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"The Hawk King" Returns, Market Reprices September Rate Hike
U.S. stocks closed under pressure last Friday, with the three major indices all weakening. The Dow Jones fell 0.02%, essentially flat; the S&P 500 fell 0.25%, and the Nasdaq fell 0.52%.
Last Friday at Jackson Hole, Fed Chairman Walsh delivered his first major speech since taking office. He clearly emphasized that although recent PCE and CPI data have improved, underlying inflation has not shown "meaningful improvement." If inflation does not clearly and sufficiently quickly return to the 2% target, "the Fed still has work to do." The market immediately interpreted this as a potential rate hike in September. The probability of a September hike surged from around 40% to 62.6%, and the two-year Treasury yield jumped about 12 basis points to around 4.36%, hitting a recent high.
CICC believes that the core of Walsh's message this time was not to directly announce a September rate hike, but to attempt to rebuild the Fed's anti-inflation credibility. Their assessment is that the fundamentals are currently still in a state where a hike is "a possibility either way." However, if subsequent employment and inflation data do not show sufficiently significant changes, there is a realistic possibility Walsh might hike in September to maintain policy credibility. Morgan Stanley cautions that Walsh has long prioritized balance sheet issues, and the Fed may initiate a balance sheet reduction of over $1.5 trillion next year, using "more QT, less rate hikes" to curb inflation.
The dollar regained buying interest, approaching near 99.7. Gold plunged over 3%, losing the $4400 level today and falling below its 200-day moving average, hitting a low of $4396; silver fell over 4% in tandem. Non-interest-bearing assets faced rapid deleveraging amid rising real yields and rate hike expectations. Crude oil, however, bucked the trend and rose due to escalating weekend geopolitical tensions: WTI gapped up over 2% at the open, and Brent briefly breached the $90 mark before retreating.
The U.S. military confirmed strikes on two rocket launchers near Iran's Larak Island in the Strait of Hormuz, claiming they were preparing to deploy mines. This is the first public U.S. acknowledgment of military action against Iran since late July. Iran's Revolutionary Guard vowed retaliation, stating it had fired missiles at U.S. military bases. Trump previously emphasized "zero tolerance" for mine deployment, while Bessent is advancing the "Economic Pariah Operation," planning weekly secondary sanctions against Iran starting with banks and warning of using "financial violence" if necessary.
Trump also claimed he would fill the U.S. Strategic Petroleum Reserve with Venezuelan oil, stating he had obtained "majority control" over reserves exceeding 65 billion barrels, aiming to suppress long-term oil price expectations. The yen fell below 160 again, with Bessent saying the movement "is under control" and expecting the Bank of Japan "to do the right thing," signaling the end of Abenomics.
The biggest variable this week is the U.S. August Nonfarm Payrolls report on September 4th. The market expects around 55k-58k new jobs and an unemployment rate around 4.1%. Strong employment data would further heat up Fed hike expectations; weak data could lead to a rebound in tech stocks and gold.
AI Computing Power Recedes, Cloud and Software Break Through
Walsh's hawkish stance on Friday interrupted the post-Nvidia-earnings computing power rally. Semiconductors saw broad profit-taking, while cloud services and software gained strength on the narrative of AI implementation. The Philadelphia Semiconductor Index fell over 3%, Nvidia closed down 4.57%, AMD fell about 2.3%, ARM fell over 6%, as high-valuation hardware was the first to face pressure under rate hike expectations.
However, cloud service and platform giants actually gained. A Barclays report pointed out that for every $100 in revenue for AI model companies, about $35-$45 goes to Amazon AWS, Microsoft Azure, and Google Cloud in the form of inference computing costs, with cloud providers earning about $10-$20 in operating profit, corresponding to a 35%-45% operating margin. In other words, the deeper AI commercialization goes, the more likely cloud giants become infrastructure "rent collectors." Amazon rose nearly 4%, Microsoft and Google (Class A) rose nearly 2%, Meta rose over 1%. On the software side, Elastic surged over 19%, Workday rose nearly 6%, ServiceNow rose over 4%.
Earnings season winds down this week, but AI validation is at its densest. Broadcom, Dell, Hewlett Packard Enterprise, Snowflake, Credo, Ciena, MongoDB, Palo Alto, Zscaler, and others will report. Investors are no longer satisfied with "AI is big," but want to see if orders, gross margins, capital expenditure returns, customer concentration, and guidance can support valuations.
