Saudi Arabia remains mum on East-West pipeline impact

Asia market update: Saudi Arabia remains mum on East-West pipeline impact; Crude FUTs rise >2%; Altman warned IPO won’t occur until 2027 as AI executives continue to note possible safety hazards; Z.AI declines on capital raise; Trump/Xi expected summit remains in focus; Key rate decisions are due later in the week including the BOJ and US Fed.

General trend and developments

- Opening the week: WTI Crude FUTs opened +2.1% at $102.12/bbl (v $99.99/bbl prior); Brent FUTs opened +2.4% to $106.74/bbl (v $104.47/bbl prior); Nasdaq FUTs opened -0.6% at 29,506 (v 29,684 prior); S&P 500 FUTs opened -1.0% at 7,650 (v 7,727 prior).

- The extent of the possible disruptions to Saudi Arabia’s East-West pipeline remains unclear. Saudi Arabia has not given full details about the extent of the damage or how long the east-west route will remain off-line [financial press]. Over the weekend, damage assessments indicated that the East-West Pipeline sustained damage and will take more than a month to repair due to a lack of spare parts and deeply impacted supply chains, with minor damages to the pipeline already repaired [financial press report]. However, catastrophic damages will take longer to resolve, where repairs occurred to have been hit again, according to the same financial press source. US officials again stated that Washington currently has no plans to conduct strikes against the Houthis.

- Meanwhile, Iran and Oman have reportedly finalized details on alternative routes through the Strait of Hormuz, though Iranian sources stress that any reopening of the waterway hinges entirely on the United States meeting Tehran’s conditions, further, UKMTO has also reported a vessel that was struck by an unidentified projectile in the waterway, underscoring ongoing risks to vessel shipping. Monday’s Strait of Hormuz meeting between Iran and the GCC countries has been postponed amid amendments being submitted by Saudi Arabia regarding the proposal [Axios].

- The press continues to focus on development fears regarding AI: Over the weekend, Anthropic CEO Dario Amodei published an essay proposing a three-step plan aimed at “pacing the frontier”—advancing AI model capabilities at a measured rate that prioritizes safety without stopping technical progress. OpenAI CEO Sam Altman and SpaceX founder Elon Musk both voiced support for this idea over social media. In related developments, Anthropic told investors it expects to be profitable for the second consecutive quarter (FT). Additionally, King Charles is set to meet leaders from major AI companies including Nvidia, Google, and DeepMind in Scotland this week (NYT).

- Recall, US President Trump and the WSJ commented on the various ‘AI doomsday’ scenarios last week. A recently released WSJ article from Sun noted ‘The Week Everybody Started Talking about AI Doomsday.’ Trump continued to downplay the need to check AI development, in comments also made on Sunday.

- Japanese chip-related stocks fell sharply on Monday [local time], with SoftBank (SFTBY) falling approximately -11%, while Kioxia (285A.JP) declined -9.3% and Advantest (6857.JP) fell -4.9%. The selling pressure coincided with comments from OpenAI CEO Sam Altman in a Fortune interview published on Saturday, stating that the company will not go public this year, clarifying the timeline following an August announcement that OpenAI’s CFO had informed staff that the firm was targeting a public listing in 2027 or sooner.

- Taiwan remains ‘sticking point’ for US/China relations: China has threatened to cancel the planned Xi-Trump summit if the US approves new arms sales to Taiwan. Trump has downplayed talk of Xi pulling out of the bilateral meeting. He also said it would be okay if China built EV plants in the US, since they would have to hire Americans, and noted that China’s AI guardrail is President Xi while downplaying the need to check AI development. Xi is scheduled to arrive in the US late on September 23rd and depart on September 25th, with the White House confirming the visit for September 24th, 2026.

- Swedish Krona (SEK) declines amid election uncertainty as PM Kristersson suggested complexity regarding the government formation process. Kristersson added the final poll results might not be known until ‘days’. Sweden’s far right lost ground, while the 4 opposition parties held a one-seat majority in the 349-seat parliament, according to early polling. [Reminder from the Sept 2022 elections: Sweden PM [now former PM] Andersson said he would resign after losing close election; The preliminary election result was clear enough to draw conclusions; Expected that the right wing coalition in Sweden has won a slight majority (176 seats vs 173) over the left wing coalition].

