Geopolitical tensions have surged as the U.S. launched airstrikes on Iran for the ninth consecutive day, with Donald Trump vowing that Iran will pay a significant price for the deaths of American soldiers. The resulting rise in energy costs has reignited inflation concerns, leading to a broad decline across the three major U.S. stock indices. Investor focus has now shifted to the wave of tech earnings reports and AI capital expenditure data due this week. Goldman Sachs data indicates that hedge funds are offloading U.S. tech stocks at a record pace. Meanwhile, the cryptocurrency market has shown resilience, with Bitcoin rising to cross the $65,000 threshold; Bitcoin miner Hut 8 saw its stock surge by double digits following a massive $9.8 billion agreement.

Trump Vows Retaliation Against Iran; Hedge Funds Scale Back U.S. Tech Exposure

Following the ninth day of U.S. airstrikes, Donald Trump stated on Truth Social that Iran will pay a price "many times greater" for the deaths of three U.S. service members. Despite Iranian Foreign Ministry spokesperson Nasser Kanaani noting that dialogue remains possible through intermediaries based on national interests, the escalating Middle East conflict pushed West Texas Intermediate (WTI) crude oil futures up 0.9% to $83.23 per barrel. Brent crude gained approximately 1.3%, closing at $89.22 per barrel—the highest level since mid-June.

Rising energy costs have fueled inflation fears, putting downward pressure on the bond market. While the three major U.S. indices closed in the red, semiconductor stocks managed to stabilize against the broader trend.

This week, 77 S&P 500 companies are set to report earnings, with investors closely watching the AI investment returns and profit margins for Alphabet (Google) and Tesla. Vincent Lin, head of Prime Services at Goldman Sachs, noted that hedge funds have been exiting U.S. tech stocks at record rates over the past two months, signaling a significant reduction in long positions. Deutsche Bank analyst Jim Reid added that Chinese AI models are increasingly approaching the pricing and performance levels of high-end U.S. systems, posing a challenge to the U.S. model of AI development, which relies heavily on high compute power and massive capital expenditure.

Bitcoin Defies Market Headwinds to Top $65K; Hut 8 Signs $9.8 Billion Lease

The cryptocurrency market has demonstrated relative resilience compared to the U.S. equity markets. Bitcoin rose 0.83% over a 24-hour period to reach $65,087, while Ethereum climbed 1.59% to $1,894. Despite the rise in macroeconomic risk aversion and oil prices, major crypto assets have bucked the trend seen on Wall Street, showing signs of a modest rebound.

U.S.-listed spot Bitcoin ETFs have recorded net inflows for two consecutive weeks, following nearly two months of capital outflows, bolstering market sentiment that the asset class may be forming a floor.

In the crypto-related equity space, energy infrastructure provider Hut 8 (HUT-US) stood out, with its stock price surging 10.37% to $100.93 per share. Hut 8 announced a 15-year, $9.8 billion lease agreement with an existing client. This deal will lead to the full commercialization of its 1GW Beacon Point data center in Texas, serving as the primary catalyst for the stock's double-digit gain.

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