil.
All day — Federal Reserve meeting begins — no decision until Wednesday at 18:00 UK time, but markets will trade around any leaks or commentary on oil and inflation.
12:30 — US durable goods orders (September) — a guide to business investment, including the AI spending that is driving markets.
14:00 — US Conference Board consumer confidence (October) — tells traders whether high fuel prices are starting to hurt households.
All day — Gulf headlines and Qatar-led talks on the Strait of Hormuz — the main driver of oil and, through oil, of inflation expectations.
Levels Traders Are Watching
These are reference points, not predictions. On the S&P 500, Monday’s close near 7,677 is the marker that needs to hold, with 7,600 the round number below. The Nasdaq Composite is back above 26,000, and holding that line ahead of Microsoft and Alphabet matters for sentiment. For Brent, $116.72, Friday’s high, is the level above, and $110 is the floor that has held through October. On the US 10-year, 5 per cent is still the dividing line for equity valuations. Gold’s $4,000 is the obvious psychological level. For sterling, $1.33 to $1.34 is the range into the Budget, and on the FTSE 100, 10,700 is now the support to watch. Bitcoin’s $80,000 remains the pivot.
Where This Leaves Traders
The read this morning is cautiously constructive. The AI trade has fresh evidence behind it, oil is drifting lower on diplomacy rather than on weaker demand, and volatility has eased. That is a better footing than at any point last week. The caution comes from the calendar: nothing has been decided at the Fed, nothing has been signed on Hormuz, and the two technology results that matter most are still a day away.
What would change the view is easy to spell out. A collapse in the Qatari talks or a surprise from Israel’s election that raises the risk of escalation would put oil back towards its highs and hurt bonds. A hawkish Fed would push the 10-year back through 5 per cent. Disappointing spending or cloud numbers from Microsoft and Alphabet would quickly undo Monday’s relief. The markets worth keeping on screen are the KOSPI and Nikkei as AI barometers, Nasdaq 100 futures, Brent, the US 10-year yield and GBP/USD into Wednesday.
The opportunity in a week like this is that good news is finally being rewarded. The risk is that it is being rewarded just before the biggest tests of the month. For beginners, the takeaway is that markets move on evidence, and Monday delivered some, but one strong filing does not prove a whole industry. If you want to understand how you handle a week where the mood can swing either way, the free Samuel & Co Trading Trader Assessment is a sensible place to start before Wednesday arrives.
