James Brodie
Head of Learning & Development, Flux
US Markets Down on Chinese AI, Oil Jumps, US Consumer Confidence Up
Brent surges on escalating US-Iran conflict as AI-led equity selloff deepens and Ukraine intensifies strikes on Russian fuel infrastructure.
U.S. equities closed lower no Friday with Nasdaq -1.5% & S&P down 1% on continued AI fallout, this time over the rise of new Chinese models (Moonshot) to compete with OpenAI and Anthropic.
Surprisingly today’s Brent move (+$3.2) sees virtually no change from markets, the dollar, U.S. 2-year and gold all within 0.3% of Fridays close. Over in Asia the Kospi has another circuit breaker, currently -4.4% lower on the day.
With continued strikes between U.S. & Iran over the weekend there’s no de-escalation headlines on Monday morning. Brent jumps $3.2 with refined products (Chart 1: European diesel, Flux) making new highs, exacerbated by news from Russia. Ukraine hit 4 oil depots in Russia's Stavropol Krai region this morning, plus 3 more oil tankers in the Black Sea. Depots and tankers on the same day means both the storage side and the transport side are getting hit simultaneously. The fuel crisis inside Russia is compounding.
Gold primed for an aggressive move shortly (Chart 2: Bloomberg)
Consumer confidence in the US is strengthening. The University of Michigan sentiment index beats expectations across the board. Current conditions and expectations improve, while 1‑year and 5‑10‑year inflation expectations soften.
The Nikkei 225 dropped -4% on Friday, now more than -10% below its June 25 peak, marking a technical correction and its worst weekly loss since April 2025. The broader Topix fell -2.7%, with Tokyo Electron alone contributing the most to the decline after sliding -8.2%.
Chinese AI startup Moonshot rumbled through global markets. The company claims its new Kimi K3 model rivals top offerings from OpenAI and Anthropic in a release reminiscent of last year’s “DeepSeek moment.” It came as President Xi Jinping appeared at China’s premier AI summit, underscoring how rapidly the nation’s AI developers are closing the gap with US rivals.
While Apple makes another all-time high, $1 trillion has been erased from SpaceX stock since its peak, at $225.6, now trading $124. Having said that SpaceX, is in talks to provide compute power to the US Pentagon, per WSJ.
Hedge Funds Amass Biggest New Zealand Dollar Net Short Since 2006 (Chart 3: Bloomberg, @C_Barraud)
RBI intervenes to Support Rupee as Currency Nears Record Low – Bloomberg
Gold miners are now cheaper relative to the S&P 500 than at any point in history. (Chart 4: Bloomberg, @TaviCosta)
1.2 million Koreans were hit with margin calls in the latest KOSPI crash. As of July 13, 1 in 30 south Korean adults saw their leveraged retail accounts get hit by margin calls. Roughly 340,000 individuals were fully liquidated, with some left owing money to their brokers. SK Hynix and Samsung accounted for roughly one-third of all leveraged positions. their sharp synchronized selloff exacerbated the blow up, hitting younger investors the hardest. Almost two-thirds of all younger traders got liquidated.
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