Specific Project Moves and Stock Price Fluctuations:
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Nvidia closed down 4.57%: Mainly affected by rising rate hike expectations, leading to selling of high-valuation chip stocks. Although Wall Street remains optimistic about its AI computing power demand, with Citigroup, Goldman Sachs, and Morgan Stanley raising or maintaining high target prices, short-term valuation pressure is evident.
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Semiconductor sector under overall pressure: The Philadelphia Semiconductor Index fell about 3.5%, AMD fell about 2.3%, ARM fell over 6%, Applied Materials fell over 4%, Marvell Technology fell over 10% post-earnings.
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Cloud services gained strength, Amazon rose nearly 4%: Cloud business synergy with AI computing power was reiterated as positive by institutions like Barclays, leading to funds flowing back to cloud infrastructure. Microsoft rose 1.68% (Azure and OpenAI ecosystem continue to support AI cloud revenue), Google rose about 1.74% (GCP cloud business and Gemini ecosystem gain attention), Meta rose over 1%, Apple rose about 1.63% (market focused on AI and foldable product roadmap under new CEO).
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Elastic surged over 19% post-earnings: Became one of the strongest performers among AI application software stocks. Earnings showed revenue and net profit both exceeding expectations, with RBC Capital, TD Cowen, and others raising target prices. Related sector: Workday rose nearly 6%, ServiceNow rose over 4%, Salesforce rose over 1%, Veeva fell nearly 2%, indicating internal performance and narrative divergence within software.
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Tesla fell nearly 2%: The company officially announced a September 3rd event in Austin, Texas, to unveil the driverless Cybercab model with no steering wheel or pedals, planning to gradually add it to the Robotaxi fleet. Although the mass production timeline affects overall vehicle valuation, the stock closed lower in the short term, dragged down by broader tech sector selling.
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SpaceX rose 0.45%: The company plans to launch its first batch of AI data center satellites equipped with Nvidia Vera Rubin architecture GPUs in Q4 2027. Evercore assigned an "Outperform" rating with a $230 target price. However, the institution also cautioned that significant revenue contribution may not come until FY2029, with orbital heat dissipation, radiation damage, collision risks, and regulatory approval remaining major commercial hurdles. Additionally, OpenAI announced it will stop providing AI model services to SpaceX's code tool Cursor starting November 12th, citing Musk's repeated contract breaches, escalating the feud between the two tech giants.
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NIO rose 0.23%: NIO will release Q2 earnings before the U.S. market opens on September 1st. The market is focused on Q2 delivery volume, gross margin recovery, and multi-brand strategy progress, especially whether Ledao and Firefly can boost sales without eroding margins. Related sectors: Chinese EV stocks, XPeng, Li Auto, BYD supply chain, and power battery chain will be affected by its gross margin guidance.
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Dell fell 3.39%: Dell will release earnings after the U.S. market close on September 1st. Traders are watching AI server orders, profit margins, and delivery cadence.
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Broadcom fell 0.74%: Broadcom will release earnings after the U.S. market close on September 2nd, the most important event for the AI hardware sector this week. The market focus is on AI semiconductor revenue, custom chip orders, and AI networking demand. Related sectors: Credo, Ciena, Hewlett Packard Enterprise, Snowflake, NetApp, Dell, etc., will collectively test the reality of AI capital expenditure.
This Week's Focus:
August 31st (Monday)
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9:20: Zhipu and 32 other Chinese stocks officially included in MSCI indices, taking effect: Index adjustments will bring passive fund allocation and short-term portfolio rebalancing. Zhipu, as a highly watched new addition among emerging market constituents, may drive volatility in AI, semiconductor, healthcare, and new materials sectors.
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G20 Finance Ministers and Central Bank Governors Meeting held, until September 1st: The meeting focuses on global inflation, currency volatility, debt risks, financial stability, and sanctions on Iran. U.S. Treasury Secretary Bessent may push for international cooperation on secondary sanctions against Iran. Related rhetoric will impact crude oil, the U.S. dollar, U.S. Treasuries, and emerging market currencies. If the meeting releases signals of currency coordination, the yen, USD/JPY, and long-term U.S. Treasuries may also experience volatility.
