Quick overview

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Global markets started the week under pressure as geopolitical tensions in the Middle East intensified and investors reassessed the scale of artificial intelligence spending across major tech firms.

U.S. equities opened lower on Monday after a strong start to the month, with the S&P 500 down 0.30%, the DJIA falling 0.92%, while the NASDAQ Composite edged slightly higher by 0.08%, reflecting continued strength in select technology names despite broader weakness.

Oil Prices Jump as Hormuz Tensions Escalate

Crude oil extended its rally, with Brent futures climbing more than 5% to $113.7 per barrel, while U.S. benchmark West Texas Intermediate rose above $105.3 per barrel.

The move came after reports of renewed violence in the Strait of Hormuz, including alleged attacks on vessels and damage to a key oil port in the United Arab Emirates.

The escalation has raised fresh concerns over global energy security, given the Strait of Hormuz’s role as one of the world’s most critical oil transit routes.

Geopolitics and Military Response

The situation intensified further after former U.S. President Donald Trump reportedly launched a naval initiative dubbed “Project Freedom,” aimed at securing shipping lanes in the region.

Japan’s Prime Minister Sanae Takaichi warned that any disruption in the Strait of Hormuz would have a “major impact” on global energy markets, underscoring rising international concern over supply stability.

Tech Earnings and AI Spending Under Scrutiny

Beyond geopolitics, investors are also focused on a heavy week of corporate earnings and growing questions about the scale of artificial intelligence investments across the industry.

Estimates suggest AI-related spending could reach $751 billion by 2026, significantly above earlier projections and marking an 83% increase versus 2025 expectations.

Key companies reporting results this week include Advanced Micro Devices, Inc., Super Micro Computer, Inc., Palantir Technologies Inc., The Walt Disney Company, and McDonald’s Corporation.

Global Markets Turn Risk-Off

European equities fell sharply, with the Euro Stoxx 50 down 2.18%, Germany’s DAX losing 1.06%, and France’s CAC 40 declining 1.71%.

In Asia, sentiment was mixed: Hong Kong’s Hang Seng Index rose 1.21%, Shanghai’s benchmark gained 0.11%, South Korea’s KOSPI surged 5.21%, while Japan’s Nikkei 225 added 0.38%.