Hello everyone, I am Leonie Kidd from London. Welcome to another episode of Daily Open brought to you by CNBC.
AI The bulls are trampling on the 'canary in the coalmine' of the debt market.
Despite warnings from the bond market about fiscal constraints, the stock market still soared to new record highs.
This is a complex combination for investors, but there will be even more clues today: the minutes of the Federal Reserve meeting will be released, which are expected to provide some clarification regarding the much-debated interest rate hike in September.
Continue reading below.
Things you need to know today
The S&P 500 index has reached a new historical high, closing above 7,800 points for the first time. Nearly all of the increase came from the technology sector, with large chip manufacturers such as Advanced Micro Devices and Marvell Technology leading the gains.
At the same time, U.S. Treasury yields have fallen from high levels, but they remain at a relatively high range.
If you want to understand in more detail the reasons behind the S&P 500's upward trend against the market, you can click here to read more.
Reverse Risk
Despite the generally positive market sentiment surrounding AI, some investors are still issuing warnings.
Singapore's sovereign investment giant Temasek ( Temasek ) warned that the reversal of AI transactions is the biggest risk facing the current market. The Chief Investment Officer, Rohit Sipahimalani, stated at the Milken Asia Summit: " AI is an environment where changes happen so quickly; things can change easily, and you must be able to pivot swiftly."
Meanwhile, the former BitMEX CEO Arthur Haynes warned that trillions of dollars were "wasted" during the AI craze.
Hayes said, "If you study the history of finance and observe each major technological advancement, you will find that there is always overbuilding. There are always collapses, but there are also always rescues."
Follow minute by minute
Later on Wednesday, investors will be closely watching the release of the minutes from the Federal Reserve's meeting in September. That meeting marked the first interest rate hike since 2023, and despite pressure from the White House advocating for the opposite, the Fed still decided to raise rates.
According to CME FedWatch, the probability of a 25-basis-point interest rate hike in October is 20.5%, which is lower than the approximately 51% from a week ago; however, market pricing indicates that the probability of a rate hike at the December meeting is 84.5%.
India raises interest rates
The Reserve Bank of India raised interest rates for the first time since 2023, joining a cycle of tightening monetary policy.
India's inflation has been rising for 10 consecutive months, and despite facing external challenges, economic growth has remained strong.
Oil prices continue to rise.
In morning trading, oil prices rose due to further attacks by Houthi militants supported by Yemen and Iran on Saudi Arabia's oil infrastructure.
Iran has increased attacks on oil tankers passing through the Strait of Hormuz, which has once again raised concerns among traders about oil supply.
“Squawk Box Europe” will conduct an exclusive interview with Chevron CEO Mike Wirth to discuss how supply disruptions are transmitted to gas stations. Click here to watch the interview.
—— Leonie Kidd
Finally, as a supplementary note...
British Airways plans to create a record 106-seat business class on Airbus A380 giant aircraft.
British Airways is creating what it claims to be the “largest business class in the world” by removing dozens of economy class seats, which is the most prominent example of airlines betting on the future of high-spending passengers.
These changes are part of a major overhaul of British Airways' fleet and ground services, which includes the VIP lounges at London Heathrow Airport.
—— Leslie Josephs
