Military tensions in the Persian Gulf over the weekend renewed concerns, with reports suggesting US personnel casualties that should have signaled a significant deterioration. However, the reaction from international oil prices was remarkably muted. Brent crude futures rose briefly during early Monday trading before swiftly erasing those gains. This market behavior suggests that the geopolitical risk premium is diminishing, indicating investors have become somewhat desensitized to the months-long stalemate.
A consensus has emerged that the conflict remains contained, with a low probability of all-out war. With risks to the strait already priced into oil, traders are prioritizing actual supply and demand fundamentals over distant war narratives. As geopolitical risks briefly fade from the spotlight, capital has rapidly pivoted to this week's critical event: earnings releases from Silicon Valley tech giants.
As a bellwether for the global tech industry, Alphabet's quarterly earnings are under intense scrutiny. Specifically, its capital expenditure guidance is seen as a key watershed for judging the trajectory of the AI supply chain. Recent volatility in memory chip stocks reflects growing market skepticism about whether monetization capabilities in downstream AI applications can sustain continued price hikes in upstream hardware. Google Cloud's growth rate and its investment plans for AI infrastructure will directly address questions regarding whether the pace of AI spending has hit a ceiling on commercial returns.
Easing external sentiment and expectations for tech stocks recently pushed the Hang Seng Index above the 25,000 mark. However, this level has accumulated significant overhead supply, requiring time to consolidate. Technically, the 25,200 to 25,500 range will serve as a new resistance zone, with support initially seen at 24,500. Sector performance will largely depend on market sentiment following Google's earnings. If its capex guidance exceeds expectations, Hong Kong-listed chip and AI concept stocks may see a short-term trading opportunity. Conversely, if cautious signals are released, investor conviction in AI will face a new test.
