General Market News

ByteDance and the Motion Picture Association signed an agreement to strengthen copyright protections on ByteDance's AI video and image-generation models. The deal resolves concerns raised by Disney and other studios in February about unauthorized generation of copyrighted characters and celebrity likenesses. The agreement covers ByteDance's Seedance and Seedream models used across TikTok, CapCut, and Dreamina.

• The MPA sent a cease-and-desist letter earlier this year after studios complained that Seedance could generate content featuring copyrighted film and TV characters without permission
• ByteDance updated its Seedance video and Seedream image-generation models with stronger intellectual property protections
• Both parties committed to ongoing collaboration on copyright safeguards as AI technology continues to evolve

U.S. markets opened mixed on Monday as AI optimism lifted tech stocks, offsetting concerns from rising oil prices driven by Middle East tensions. The Dow fell 0.3% while the Nasdaq stayed flat, supported by lower Federal Reserve rate hike expectations following softer inflation data and weak July retail sales.

• Chip stocks rallied on reports that an AI company expects $190-$200 billion revenue by 2028, with Micron rising over 4% and Nvidia earnings awaited next week
• Probability of a September Fed rate hike dropped to 31% from near 50-50 odds a week earlier, boosting sentiment for growth stocks
• Oil prices climbed nearly 1% (WTI to $83, Brent to $89) on warnings of escalating tensions in the Strait of Hormuz, keeping inflation risks elevated

Mexican banking affiliates of six major global banks agreed to pay $86.4 million to settle an antitrust lawsuit accusing them of rigging the Mexican government bond market over an 11-year period. Combined with earlier settlements by Barclays and JPMorgan, the total payout reaches $107.1 million before legal fees. The settlement, pending court approval, resolves an eight-year-old case that is part of broader litigation against major banks for market manipulation.

• Bank of America, Banco Santander, BBVA, Citigroup, Deutsche Bank, and HSBC settled claims they conspired to fix prices and allocations of Mexican government bonds from January 2006 to April 2017, though the banks denied wrongdoing
• Investors cited chatroom transcripts as evidence that banks suppressed prices of bonds they purchased and inflated prices of bonds they sold
• The case is part of over a decade of litigation in Manhattan targeting alleged collusion by major banks to manipulate interest rates, U.S. Treasuries, bonds, currencies, and commodities

Oil prices rose on Monday as Iran ruled out extending its memorandum of understanding with the U.S., which expires after a 60-day deadline. A senior Iranian official warned Tehran would shift to offensive action if diplomacy fails, raising concerns about potential escalation in the region and disruption to oil flows through the Strait of Hormuz.

• WTI crude futures rose 0.76% to $83.03 per barrel while Brent crude increased 0.92% to $89.33 per barrel
• The U.S.-Iran memorandum of understanding signed June 17 was intended to keep the Strait of Hormuz open while negotiating a final nuclear deal within 60 days
• Iran's Foreign Ministry spokesman stated the U.S. 'violated the understanding from the very beginning' and ruled out any extension talks

The VIX, Wall Street's volatility index, has fallen to 14.2, its lowest level in 2026, as the S&P 500 has climbed 16% year-to-date to record highs. Analysts warn this signals dangerous investor complacency heading into the historically volatile mid-August to mid-October period, especially during a midterm election year with unresolved geopolitical risks.

• Every midterm election year since 1990 has seen the equal-weight S&P pull back at least 7% from its mid-August peak through mid-October, yet 2026 has had no 80% downside volume days since October (typical years average 21 such days)
• Despite dovish inflation data, long-end Treasury yields remain near cycle highs, while July retail sales fell 0.6%, indicating growing U.S. consumer strain
• Major unresolved risks include the ongoing Middle East conflict and Strait of Hormuz blockade, with two-month implied volatility near pre-Iran-war levels at 13.5% despite active geopolitical threats

US stock futures showed mixed movement on August 17, 2026, as traders await a wave of major retail earnings reports from Walmart, Target, Lowe's, and Home Depot. The earnings will provide insight into consumer spending during the back-to-school season, while uncertainty around the Federal Reserve's rate decision continues to influence market sentiment.

