TL;DR

Alibaba chip hits Nvidia; US ends $800 duty-free imports; PCE inflation to guide Fed rate bets.

Highlights

• Alibaba unveiled a new AI inference chip compatible with Nvidia software, sending Nvidia shares down 1.2% pre-market; Alibaba also missed Q1 revenue forecasts, with strong cloud growth offset by weak e-commerce 110.
• The US ended the $800 duty-free parcel rule, imposing tariffs on all imports; global e-commerce platforms like Etsy and eBay fell as international sellers paused US shipments, and logistics disruptions are expected 3.
• The Indian rupee hit a record low of 88/USD as new US tariffs on Indian goods triggered equity outflows and pressured the currency 7.
• Israel declared Gaza City a combat zone and began a new assault, ending humanitarian pauses and escalating regional tensions 2.
• US Senator Wicker visited Taiwan, reaffirming security ties as China protested and increased military activity around the island 5.
• Russian officials rejected Western security plans for Ukraine, warning against NATO troop deployments and escalating rhetoric 4.
• PepsiCo increased its stake in Celsius Holdings to 11% with a $585 million investment; Celsius shares rose 7.6% pre-market 11.
• BYD’s H1 revenue surpassed Tesla ’s for the first time, but margins remain under pressure from EV price competition; China’s major banks reported flat profits on margin squeeze 1219.
• UK bank stocks dropped after calls for an £8 billion windfall tax on Bank of England reserves 9.
• Ethereum ETFs attracted $1.2 billion in August net inflows, outpacing Bitcoin for six consecutive weeks 18.
• Global markets are steady ahead of US PCE inflation data; US indices at record highs, with rate-cut bets in focus 20.
• Protests in Jakarta triggered a 2% drop in Indonesia’s main equity index and a weaker rupiah 14.

Commentary

US equity futures are steady as traders await the July PCE inflation print, with the S&P 500 and Nasdaq at record highs 20. The inflation data, due at 8:30 a.m. ET, is expected to set the tone for rate expectations into the September FOMC meeting. A softer-than-expected reading could reinforce the prevailing view of a 25bp Fed cut, while a surprise to the upside may prompt a quick re-pricing in rates, the dollar, and risk assets 20.

Tech and AI hardware are in focus after Alibaba ’s new AI inference chip launch, which pressured Nvidia shares pre-market 110. The chip’s compatibility with Nvidia’s software highlights competitive risks for US semiconductor leaders, even as Alibaba’s own results missed revenue and profit expectations outside its strong cloud division 110. The broader tech sector remains sensitive to both US-China competition and ongoing AI investment cycles 120.

The abrupt end of the US duty-free parcel rule is causing immediate disruption across global e-commerce and logistics. Shares of Etsy and eBay are under pressure as international sellers suspend US shipments and shipping costs rise 3. This policy shift is also contributing to currency and equity volatility abroad, notably with the Indian rupee hitting new lows and outflows from Indian equities accelerating 37.

Geopolitical risk remains elevated. The escalation in Gaza 2, renewed US-Taiwan engagement amid heightened Chinese military activity 5, and Russia’s rejection of Western Ukraine security proposals 4 all add to the potential for safe-haven flows. Meanwhile, sector rotation is evident: Celsius surged on fresh investment from PepsiCo 11, while UK banks underperformed on windfall tax concerns 9. In crypto, institutional interest is shifting toward Ethereum, as evidenced by sustained ETF inflows and on-chain activity 18.

Traders should monitor the PCE inflation release for immediate rate and dollar direction, and watch for volatility in US tech, e-commerce, and sectors exposed to global trade and geopolitical risk 20.