From Singapore, Anniek Bao presents the latest edition of CNBC’s Daily Open, where global markets continue to navigate a complex landscape marked by geopolitical tensions and rapid technological advancements. Six months into the ongoing conflict, Washington’s stance on the Iran war has shifted from anticipating its conclusion to a long-term commitment. Defense Secretary Pete Hegseth, speaking from Panama, affirmed the U.S. Navy’s capability to indefinitely sustain its blockade of Iranian ports through strategic rotation of warships. Despite this significant geopolitical development, Wall Street demonstrated remarkable resilience, with the S&P 500 not only reaching an intraday record above 7,800 but also securing a closing record, putting it on track for its third consecutive weekly gain.
On Thursday, financial markets defied concerns surrounding the naval blockade. The S&P 500 closed at an unprecedented 7,798.99, having already hit an all-time intraday high. The Nasdaq Composite also registered an impressive gain of 0.81%, reaching 26,803.03. Futures indicated minimal change, yet two of the three major benchmarks were poised for a third straight winning week. Commodity markets saw slight fluctuations; Brent crude for October delivery, after falling over 2% to $87.07 a barrel on Thursday, experienced a marginal uptick in early Asian trading on Friday. Similarly, U.S. West Texas Intermediate futures, which had dipped to $81.25 overnight, also showed a slight increase. These minor gains followed Secretary Hegseth’s reiteration that the U.S. Navy possesses the capacity to maintain the blockade of Iranian ports indefinitely by cycling in and out its naval assets.
While the U.K. economy exhibits promising signs of recovery, with its GDP expanding by 0.4% in the second quarter after a 0.6% rise in the first, the broader outlook remains clouded by the repercussions of the Iran war and persistently high energy prices. This growth trajectory positions the U.K. to be the fastest-growing economy within the G7 for the second consecutive quarter, with Deutsche Bank’s chief U.K. economist, Sanjay Raja, describing the first-half annualized pace of 2% as “scorching.” However, concerns persist regarding the sustainability of this momentum, especially given the International Monetary Fund’s prior warning in April that the Iran conflict would disproportionately impact Britain’s growth due to its significant reliance on oil and gas imports, which are already contributing to rising household costs.
Beyond geopolitical conflicts, Asia’s chip trade has recently showcased an extraordinary and somewhat unsettling phenomenon. The Kospi, South Korea’s benchmark index, entered a technical bull market on Thursday, marking a recovery of over 20% from its July 30 low. This turnaround is particularly striking given that the index had previously entered bear-market territory due to a rout primarily driven by leveraged positions and forced selling. The swiftness of this rebound underscores the extreme volatility inherent in tech stocks and prompts questions about the longevity of the current rally. Phillip Wool, head of research at Rayliant Global Advisors, aptly notes that “Korea’s equity market is basically synonymous with the AI hardware trade at this point.”
The artificial intelligence sector has been abuzz with investor meetings and executive shifts, momentarily diverting attention from technological capabilities to crucial aspects of industry financing and leadership. Krishna Rao, CFO of Anthropic, has been engaging in preliminary discussions with potential investors in anticipation of a possible initial public offering. These conversations, though not yet delving into specific financials or valuation, follow the company’s confidential IPO filing in June, which came after a May funding round valuing it at $965 billion. Meanwhile, OpenAI has experienced notable executive departures, including chief revenue officer Denise Dresser after an eight-month tenure, shortly after veteran executive Brad Lightcap announced his exit. Mark Zuckerberg, in a move widely seen as a direct challenge to OpenAI and Anthropic, has open-sourced Meta’s most advanced AI model, asserting that concentrating AI development in the hands of a few is “inherently problematic.” Separately, Tim Cook inaugurated an advanced manufacturing center in Houston on Thursday with Commerce Secretary Howard Lutnick, a facility that has already begun shipping its initial AI servers. The ongoing Iran war, much like unpredictable weather, now serves as a constant backdrop against which traders must assess risks and strategize their market movements.
