Markets Mixed as Oil Prices Slip on US Energy Ceasefire Remarks

Global markets faced heightened geopolitical risks as Houthi attacks raised concerns over energy supply disruptions. Oil prices saw a downward trend following remarks from US President Donald Trump, who stated that Russia and Ukraine agreed to an energy ceasefire. Brent crude dropped 2% to $103 a barrel, and WTI crude fell by a similar margin to $90.

In Asia, markets displayed a mixed trend, with South Korea's Kospi index sliding 2.5%, driven down by chip stocks reacting to losses in the US tech sector. Wall Street is entering a busy earnings and macroeconomic week, with the upcoming US Consumer Price Index set to heavily influence the Federal Reserve's rate decisions.

Tel Aviv Market Outlook

Investors on the Tel Aviv Stock Exchange hope for a better week despite persistent geopolitical headwinds. The ongoing tensions involving the US, Iran, and the Houthis, alongside stubborn bond yields and oil prices, continue to pressure local sentiment. IBI Investment House warned that the current coalition structure could increase risk premiums and weaken the shekel.

Dual-listed stocks provided some support, led by Teva which gained a positive arbitrage gap of about 5% following a surge on Wall Street after receiving FDA approval for a schizophrenia drug. Palo Alto Networks is expected to rise by 4%.

AI Capital Destruction Warning

Chris Wood, global equity strategist at Jefferies, warned that the long-term result of the artificial intelligence boom could be massive capital destruction in the US. The concern stems from whether future profits will justify the staggering capital expenditures poured into the sector, especially as cheaper open-source Chinese models gain market share.

According to the report cited by Bloomberg, Chinese models processed 76.12 trillion tokens on OpenRouter during the week ending September 27, compared to just 14.2 trillion for leading American models. Wood also highlighted rising credit risks, as AI investments are increasingly debt-financed rather than funded solely by tech giants' equity.