Market snapshot
Equities in the red. On Monday the S&P 500 slid 0.79 percent to 7,515, the Nasdaq fell 1.55 percent to 25,873, and the Dow held firmer, down only 0.26 percent to 52,499. Money runs from risk when war hangs over Hormuz again.
Chips took the most. Nvidia down 3.5 percent, AMD down 4.2 percent, Micron down 4.3 percent, Intel down 6.1 percent, and SanDisk down 12.6 percent outright. The reason is twofold, geopolitical fear and the revived question of whether the artificial intelligence giants will cut their infrastructure spending.
Oil jumped. WTI rose about 4 percent above $74, and on Monday evening Brent passed $83 a barrel, the highest in roughly a month. Gold is holding near $4,066, and safe haven money has not gone anywhere. Bitcoin is around $62.5 thousand, slightly weaker. The DXY dollar index is calm at 101.
Lithuania and the Baltics
The 21st government was sworn in. Mindaugas Sinkevičius and his cabinet begin work, and the Seimas approved the government programme with 72 votes in favour, 29 against and 4 abstentions. The coalition is the same, the Social Democrats, the Democratic Union For Lithuania and the Farmers and Greens. Inga Ruginienė moves from the prime minister’s chair to the post of minister of social security and labour.
The opposition prepares a weapon. Conservatives and liberals are considering an appeal to the Constitutional Court over the legitimacy of the Sinkevičius government. The political stability business is waiting for is not locked in yet.
China as a priority. The new government publicly declares a restoration of relations with Beijing. An interesting turn after recent years of cold, and a signal about where Vilnius is steering its foreign policy.
The Seimas worked late. The so-called milk law was passed and the development of the southern part of Klaipėda port was approved. Business expects stability from the new team plus relief for reinvested profit, and that will be the first litmus test.
Nausėda on the cycle. The president hinted that countercyclical policy may be needed next year, while it remains important to keep the public finances sustainable. Translated from official language into plain speech, if the economy slows there will be borrowing and stimulus, only without forgetting that debt costs too.
The rating holds. Fitch Ratings confirmed the credit rating of Akropolis Group. The shopping centre group remains comfortable for investors, despite the general caution around real estate.
The border and the sky. There is discussion of whether Lithuania could introduce controls on the Latvian border over migrant flows, while the pilots of deployed NATO air policing fighters over the Baltic will get wider authority. The region’s security temperature is rising quietly, without headlines.
Europe
The sanctions knot. EU ambassadors in Brussels failed to agree on the 21st sanctions package against Russia, and the discussion moved up to the level of foreign ministers. Kaja Kallas hopes to approve a list of roughly 250 Russian citizens and companies. The unanimity requirement is slowing the pace again, and time is pressing.
Gibraltar without barriers. The EU and the United Kingdom signed an agreement removing checks between Gibraltar and Spain. A small but symbolic full stop on the legacy of Brexit.
Ukraine
The prime minister resigned. Yulia Svyrydenko stepped down and the Rada formally confirmed the decision. Zelensky speaks of a change of political strategy and has not yet named a replacement, but the media put Naftogaz head Serhiy Koretskyi first in line.
Air defence holds. Ukraine shot down 5 Russian ballistic missiles, Kyiv is rushing to strengthen its sky and plans to produce Patriot systems on its own territory. Moscow is raising the tempo of ballistic strikes, which is the logic of a contest rather than a coincidence.
The Baltic keeps watch. Polish fighters over the Baltic Sea intercepted a Russian reconnaissance aircraft. Routine now, which a few years ago would have been a headline for a week.
Geopolitics
Hormuz is closed again. Trump announced he is renewing the naval blockade of Iran in the Strait of Hormuz from Tuesday, with a 20 percent levy on all cargo carried through the strait. The United States declared itself the guardian of the Strait of Hormuz. This is already the fourth American strike on Iran in a week, and Tehran claims to have fired on two tankers.
Oil as leverage. When 20 percent of the world’s oil passes through one stretch of water, every strike there is not a local conflict but a tax on the whole world economy. The price of energy becomes the language of geopolitics.
The United States withdraws from Iraq. Washington announces a full withdrawal of its troops from Iraq by the end of September. An interesting time to pull out of one corner of the region while escalating in another.
The levy as doctrine. The pattern is worth noticing, the United States increasingly charges a fee for security, whether that is a strait or the defence of allies. The hegemon no longer supplies a public good for free, it writes an invoice.
What to watch tomorrow
The start of the blockade. The Hormuz blockade takes effect on Tuesday. The question is whether Iran answers, and whether Brent passes $85. That is the single most important one-day risk switch.
Ukraine’s prime minister. Whether Zelensky names a replacement for Svyrydenko and whether it is Koretskyi. The head of Naftogaz in the premier’s seat would say a great deal about where Kyiv’s energy and corruption fronts are heading.
EU sanctions. Whether foreign ministers break the knot on the 21st package. If not, that is one more signal of unity fatigue.
The Constitutional Court question in Lithuania. Whether the opposition actually files over the government’s legitimacy, and how quickly.
The mood in chips. Whether semiconductors recover on Tuesday, or the fear over artificial intelligence capital has a sequel. Nvidia’s direction shows the appetite of the whole index.
Meška’s comment
A day when everything joined into one line. Oil is rising not because barrels are suddenly short, but because the hegemon decided to charge a toll for passage through the water it guards. Twenty percent of the cargo is not a market price, it is a tax. And when security becomes a billable service rather than a public good supplied for free, that is the late cycle sign, an empire that can no longer fund order out of its own pocket.
In Lithuania the 21st government is being sworn in at the same time, and the opposition is already sharpening its appeal to the Constitutional Court. Political instability is not only our affair, it reflects the same wider phenomenon, the old order no longer holds, coalitions are crumbling in Vilnius, in Kyiv and in Brussels, where the 21st sanctions package is stuck on unanimity. The question is not whether the system creaks, but how much longer it creaks before it starts to break.