• Dow futures fell 0.2%, S&P 500 rose 0.1% after a third consecutive weekly gain, and Nasdaq-100 gained 0.5%
• Traders have reduced the probability of a September Fed rate hike at Jackson Hole to less than one-third amid mixed inflation and jobs data
• Brent crude oil rose to $89 per barrel, while 10- and 30-year Treasury yields both increased 5 basis points on Friday

China's crude oil throughput in July 2026 rose 0.3% month-on-month to 12.5 million barrels per day, marking the first monthly increase since the Iran war began in late February. Despite this uptick, July throughput remained 15.8% below year-earlier levels and far below pre-war levels, as the conflict has disrupted supplies and weakened domestic demand.

• China drew down an estimated 25-28 million barrels from onshore oil stockpiles in July, the largest drawdown since September 2021, suggesting actual refinery output may be higher than official figures indicate
• Oil imports remain down 24% year-on-year despite a rebound last month, with consultancies estimating drawdowns are accelerating and could continue through October 2026
• Year-to-date throughput for January-July fell 6.5% to 13.67 million bpd, while domestic crude production increased 0.9% to 4.3 million bpd in July

US stock futures opened higher on Monday, led by Nasdaq 100 futures rising 170 points as weaker retail sales data reduced expectations for a September Federal Reserve rate hike. The S&P 500 is approaching its 28th record close of 2026, though rising oil prices near $90 per barrel pose a risk to the softer inflation narrative.

• US retail sales fell 0.6% in July, the first decline in nine months, pushing the probability of a September Fed rate increase down to 31% from roughly 50% a month ago
• Micron stock jumped 3.5% to above $1,000 premarket on domestic chip-sourcing signals and expectations that DRAM prices will rise 15-20% and NAND prices 30-40% in Q3
• Brent crude climbed to $89.44 per barrel as stalled Iran negotiations and reduced Strait of Hormuz tanker traffic threaten to reignite inflation concerns despite weaker economic data

Russia's Novorossiysk port, the country's main Black Sea oil export facility, resumed crude oil loadings on Sunday after suspending operations on Friday due to a Ukrainian drone attack. The port handles approximately 700,000 barrels per day of Russian and Kazakh crude oil and serves as a critical transit route for landlocked Kazakhstan's oil exports.

• A Suezmax-class tanker loaded Kazakh KEBCO crude starting Sunday with departure scheduled Monday, while another tanker is expected to load 80,000 tons of KEBCO crude on Tuesday
• The port suspended loadings after the drone attack caused storage tanks to reach capacity when oil deliveries continued but export operations stopped
• The incident highlights the growing vulnerability of Russian energy infrastructure to repeated Ukrainian drone attacks in recent months, affecting both Russian and Kazakh oil exports

U.S. retail sales posted their biggest drop in nine months in July, dampening consumer spending outlook ahead of key earnings reports from Home Depot, Target, and Walmart this week. The weak retail data, combined with subdued inflation reports, has reduced Federal Reserve rate hike expectations for September, helping Wall Street indexes push to record highs despite ongoing Iran tensions affecting oil prices.

• July retail sales decline was partly attributed to falling oil prices and Amazon shifting 'Prime Day' to June, but aligns with dropping consumer confidence in University of Michigan surveys
• Fed rate hike expectations for September have moderated following the retail miss and recent subdued inflation data, though oil price increases from Iran standoff may shift outlook before next month's meeting
• China's economic slowdown continues with industrial output and retail sales weakening, while new home prices fell 3.2% year-over-year in July amid persistent property sector struggles

The S&P 500 rallied over 6% in 12 trading days to record highs, driven by strong second-quarter earnings reports. However, analysts warn this earnings surge may represent companies 'over-earning' due to one-time factors like AI investment markups, data-center buildouts, and energy sector spikes, raising questions about sustainability. Market strategists see constructive near-term flows but growing caution for September and beyond.