- Large South Korea chipmakers rejected KEPCO’s proposal to prepay for 5 years worth of power costs. The specific reason for the rejection has not been confirmed as Hynix and Samsung have yet to make a formal statement.
The South Korean utility had sought a combined KRW25T from both companies. [Yonhap].

- Sept US Fed rate hike expectations have continued to rise amid inline US CPI data [released on Fri] and higher oil prices.

- Looking ahead this week (Asian-weighted focus, EST/EDT), key data releases include the CN August Retail Sales & Industrial Production/Fixed Asset Investment & Unemployment Rate on Monday September 14th, the much anticipated US FOMC Interest Rate Decision on Wednesday September 16th, and the JP August National CPI & Core CPI followed by the BoJ Interest Rate Decision on Thursday September 17th.

- US equity FUTs -1.3% to -0.5% during Asia trading.

Looking ahead (Asian-weighted focus, using EST/EDT time-zone)

- Sun Sep 15th: BRICS Summit, (Sun night, JP July Industrial Production, HK Q2 Industrial Production & PPI).

- Mon Sep 14th: CN Aug New Yuan Loans & Total Social Financing & M2 Money Stock, IN Aug CPI, (Mon night, KR Aug Trade Balance, CN Aug Retail Sales & Industrial Production/Fixed Asset Investment & Unemployment Rate, CN NBS Press Conference, KR July M2/M3 Money Supply).

- Tue Sep 15th: IN Aug Trade Balance, CN Aug FDI, EU July Trade Balance & Sep ZEW Economic Sentiment, US 20-Year Bond Auction, NZ Q2 Current Account, (Tue night, JP Aug Trade Balance).

- Wed Sep 16th: EU July Industrial Production, IN M3 Money Supply, US Aug Retail Sales, RU Aug PPI, US FOMC Interest Rate Decision, US FOMC Press Conference, BR BCB Interest Rate Decision, NZ Q2 GDP, (Wed night, SG Aug Trade Balance & Unemployment Rate, TW CBC Interest Rate Decision, HK Aug Unemployment Rate).

- Thu Sep 17th: EU Aug CPI & Core CPI, UK BoE Interest Rate Decision, US Aug Preliminary Building Permits & Housing Starts & Pending Home Sales, UR NBU Interest Rate Decision, KR Aug PPI, NZ Aug Trade Balance, (Thu night, JP Aug National CPI & Core CPI, JP BoJ Interest Rate Decision, MY Aug CPI & Trade Balance, DE Aug PPI, JP BoJ Press Conference).

- Fri Sep 18th: ECOFIN Meetings, US Aug Industrial Production & Manufacturing Production & Capacity Utilization Rate, AR Aug Trade Balance & Budget Balance.

- Sat Sep 19th: ECOFIN Meetings.

Holidays in Asia this week

-Mon Sep 14th: India.

-Wed Sep 16th: Malaysia.

Headlines/economic data

Australia/New Zealand

-(AU) ASX 200 Index opens flat at 8,741.

-(AU) Reserve Bank of Australia (RBA) Assistant Governor Hunter: Australia household spending "holding up ok"; Inflation in Australia is still above target; Risks to inflation skewed to upside - Fireside Chat, Regional Australia Institute’s Regions Rising National Summit.

-(NZ) New Zealand Aug Performance Services Index: 51.2 v 50.6 prior.

-(NZ) New Zealand July Net Migration: 3.0K v 1.6K prior.

China/Hong Kong

-(CN) Shanghai Composite Index opens -0.5% at 3,867; (HK) Hang Seng Index opens -0.4% at 24,701.

-(CN) USD/CNY China PBOC sets the yuan mid-point at 6.7698 v 6.7743 prior (strongest level since February 3rd, 2023).

-(CN) US has linked Chinese satellite imagery to July Iranian strikes in Jordan that killed 3 troops - WSJ [weekend update].

-(CN) Beijing City has banned drone possession, effective from Nov 15th - Beijing Daily.

-(CN) Fitch: China support for LGFVs is likely to extend beyond 2028.

-(CN) Chinese local banks urged to boost clients' yuan hedging - US financial press.