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Zhipu, Black Sesame Intelligent, Minglue Technology, and Horizon Robotics report earnings: Hong Kong-listed AI and autonomous driving chains enter a concentrated validation period. Zhipu's first interim report post-IPO will focus on ARR, API call volume, Token pricing, and commercialization execution; Horizon Robotics relates to autonomous driving chip shipments, penetration of high-level ADAS solutions, and automotive AI chain valuations.
September 1st (Tuesday)
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Tim Cook officially steps down as Apple CEO, John Ternus succeeds: Apple enters a new round of management transition. Cook will become Executive Chairman, and current Senior VP of Hardware Engineering, John Ternus, will take over as CEO. The market is watching whether Apple will accelerate hardware innovation and AI endpoint strategy under the new leadership, particularly the roadmap for foldable iPhone, on-device AI, the new Siri, and smart displays.
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Electronics component and material price hikes take effect collectively: Qualcomm partially adjusts product prices; Maxscend adjusts RF product prices; Taiyo Yuden raises MLCC prices; Mitsubishi Tools adjusts prices; Nan Ya Plastics raises CCL and Prepreg prices by 20%-25%. This round of price hikes reflects rising upstream raw material costs, capacity, and supply chain pressures. Qualcomm and Maxscend price increases will affect the communication chip and RF front-end chain; Taiyo Yuden's MLCC price hikes benefit the passive components sector; Mitsubishi's price adjustments reflect rising industrial consumable costs; Nan Ya Plastics' CCL price hikes will transmit to the PCB and AI server board chain. If downstream accepts the price hikes smoothly, related company profit expectations will improve; if transmission is difficult, it may compress gross margins for terminal hardware manufacturers.
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G20 Ministerial Meeting on Science and Technology held, until September 2nd: Musk, Huang Renxun, Altman, and other tech giants attend. The meeting focuses on global AI governance, digital economy rules, and the U.S.-promoted 'Carolina Principles' for light-touch AI regulation. If the regulatory tone leans accommodative, it will benefit AI platforms, model companies, cloud computing, chips, and the computing power chain; if regulation tightens, valuations of AI application and large model companies may face pressure.
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Japan 10-year and 30-year Government Bond Auctions (September 1st, September 3rd): Japan will issue 10-year and 30-year bonds. With the yen below 160 and long-term U.S. yields high, the market is watching whether demand for domestic Japanese bonds will divert foreign capital. If auction demand is weak, Japanese bond yields may rise, spilling over to affect U.S. Treasuries and global growth stock valuations; if demand is steady, it could help ease global long-term rate pressures.
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NIO earnings pre-market U.S.: The market focuses on Q2 deliveries, vehicle gross margin, narrowing losses, contributions from Ledao and Firefly, and Q3 delivery guidance. If vehicle gross margin remains around 17%-18% and strong delivery outlook is given, sentiment for the Chinese EV sector may recover; if gross margin is eroded by multi-brand expansion, NIO and the new energy vehicle chain may face pressure.
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Baidu's dual-primary listing in Hong Kong and the U.S. takes effect: Dual-primary listing enhances liquidity and financing flexibility in both markets, continuing the benchmark significance of U.S.-listed Chinese stocks returning to Hong Kong. The Hong Kong tech sector may benefit from index inclusion, southbound capital, and international fund rebalancing.
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Shein and Meccamand Robot officially list in Hong Kong: Shein's first-day performance will affect valuations of Hong Kong-listed consumer tech and cross-border e-commerce; Meccamand Robot will impact sentiment in the robotics and machine vision sector.
September 2nd (Wednesday)
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Dell, Credo Technology, MongoDB, Palo Alto Networks earnings: Dell will test the visibility of AI server orders and margin quality; Credo validates AI data center active cable demand; MongoDB observes enterprise database cloud migration; Palo Alto verifies cybersecurity spending driven by AI threats. If orders and guidance are strong, AI infrastructure, networking equipment, data cloud, and cybersecurity sectors may receive a boost.