• The rally was fueled by relief from prior tech concerns, semiconductor recovery, and benign inflation data that reduced Fed rate hike expectations, with retail and professional investors rushing back into equities
• Second-quarter earnings may be inflated by markups of tech giants' stakes in AI companies (OpenAI, Anthropic), data-center revenue booked upfront against future expenses, and one-time energy sector gains from supply disruptions
• The S&P 500 P/E ratio stands at around 20x (down from 23x last October), with strategists warning that valuation peaks may have passed and cautioning that August buying capacity could be exhausted by September

President Trump-backed World Liberty Financial is collaborating with Hong Kong-based WorldClaw, which offers AI models from Chinese companies flagged by the U.S. administration for national security concerns. Nearly half of WorldClaw's 90 AI models come from Chinese firms like Alibaba, Baidu, and Z.ai that face Pentagon restrictions or Commerce Department designations. The Trump family, which owns 38% of World Liberty, earns revenue when WorldClaw users pay with World Liberty's crypto tokens.

• 43 of 90 AI models on WorldClaw come from Chinese companies the Trump administration has flagged for ties to the military or intellectual property theft, including Alibaba and Baidu (Pentagon-designated) and Z.ai (Commerce Entity List)
• The Trump family has earned over $1.4 billion from World Liberty token sales and profits from USD1 stablecoin use, including payments on WorldClaw's platform which has over 10,000 users processing 50 million daily tasks
• Seven experts cited the arrangement as hypocritical given administration stance on Chinese tech, though the collaboration is legal and reflects Trump's 'business-first approach' amid ongoing U.S.-China AI competition

An ECB blog post warns that a market correction to U.S. tech stock valuations driven by AI hype is likely, with potentially severe consequences. The post notes that policymakers have limited fiscal and monetary buffers to cushion the economic impact compared to past corrections. Euro zone households and institutions face significant exposure to major U.S. tech stocks, raising financial stability concerns.

• European households have €440 billion exposure to the 'Magnificent 7' tech stocks (Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia, Tesla), with pension and insurance firms holding similar amounts
• Economic research on past technological revolutions suggests stock corrections are likely even if AI succeeds, as overly optimistic profit growth expectations are difficult to meet
• Policymakers have 'markedly less room' to cut interest rates or use fiscal policy compared to the dot-com era, making it harder to cushion fallout from a correction coinciding with broader market instability

Treasury yields declined on Monday as investors awaited the release of July's FOMC meeting minutes scheduled for Wednesday. The 10-year Treasury yield fell more than 2 basis points to 4.6743%, while the 2-year and 30-year yields also moved lower. Markets are seeking further insights into the Federal Reserve's monetary policy decisions and future rate trajectory.

• The 10-year Treasury yield dropped over 2 basis points to 4.6743%, while the 2-year fell to 4.1542% and the 30-year declined to 5.2445%
• The Federal Reserve held rates steady at 3.50%-3.75% for the fifth consecutive meeting on July 29, with three dissenting members (Hammack, Kashkari, and Logan) calling for a 25 basis point hike instead
• Treasury yields had risen Friday after retail sales unexpectedly fell 0.6% in the latest month, following stronger performance in July

China curtailed 360 terawatt-hours of clean energy in the first half of 2026, a 49% increase year-over-year, as grid infrastructure failed to keep pace with renewable capacity expansion. This wasted power could have supplied Mexico for a year, with similar curtailment issues emerging in Australia, Japan, and India. The trend threatens renewable investment viability globally as grids reach capacity limits while fossil fuel reliance continues.

• Independent analysts estimate China rejected 26.1% of total wind and solar output in H1 2026, far exceeding the government's reported curtailment rates of 8.6% (solar) and 9.1% (wind)
• Insufficient transmission infrastructure and guaranteed coal plant operation contracts are blamed for structural curtailment issues expected to persist through the decade
• Curtailment surged across Asia-Pacific: Australia up 37% to 2.93 TWh (7% of renewable output), Japan up 34% to 2.35 TWh (4% of output), and India curtailed 8.13 TWh in Q2 (14% of solar output)

Shipping traffic through the Strait of Hormuz has effectively halted ahead of Monday's expiry of a 60-day U.S.-Iran ceasefire, with diplomatic talks stalled. Only five vessels transited the critical oil passage on Saturday compared to 31 the previous weekend, as uncertainty grips the waterway that carries a fifth of global oil supplies. The dramatic slowdown reflects a 90% decline in shipping since conflict began in February.