-(CN) China sells 2-year and 7-year New Bonds.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY504B in 1-day Overnight Reverse Repos.

-(CN) China PBOC Open Market Operation (OMO): Sells CNY0B in 7-day Reverse Repos; Net injects CNY504B v injects CNY4B prior (first straight nil injection, fourteenth time since 2020).

-(HK) 2513.HK Confirms $5.0B equity fund-raising that includes convertible bonds; the offering includes the placement of 22.0M new shares at HK$714.00/share for proceeds of HK$15.7B.

-(HK) 2513.HK Follow up: Shares fall -5.7% following $5.0B offering of share, convertible bonds sales.

Japan

-(JP) Nikkei 225 Index opens -0.5% at 63,660.

-(JP) Japan's Takaichi Cabinet approval rating falls to 61.6% (vs. 62.5% prior) - FNN poll.

-(JP) Japan Chief Cab Sec Kihara: Will compile budget while appropriately control bond issuance amount; To control JGB issuance through initial, extra budgets - Tokyo.

-(JP) Japan govt is considering subsidizing defense equipment production - Nikkei [weekend update].

-(JP) Japan July Final Industrial Production M/M: -0.2% v +0.1% prelim; Y/Y: 0.5% v 4.1% prelim.

-(JP) Japan Trade Min said Tokyo’s investment projects under investment deal with the US to focus on power sectors – Nikkei [update].

-(JP) Japan PM Takaichi plans cabinet role for Ishin's Hiroshi Nakatsuka - NHK.

-(JP) Japan PM Takaichi ally won the Okinawa election - US financial press [update].

-(JP) 9984.JP Receives upsized $11.9B loan (v $10.0B prior) in OpenAI funding push - US financial press.

-(JP) 9984.JP Follow up: Shares fall by -11% amid discussions related to slowing AI development; Kioxia (285A.JP) shares fall -9.3%; Advantest (6857.JP) shares fall -4.9%.

Korea

-(KR) Kospi Index opens -3.1% at 6,693.

-(KR) Korea Exchange extended trading into the evening sessions (as expected); this will enable trading through 8 pm local time for most stocks - US financial press [update].

-(KR) South Korea's National Pension Service (NPS) appoints Kyuhong Lee as new CIO - Statement.

-(KR) South Korea seeks to send medical equipment to North Korea - Yonhap.

-(KR) South Korea sells 10-year bonds: Avg Yield: 4.51% v 4.415% prior.

-(KR) Bank of Korea sells KRW700B vs. KRW700B indicated in 3-month Monetary Stabilization Bonds (MSB); Avg Yield: 3.050% v 3.040% prior.

-(KR) 015760.KR Samsung Electronics, SK Hynix reject co.'s KRW25T pre-payment plan - Yonhap.

Other Asia

-(TW) TSM said to be planning to increase advanced chipmaking capacity by 22% by mid-2027 - Taiwan press.

-(TW) Taiwan Pension to invest $600M in overseas stocks.

-(SG) Singapore Minister: Hope to get subsea cables framework endorsed by ASEAN in 2027.

-(PH) USD/PHP Philippine Peso weakens to record low of 62.822/USD (v 62.719/USD prior record low); focal points include oil prices.

North America

-(US) Pres Trump: A trade deal with Canada could happen at the right time; Will probably see a deal fairly soon; Would be ok if China built EV plants in the US, as they would have to hire Americans [weekend update].

-(US) US President Trump 'downplayed' talk of China President Xi 'pulling out' of bilateral summit - US financial press [update].

-(CA) Canada PM Carney has proposed that Canada should become the EU's first 'Associate member'; EU is said to be open to the idea - press [weekend update].

-(CA) Canada is in discussions to back an EU loan for Ukraine - FT.

-(US) ANTHROPIC.IPO CEO Dario Amodei published essay saying we must slow the pace at which we improve the capabilities of AI models; OpenAI chief Altman and SpaceXAI founder Musk voice support for Amodei's ideas [weekend update].

-(US) President Trump: Asked Zelenskyy not to hit [Russia's] diesel refineries - Informal Press Exchange.

-(US) House Speaker Johnson: Seek meeting with AI providers, key experts; Calling for a meeting in DC with AI platform providers.

