A message reading "AI artificial intelligence", a keyboard, and robot hands are seen in this illustration taken January 27, 2025. REUTERS/Dado Ruvic/Illustration

By Mike Dolan

(Reuters) -What matters in U.S. and global markets today

By Mike Dolan, Editor-At-Large, Finance and Markets

Wall Street's 'fear gauge' of implied stock market volatility touched its highest in almost four months on Tuesday as a fresh wave of AI excitement jostled with trade war tensions and the onset of the third quarter earnings season.

The VIX earlier hit its highest since mid-June as U.S.-China trade exchanges turned sour again overnight following Monday's Broadcom-led stock rebound. Tuesday's packed diary includes Q3 updates from the big U.S. banks, a keynote speech from Federal Reserve Chair Jerome Powell and the International Monetary Fund's World Economic Outlook.

U.S. stocks snapped back on Monday, with chipmakers leading the charge as Broadcom soared 10% on news of an OpenAI partnership and Google announcing $15 billion of investments in datacenters in India.

But weekend hopes of cooling U.S.-China trade tensions were undermined again as the two countries began charging additional port fees on ocean shipping firms that move everything from holiday toys to oil. Treasury Secretary Scott Bessent said there was still a chance to avert 100% U.S. tariffs on November 1 and that a meeting of the two countries' leaders was still possible.

U.S. stock futures relapsed about 1% before Tuesday's bell, however, and yields on Treasuries, which had not traded on Monday's Columbus Day holiday, plunged further.

The 30-year bond yield plummeted to its lowest since the April trade shock even as the dollar firmed, with Bessent saying the ongoing government shutdown was hitting the economy and "getting serious".

Overseas, Japan's Nikkei dived 2.5% after a long weekend, clocking its sharpest one-day drop since April as investors fretted over uncertainty around the country's next prime minister. In France, newly re-appointed Prime Minister Sebastien Lecornu addresses parliament on Tuesday to spell out his budget priorities.

U.S. crude oil prices slipped to their lowest since May, and gold hit a new record at $4,179 per ounce - but bitcoin continued its sharp retreat and is now down more than $10,000 from its October 6 peak.

* Broadcom jumps on OpenAI partnership: Broadcom surgedalmost 10% after partnering with OpenAI to produce the startup'sfirst in-house AI processors, turbocharging a broader chiprebound as the PHLX semiconductor index jumped nearly 5% and AIbellwethers such as Nvidia and Micron rallied. The movereinforced AI as the market's primary dip-buyer theme, even asU.S.-China trade tensions simmer in the background. * JPMorgan Chase launched a $1.5 trillion plan on Mondayto facilitate, finance and invest in industries deemed criticalto U.S. national security and economic resilience, includingdefense, energy and advanced manufacturing. JPMorgan, GoldmanSachs, Citigroup and Wells Fargo report today, kicking off aseason that doubles as a macro proxy while official releases aredelayed. Investors will parse net interest income resilience,the market's rebound and any tariff or shutdown dents toactivity, with consensus pointing to high-single-digit S&P 500earnings growth. * Japan stumbles: The Nikkei fell as much as 3% and the yenfirmed after Japan's finance chief flagged the need for a newstrategy that addresses inflation, adding to politicaluncertainty already weighing on risk appetite. With BOJ policyexpectations and leadership cross-currents in the mix, Japan'sequity volatility is bleeding into broader Asia risk.

In today's column, I discuss whether gold's parabolic surge is becoming the bubble investors think they're hedging against.

Today's Market Minute

* Hamas freed the last living Israeli hostages from Gaza on Monday under a ceasefire deal and Israel sent home busloads of Palestinian detainees, as U.S. President Donald Trump declared the end of the two-year-long war that has upended the broader Middle East.

* The United States and China on Tuesday will begin charging additional port fees on ocean shipping firms that move everything from holiday toys to crude oil, making the high seas a key front in the trade war between the world's two largest economies.

* Google will invest $15 billion over the next five years to set up data centre capacity for an artificial intelligence hub in India's Andhra Pradesh, the company said on Tuesday, marking one of its biggest ever investments in the country.

* The U.S. dollar just notched up its best week in two months, a move many would dismiss as a short-term bounce in a longer-term decline, especially with lower U.S. interest rates on the horizon. But, writes ROI markets columnist Jamie McGeever, the bull case for the tarnished greenback is surprisingly persuasive.

* The UK stock market has become one of the top contrarian trades after the recent Bank of America survey reported a record number of fund managers underweight the British market. There are plenty of reasons to think that UK equities could outperform their U.S. counterparts in 2026 and potentially for the next decade – and this optimism does not rest solely on Britain’s cheap valuations. Read more in Panmure Liberum investment strategist Joachim Klement's latest piece for ROI.

Chart of the day

The AI boom ignited by ChatGPT's launch in late 2022 has continued to fuel staggering capital outlays and data center expansion despite a brief crisis of confidence sparked by China's cheaper DeepSeek model and periodic market concerns over Trump's tariff policies. Citigroup last month raised its forecast for AI-related infrastructure spending by tech giants to surpass $2.8 trillion through 2029, from $2.3 trillion estimated earlier, citing aggressive early investments by hyperscalers and growing enterprise appetite.

Today's events to watch (all times EDT)

* U.S. NFIB small business survey for September (6:00 AM EDT); Canada August building permits

* Federal Reserve Chair Jerome Powell speaks (12:20 PM EDT) in Philadelphia, Fed Board Governor Christopher Waller speaks in Washington, Boston Fed President Susan Collins speaks in Boston; European Central Bank policymakers François Villeroy de Galhau and Sharon Donnery speak in New York; Bank of England policymaker Alan Taylor speaks in London

* The International Monetary Fund releases World Economic Outlook (9:00 AM EDT) as IMF-World Bank meetings get underway in Washington. Speakers at the IMF meeting include Federal Reserve Vice Chair for Supervision Michelle Bowman, European Central Bank President Christine Lagarde, Irish Central Bank Governor Gabriel Makhlouf

* French Prime Minister Sebastien Lecornu addresses parliament to spell out his budget priorities (8:00 AM EDT)

* U.S. corporate earnings: JPMorgan, Goldman Sachs, Citigroup, BlackRock, Wells Fargo, Johnson & Johnson, Domino's Pizza

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Opinions expressed are those of the author. They do not reflect the views of Reuters News, which, under the Trust Principles, is committed to integrity, independence, and freedom from bias.

(By Mike Dolan; Editing by Gareth Jones)