By Ahmad Assiri, Research Strategist at Pepperstone
U.S. equities began the week in subdued fashion before shift toward risk following announcement of a strategic partnership between Nvidia and OpenAI. This supported a strong bid in Nvidia, spilling over to the broader market, with selective support from other names such as Apple. Gains were not evenly shared across the mega-cap complex, however, Oracle stood out as the nimble challenger with giant ambitions, rallying 6% on the back of securing TikTok’s algorithms of the platform in the US, further reinforcing the positive bias in sentiment. Still, familiar concerns about markets testing fresh peaks linger, a caution that paradoxically offers a foundation for traders to refrain from excessive risk-taking.
Nvidia’s announcement of a $100 billion investment with OpenAI to build 10-gigawatt data centers underscored its entrenched dominance in AI infrastructure. The stock rallied nearly 4% on conviction that mega-tech is anchoring control over AI models and also over the very infrastructure layer beneath OpenAI models. For investors, the message is big tech cannot function without Nvidia, whether in chips or compute platforms. This adds renewed test to ATH, even as risks around the sheer scale of investment and reliance on a single partner OpenAI remain. Yet with OpenAI now boasting 700 million weekly active users, the partnership carries strategic heavy weight.
From Washington, Fed Governor Steven Miran drew attention after dissenting at last week’s FOMC meeting, calling for sharp easing and arguing the neutral rate should sit closer to 2.5%. Appointed by Trump, Miran contended that current policy is overly restrictive. Markets, however, largely interpreted his stance through a political lens rather than an economic one, given the broader committee’s view that the neutral rate is far higher. The takeaway is that the more political color seeps into Fed debates, the more questions arise over institutional independence even if, in practice, the ultimate policy path remains anchored to consensus rather than individual voices.
DXY held within familiar ranges but leaned toward weakness. Repeated failures to sustain upside or decisively break resistance have bolstered conviction among traders that range-bound and mean-reversion strategies remain favorable.
Gold remains the standout performer, trading above $3,750 after hitting fresh record highs in early dealings. In today’s environment, it is arguably the hardest market for investors to ignore, underpinned by dollar softness, central banks demand and its entrenched role as a structural hedge. Every pullback over the past month has been swiftly absorbed by both speculative and institutional flows, underscoring the depth of conviction behind the move.
Brent crude remained confined, hovering near $66 after four sessions of sideways-to-negative drift, marking a cumulative 3.75% decline. The price action reflects a balance between steady global demand and OPEC+ output increases, though the latest hikes were modest relative to earlier decisions this year.
The cross-asset landscape is defined by the duality of tech driven sentiment, embodied by Nvidia’s outsized role in AI, and policy scrutiny over Fed independence. Equities continue to enjoy a positive tilt, the dollar struggles to find upside traction while gold has cemented itself as the market’s most compelling anchor.
Ahead Today
Focus turns to flash PMIs from the euro area and the UK, as well as the Riksbank decision, rates expected to remain unchanged at 2.0%. In the US, the Richmond Fed manufacturing survey and a $70 billion 2-year note auction are due, alongside appearances of Powell, Bostic and Bowman that may add nuance to Fed narrative.