AI Rebound, Oil Rally Lead Monday's Market Moves

Market snapshot:

• S&P 500 added 0.4%
• WTI crude jumped $2.37 to $103.78
• US 10-year yield rose 4.2 basis points to 5.14%
• AUD outperformed, JPY lagged behind
• Gold declined $25 to $4139

Monday marked a rebound in AI-related stocks, with memory and chip names climbing on renewed optimism. CoreWeave shares, however, eased lower due to debt concerns. Amazon shares rose 5% after an upgrade. Still, decliners beat advancers by a 2-to-1 ratio, leaving the rally's breadth thin.

An intraday reversal in oil prices was part of the explanation. Crude opened the week lower after Trump waived sanctions on Russia, but that move lost steam and flipped on reports of small US strikes in Iran and Houthi attacks on Saudi oil infrastructure. Oil settled sharply higher, and that spillover hit bonds, lifting US 10s 4 bps to 5.14%.

US economic data was thin, but NAHB figures highlight how 2027 could be tough for housing if interest rates stay here. In Canada, the loonie slipped after CPI came in less hot than expected. Despite that, RBC shifted its call to expect a BOC rate hike this month, as central banks globally turned hawkish at the IMF meetings, likely after sharing stories of broadening price pressures. Along those lines, the BOC consumer survey showed rising 5-year inflation expectations.

Finally, a period of intense election activity is ahead, with focus on the US midterms, Brazilian election, Israeli election and Canadian referendum. That overlaps with the ramp-up of Q3 earnings reports.