As oil swoons, AI recharges

* UN General Assembly begins in New York * US 2-year note auction (1 p.m. EDT) * New York Fed's John Williams, Richmond Fed's Thomas Barkin and Fed Vice Chair Philip Jefferson speak * Japanese financial markets closed for holiday, returning Thursday The combination of a buzzy reception for Meta's new AI assistant Muse and softer oil prices was enough to give stocks a lift to start the week, with Mark Zuckerberg's firm surging more than 11% on demand for its new agent on Monday. The broader AI stock universe, which has been wavering all month over apocalyptic AI disaster warnings, lapped it up too. Global chip stocks climbed anew, with US chipmaker AMD becoming the latest trillion-dollar-valued stock and Asia's tech stocks rising yet again on Tuesday. The latest leg higher in AI-related stocks and chip firms comes after weeks of handwringing about the potentially destructive effects of AI, but the release of Meta's Muse appears to have recharged optimism, lifting the Nasdaq to record highs. The SOX chip sector index was also up more than 4% on Monday, as the chip mood was further improved by data showing South Korean exports rose 78.3% in the first 20 days of September compared with a year earlier to $71.4 billion. That's the highest 20-day performance on record, as semiconductor shipments increased 259.4%. Debt tensions in Europe centered on France again, with French debt underperforming at an already nervy time for sovereign bond markets, owing to growing doubts about a budget agreement there and the backdrop of next year's presidential elections. The French 10-year borrowing premium over Germany has risen above 100 basis points over the past week for the first time in more than a decade. Meantime, credit default swap insurance costs on French government debt rose to the highest in six years. Back on Wall Street, Fed speakers continued to send hawkish signals, with Chicago Fed boss Austan Goolsbee being the latest to point out that services and demand-driven inflation were just as much a problem as elevated energy prices. Beyond the latest AI stock rally, much now spins into Thursday's summit between President Trump and China's Xi Jinping. AI risks are likely to top the agenda, which will also focus on a potential trade truce extension and geopolitical flashpoints like Taiwan and the Iran war. What's more, the flurry of leaders' meetings at the UN General Assembly this week could see Trump meet with Iranian President Masoud Pezeshkian - according to Trump, at least. Hopes of diplomatic progress on that front helped Monday's general retreat in crude prices. Brent slipped below $100 per barrel on Tuesday after a report from Kyodo News that Iran had offered to reopen the Strait of Hormuz within seven days if the US takes initial steps to ease military pressure. Saudi Arabia also restarted operations at its East-West Pipeline, sources said. Elsewhere in geopolitics, Trump on Sunday pressured Ukrainian President Volodymyr Zelenskiy to cease strikes on Russian oil refineries - although that did not seem to come with an equivalent demand that Moscow stop hitting Ukraine's energy infrastructure. The two will meet in New York this week.

As oil swoons, AI recharges

Events to watch

AI stocks and chips lift equities

French debt pressure and hawkish Fed signals

Geopolitics weigh on oil and set up summit diplomacy

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