• Shipping through the Strait dropped to just 5 vessels on Saturday and zero on Sunday, down from an average of 130 daily transits before the war started February 28
• Iran's Foreign Minister denied any ceasefire or active negotiations exist, while Iran's Deputy Foreign Minister asserted the Strait will remain under 'Iran's command'
• Oil prices remained relatively stable with Brent at $88.45 and WTI at $81.79 per barrel despite the geopolitical uncertainty surrounding the ceasefire expiration

Online fast-fashion retailer Shein is targeting a company valuation of around $25 billion in its upcoming Hong Kong IPO, according to sources. This represents a significant decline from its nearly $100 billion valuation four years ago, attributed to challenging business conditions. The Singapore-based company, which sells low-cost clothing to customers in about 160 countries, plans to launch the offering later this week.

• Shein's target valuation of $25-28 billion marks a roughly 75% drop from its peak valuation of nearly $100 billion in 2020
• The company, founded in China in 2012 and now headquartered in Singapore, is known for ultra-low pricing such as $5 dresses and $10 jeans
• The IPO launch is expected later this week in Hong Kong after the company shifted from earlier plans for a U.S. listing

Emerging markets are experiencing record capital inflows and bond issuance in 2026, reversing a decade-long 'valley of tears' from 2015-2025. Improved fundamentals, stronger reserves, deeper local capital markets, and investor diversification away from U.S. assets are driving the shift, despite global shocks from war, tariffs, and AI volatility. Foreign investors poured $204 billion into EM through July, while governments issued a record $187 billion in bonds year-to-date.

• EM debt inflows reached $204 billion through July 2026, up from $177.7 billion in the prior year period, marking a more than two-decade high despite disruptions from the Strait of Hormuz closure and elevated U.S. Treasury yields
• Local-currency sovereign bonds outstanding total approximately $13 trillion by end-2024, dwarfing $1.4 trillion in international hard-currency debt, with domestic investors providing greater market stability and buffering against global shocks
• Multiple countries including Pakistan, Ghana, Ecuador, Nigeria and Argentina received credit rating upgrades, while managers favor local-currency debt in Brazil, Colombia, Egypt and Nigeria, though El Niño and fertilizer costs pose inflation risks

Japanese automakers face dual headwinds from potential yen strengthening and the Middle East conflict. After benefiting from a historically weak yen, companies like Toyota, Honda, and Nissan now face risks from Japan's rare currency intervention and supply chain disruptions from the Iran war, which threaten to erode recent profit gains.

• A 1% change in the yen affects Japanese automakers' operating profit by roughly 2%, with some companies experiencing up to 4% sensitivity according to Bernstein analysts
• Japan and the U.S. Treasury conducted a rare joint yen-buying intervention in August after the currency fell to 40-year lows past 163 per dollar, potentially reversing export competitiveness gains
• The Middle East conflict threatens key shipping lanes (Strait of Hormuz and Red Sea) and is driving surging costs for raw materials including aluminum, naphtha, resins, and memory chips critical for car production

Major asset managers are shifting AI investment strategies beyond Big Tech's infrastructure spending concerns, now focusing on which companies will deliver long-term returns. Hyperscalers (largest cloud providers like Amazon, Microsoft, Google) are attracting increased investment as they're expected to benefit from AI infrastructure buildout, while neocloud providers face risks from potential pricing normalization. The shift comes after recent earnings reassured markets about robust AI demand despite capacity constraints.

• Hyperscalers are expected to generate $340 billion more in annual operating cash flow by 2027 versus 2025, though capex will rise by approximately $534 billion in the same period
• Wellington Management ($1.3 trillion AUM) has increased positions in hyperscalers, viewing them as 'very large beneficiaries' of the AI shift, while neocloud providers (up 50-200% recently) may be vulnerable if capacity constraints ease and pricing normalizes
• Analysts warn AI monetization needs a 5x to 13x increase to justify current spending plans, and competition will likely narrow the field with fewer winners emerging than current market players