Geopolitical upheavals trigger the oil and gas markets, while tech stocks fall into trouble

Sanctions Escalation Sparks Energy Market Rally, WTI Crude Rebounds

The Trump administration has imposed unprecedented sanctions on Venezuela, ordering a comprehensive blockade of sanctioned oil tankers entering and leaving the country. This move immediately sent ripples through the global energy markets. As oil transportation routes are cut off, Venezuela’s national oil company, producing nearly one million barrels per day, faces a difficult situation and may be forced to reduce capacity. Driven by this news, WTI crude oil rose by 2.85% to $56.74 per barrel, successfully breaking a four-day losing streak. Gold also surged, gaining 0.85% to reach a high of $4349.

Consulting firm Rapidan Energy Group’s latest assessment further fuels market concerns, with the probability of U.S. military action against Venezuela rising from 40% to 60%, and the likelihood of regime change increasing from 60% to 70%. However, market reactions to this are subtly divided — some analysts believe that the risk to energy supply has been overestimated due to expected severe oversupply in global oil markets next year.

Meanwhile, the sanctions game between the U.S. and Russia is intensifying. Sources reveal that if Putin refuses to accept a peace agreement with Ukraine, Washington is preparing to impose a new round of sanctions on Russia’s energy sector, potentially targeting shadow fleet oil tankers and related traders, possibly as early as this week.

Federal Reserve Signals Easing, Powell’s Speech Hints Room for Rate Cuts

Federal Reserve Board member Waller stated at a Yale University event that after a 25 basis point rate cut last week, the current rate level remains slightly tight, with room for another 50 to 100 basis points of rate cuts, enough to push the federal funds rate below 3% — what he considers a neutral level. However, Waller emphasized that the Fed does not need to rush and can adjust policy rates gradually and steadily. He also expressed caution about the short-term labor market but remains optimistic about job growth next year.

Waller will subsequently be interviewed by Trump, vying for the next Fed Chair position. He publicly stressed the importance of Fed independence and believes that regular breakfast meetings with the Treasury Secretary are appropriate channels for communication between the White House and the Fed. Goldman Sachs’s latest outlook echoes this easing expectation — the Fed may be more inclined to cut rates further next year than previously anticipated, with employment data being a key variable triggering a new round of rate cuts.

Good news also comes from the UK, where November CPI unexpectedly fell to 3.2%, the lowest in eight months, well below the market expectation of 3.5%. This data significantly boosts expectations of a rate cut by the Bank of England, with investors fully priced in a 0.25% cut and expecting an additional cut of over 0.68% next year, equivalent to a 72% probability of three rate cuts. The British pound weakened accordingly, briefly falling below 1.34.

Tech Stocks Hit Hard, AI Chip Competition Heats Up

Behind the decline in the three major U.S. stock indices, tech stocks bore the brunt. Oracle’s stock closed down sharply by 5.4% after private credit firm Blue Owl Capital ceased negotiations and will no longer support Oracle’s $10 billion data center project. The Philadelphia Semiconductor Index fell 3.78%, with Nvidia dropping 3.8%, reflecting the adjustment pressures facing the entire chip industry.

However, the competition remains fierce. Google and Meta are teaming up to strengthen support for TPU on the open-source platform PyTorch, attempting to challenge Nvidia’s long-standing market dominance. Google also launched the more efficient Gemini 3 Flash model, which runs three times faster than its predecessor Gemini 2.5 Pro, at a quarter of the cost, priced at $0.5 per million input tokens and $3 per output token, officially launching a new challenge to OpenAI.

Geopolitical technological competition is also heating up. Reuters reports that Chinese scientists successfully developed an EUV lithography prototype in Shenzhen earlier this year, dubbed the “Chinese Manhattan Project.” This key equipment was reverse-engineered by a team of former ASML engineers and can produce extreme ultraviolet light. While not yet in mass production, the government aims to achieve chip manufacturing by 2030, with Huawei playing a coordinating role involving thousands of workers.

Market Overview: U.S. Stocks Retreat, Cryptocurrencies Rebound

The three major U.S. stock indices all declined: Dow down 0.47%, S&P 500 down 1.16%, Nasdaq down 1.81%, and China Golden Dragon Index retraced 0.73%. European stocks were mixed: Germany DAX 30 down 0.48%, France CAC 40 down 0.25%, UK FTSE 100 up 0.92%. The U.S. dollar index rose 0.19% to 98.39, USD/JPY increased 0.63%, EUR/USD fell 0.07%.

Cryptocurrency markets showed resilience, with Bitcoin rising 1.30% in 24 hours, currently at $91,150; Ethereum up 1.06%, at $3,140. Compared to traditional stock market declines, digital assets demonstrated stronger resistance.

Hong Kong night session futures: Hang Seng Index futures closed at 25,304 points, down 165 points from yesterday’s close; China Enterprises Index futures closed at 8,785 points, down 59 points.

Focus on Upcoming Events

Trump will deliver a nationwide address at 9 p.m. Eastern Time tonight, reviewing the past 11 months’ achievements and outlining policy plans for the next three years. Recent non-farm payroll data showed the unemployment rate rising to 4.6%, up from 4% at his inauguration. Historical data indicates that for six presidents with similar increases, the ruling party lost at least 12 House seats in midterm elections, posing a political concern for Trump.

Key upcoming events today include Switzerland’s November trade balance, the Bank of England’s interest rate decision, the European Central Bank policy announcement, U.S. November unadjusted CPI, Philadelphia Fed Manufacturing Index, initial jobless claims, and more. Market reactions to these data points will directly influence policy expectations after Powell’s speech.