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22:30 U.S. EIA Crude Oil Inventories, Strategic Petroleum Reserve Inventories: Against the backdrop of escalating U.S.-Iran conflict and rising Strait of Hormuz risks, the importance of inventory data is amplified. If commercial inventories decline and SPR replenishment expectations increase, WTI and Brent may continue to find support; if inventories unexpectedly build, some risk premium in oil prices may be retraced.
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Reserve Bank of New Zealand Interest Rate Decision and Monetary Policy Statement: The market is watching whether it hikes 25 bps to 2.75%. If the RBNZ signals more hawkishness, it will reinforce upward pressure on Asia-Pacific interest rates, affecting the NZD, AUD, and regional bond market risk appetite.
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Bank of Canada Interest Rate Decision and Press Conference: The market widely expects the policy rate to remain unchanged at 2.25%. The focus is on how the BoC assesses U.S. tariff retaliation, sticky inflation, and slowing employment; if the tone is hawkish, the CAD may strengthen, and North American rate trading volatility may increase.
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SEMICON Taiwan International Semiconductor Exhibition held, until September 4th: The conference focuses on advanced packaging, HBM, semiconductor equipment, and materials. If the supply chain releases signals of capacity expansion or technological breakthroughs, it will benefit the advanced packaging, memory, equipment, materials, and TSMC supply chain.
September 3rd (Thursday)
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02:00 Fed releases Beige Book on economic conditions: The Beige Book provides first-hand observations on employment, consumption, credit, real estate, and inflation. If the report shows wages and service inflation remain sticky, it will strengthen September rate hike expectations; if employment and consumption show clear cooling, the market may re-price a Fed pause.
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Broadcom earnings after U.S. market close, Hewlett Packard Enterprise, Snowflake, NetApp, FuelCell Energy, C3.ai, ChargePoint earnings: Broadcom is the headline event for the AI hardware sector this week. The market focuses on AI semiconductor revenue guidance, custom AI accelerator orders, AI networking chip demand, and customer concentration. HPE for AI server and enterprise hardware demand; Snowflake for data cloud and AI application consumption; NetApp for storage; C3.ai for enterprise AI software; ChargePoint for EV charging infrastructure.
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20:30 Fed Governor Waller interview: This is an important speech before the FOMC blackout period. If Waller echoes Walsh's hawkish tone, September hike probability may continue to rise; if he emphasizes employment risks, the market may scale back hike pricing.
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Tesla Cybercab launch event: Tesla will unveil the steering-wheel- and pedal-less Cybercab in Austin. The market is watching whether it officially joins the Robotaxi fleet, progress on commercial permits, mass production timeline, and unit economics. If the launch exceeds expectations, Tesla, autonomous driving, sensors, in-vehicle computing, and Robotaxi concepts will get a catalyst.
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2026 World Power Battery Conference held, until September 4th: Industry leaders like Tesla, CATL, and BYD will attend and release the power battery industry development index. Any significant progress in all-solid-state batteries, fast charging, battery safety, and energy storage technology will impact the new energy vehicle, battery materials, equipment, and energy storage sectors.
September 4th (Friday)
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DocuSign, Lululemon, Zscaler, Ciena, UiPath, Planet Labs, Ambarella, and others report earnings: Zscaler for cloud security demand, Ciena for optical communications outlook, DocuSign for enterprise software spending, Lululemon for consumer resilience, Ambarella for edge AI and automotive vision chips.
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20:30 U.S. August Nonfarm Payrolls, Unemployment Rate, Average Hourly Earnings: The top data point for global markets this week. The market expects Nonfarm Payrolls growth of around 55k-58k, with the unemployment rate holding at 4.1%. If employment and wages exceed expectations, it will reinforce the September rate hike trade, pushing the dollar and short-term bond yields higher, while pressuring the Nasdaq, gold, and long-duration growth stocks. If Nonfarm Payrolls are notably weak, it will undermine the pricing of Walsh's hawkishness, potentially leading to a rebound in U.S. Treasuries, gold, and tech stocks.
September 6th (Sunday)
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OPEC+ JMMC Monthly Meeting: The meeting will assess compliance with the 188k bpd September production increase and global crude oil supply/demand. If U.S.-Iran tensions haven't cooled, OPEC+ rhetoric will directly affect the risk premium for Brent and WTI. If signals are given to maintain production discipline or cautious increases, oil prices may find support; otherwise, it may cap energy stock gains.
