AI jitters, Trump's fading oil clout and China shock 2.0: The financial week in five charts
SPY•AI-related stocks have driven much of the S&P 500’s returns and growth since ChatGPT launched, while concerns about debt and inflation weighed on heavily indebted AI firms. China’s exports surged 36% year over year in September, and oil markets remained exposed to supply disruptions as Asian refiners stood to benefit from recovering crude exports.
1. AI gains and debt concerns
AI-related stocks have accounted for 75% of S&P 500 returns, 80% of earnings growth and 90% of capital-spending growth since ChatGPT launched in November 2022, according to JPMorgan Private Bank’s Michael Cembalest. Concerns are mounting over the scale and funding of AI investment and whether it will deliver adequate returns. September core inflation rose 0.3%, slightly above forecasts, adding to concerns that interest rates could remain higher for longer. CoreWeave’s five-year credit default swap rose above 1,100 basis points at one point, and the yield on its 2031 bond reached 16% before retreating.
2. Oil market pressures
Trump’s ability to talk down oil markets is fading as the Iran war continues, and the market reaction to his diesel deal with Russian President Vladimir Putin was muted. Around 2 million barrels per day of refining capacity has been lost in Russia and the Middle East, while global oil inventories have drawn down sharply since the war began.
3. China exports and refiners
China’s exports rose 36% year over year in September, the fastest pace since February, while imports also beat expectations. The trade surplus reached $938 billion in the first nine months of the year and was on track to exceed $1 trillion a month earlier than last year. Meanwhile, recovering oil supplies and offline Middle Eastern refineries could benefit Asian refiners if crude exports continue to rise.