-(US) EPA is expected to repeal the carbon standards related to coal gas power plants (as expected) - US financial press [update].

-(US) President Trump agrees to state AG suits for CLARITY act violations - Semfaor.

-(US) President Trump: DID A LOT OF BUSINESS WHILE IN IRELAND - reporters before heading back to US on Air Force One.

-(US) ANTHROPIC.IPO Tells investors it will be profitable for the second straight quarter - FT.

-(US) GOOGL Pres Trump: Not happy with Google building an AI datacenter in Finland [weekend update].

-(US) BA Boeing has made a final contract offer to engineers union SPEEA; Union negotiators recommend accepting the contract [weekend update]

-(US) F Recalling 223.5K US vehicles due to detached tank that can create a road hazard, increasing the risk of a crash, stall or fire - NHTSA [weekend update].

-(US) OPENAI.IPO CEO Sam Altman: The company won’t go public this year [2026] - Fortune Interview [from Saturday].

-(US) SPCX CEO Elon Musk: Highly confident that SpaceX will be launching Nvidia VR NLV72 AI computers in space next year - post on X [reply]-(US) SPCX Founder Elon Musk: 700 falcon flights completed.

-(US) XAI.IPO CEO Elon Musk: Grok 4.8, which is a 2.5T model trained with our new C++ software stack, will finish training this week and start RL.

-(US) AMZN Has paused operations with 21 Air after previously reported plane crash in Miami - WSJ.

Europe

-(UK) King Charles to meet leaders from artificial intelligence companies with the likes of Nvidia, Google, and Deepmind this week in Scotland - NYT.

-(SE) Sweden PM Kristersson: I will contact other party leaders to explore possible cooperation; Government formation may turn out to be complex; Still an open question which government Sweden will get.

-(EU) ECB's Kocher (Austria): High oil prices could force more rate hikes - FT.

-(IT) Italy Fin Min Giorgetti: Country needs to keep its public finances in check especially when interest rates are rising.

-(FI) Finland Aug CPI M/M: -0.2% v +0.2% prior; Y/Y: 2.2% v 2.1% prior.

Middle East

-(SA) US officials say US has no plans to strike Houthis for now - ABC News [weekend update].

-(SA) Marhelm: Sources within Saudi Arabia are now telling us that the damages to the East-West pipeline will take more than a month to repair due to a lack of spare parts and deeply impacted supply chains [weekend update].

-(IR) Reportedly Iran and Oman have agreed on details of new routes through Strait of Hormuz; Iran sources say reopening of the Strait depends entirely on US implementing Iran's conditions - Iranian press [weekend update].

-(IR) Follow up: The Strait of Hormuz meeting between Iran and the GCC countries has been postponed; notes amendments submitted by Saudi Arabia about the proposal - Axios.

-(IR) UKMTO reports a vessel has been struck by an unknown projectile in the Strait of Hormuz [weekend update].

-(IR) Oman Energy Minister: Strait of Hormuz will be open, it's probably a short-term situation; Pleased Oman still able to continue producing oil and gas.

-(SA) Saudi Foreign Min: Has decided not to retaliate from pipeline strike following a request from Iraq's PM [Friday update].

-(SA) Follow-up: Saudi Arabia has not given full details about the extent of the damage or how long the east-west route will remain off-line - financial press [update].

-(SA) Saudi Civil Defense: Early warning issued in Khamis Mushait, Jizan, and Najran to alert of potential danger; the alerts were later quickly withdrawn as of 23:51 GMT.

Levels as of 01:20 ET

Nikkei 225 -1.1%; ASX 200 flat; Hang Seng +0.2%; Shanghai Composite -0.2%; Kospi -3.3%.

Equity S&P500 Futures -0.5%; Nasdaq100 -1.3%; DAX -0.3%; FTSE100 +0.2%.

EUR 1.1601-1.1562; JPY 154.14-153.38; AUD 0.7171-0.7141; NZD 0.5819-0.5781.

Gold -0.4% at $4,330/oz; BTC +0.4% at $77,575; WTI Crude Oil +2.6% at $102.64/bbl; Copper -1.3% at $6.4753/lbs.