Daily · Energy Shock and AI Infrastructure · October 7, 2026

Key points

India's First Rate Hike in Four Years

The Reserve Bank of India (RBI) raised the benchmark repo rate by 25 basis points to 5.50% on October 7, 2026, marking the first increase since February 2023 when the rate stood at 6.6%. Governor Sanjay Malhotra stated that the Monetary Policy Committee changed its stance to "calibrated tightening" in response to rising inflation and a narrowing interest rate differential with the United States. Retail inflation had risen for ten consecutive months, reaching 4.8% in August, which is above the RBI's medium-term target of 4%. The central bank also revised its economic growth estimate upward by 40 basis points to 7.1% for the financial year ending March 2027, citing resilient economic activity.

The decision was widely anticipated, with twenty of the twenty-one economists and bank executives polled by ET forecasting the 25-basis-point hike. The move reverses expectations from the August meeting, where the RBI had projected inflation at 4.7% for the September quarter and 5.9% for the December quarter. Brent crude oil prices, which averaged around $91 a barrel in August and crossed $100 in early September, remain well above the RBI's earlier assumption of $85 a barrel for FY27. India meets nearly 85% of its fuel needs via imports, making the country vulnerable to global energy price shocks.

The rate hike has immediate implications for borrowing costs. For a standard 50 lakh ($60,000) home loan with a 30-year tenure, a 25-basis-point increase lifts the monthly EMI by approximately 852 rupees at public sector banks and 867 rupees at private banks. The 10-year government bond yield rose 5 basis points to 7.243%, while the Nifty 50 index fell 0.7% following the announcement. Goldman Sachs noted that developments since August point to an earlier start to tightening and a more extended cycle, after it had previously deferred its base-case call for rate increases to December 2026 and February 2027.

Paramount-Warner Bros Merger Completed

Paramount completed its merger with Warner Bros on October 7, 2026, creating the combined entertainment company Skydance. Shares of the new entity moved to the New York Stock Exchange to trade under the ticker SKYD. The deal, valued at approximately $110 billion, brings together the studios behind Mission: Impossible, Harry Potter, and DC Studios alongside major television and streaming networks such as CBS, CNN, and HBO Max. Warner Bros shareholders received an additional $41.9 million in a ticking fee based on the number of days between September-end and the deal-closing.

David Ellison, CEO of Skydance, named Ynon Kreiz, former Mattel CEO, as co-CEO to run day-to-day operations and lead integration. Kreiz, Bobby Kotick (former Activision Blizzard CEO), and Laurene Powell Jobs (founder of Emerson Collective) joined the board, while Tony Blair joined as an adviser. The combined company is expected to carry about $80 billion in debt. Ellison pledged to spend $30 billion or more each year on content and aims to deliver $6 billion in planned savings, largely from non-labor sources, including combining technology and cloud providers.

Skydance plans to combine HBO Max and Paramount+ into a single streaming service and release at least 30 films each in the first two years after closing, rising to 32 a year for the following three. MoffettNathanson forecast core operating profit (EBITDA) of $16 billion for 2028, rising to $19 billion in 2030, and about $67 billion in revenue in 2028, growing to roughly $70 billion in 2030. Settlements with a coalition of US states and a Hollywood writers union removed the main legal barriers to the merger; Ellison agreed to create an editorial independence board to oversee CNN and CBS.

Hormuz Attacks Drive Record Freight Costs

Shipowners are offering over $100,000 in "danger money" to captains for transiting the Strait of Hormuz, almost double the regular captain's pay of about $15,000 a month in the southern Red Sea and Gulf of Oman. Ordinary sailors receive at least four to six times their normal rates, with normal monthly salaries starting as low as $1,500. According to maritime security company Vanguard, at least 14 attacks have taken place in the last 20 days, including four vessels struck since Saturday. Freight rates for cargoes through Hormuz reached a record of $1.3 million per day this week, compared with about $20,000 to $50,000 per day last year.

At least 93 ships have been hit since February 28, while 24 sailors have been killed, according to International Maritime Organization data. Windward estimated that 13 vessels crossed the strait on October 4, down from 24 on the same day a week earlier; before the conflict, around 135 vessels crossed each day. Oil flows through the Strait of Hormuz remained about one-third below prewar levels on Tuesday, according to Kpler. War-risk insurance for vessels in the region is running at 6% to 10% of the ship's hull value, which could mean as much as $20 million for a single supertanker voyage.

Singaporean Foreign Minister Vivian Balakrishnan stated that freedom of navigation through the Strait of Hormuz is "non-negotiable" for Singapore, citing the United Nations Convention on the Law of the Sea. He described Iran's ability to charge vessels as a potential "veto right" over Hormuz that could give Tehran "greater leverage right now than even a potential nuclear weapon from an Iranian point of view." Balakrishnan said he does not expect the U.S. or Gulf states to tolerate an Iranian veto over the waterway and does not see "a quick diplomatic off-ramp" to the conflict.

EU Prepares Tariffs on Chinese Hybrids

The European Commission is preparing safeguard measures to limit imports of Chinese hybrid vehicles, most likely via tariff-rate quotas that levy a charge on volumes above a set cap. The cap would be time-limited, and Brussels plans to use hybrids as a test case replicable in other sectors. Chinese-made hybrids now account for a quarter of all hybrid sales in Europe and one in three plug-in hybrids. Monthly imports of Chinese hybrids into the EU surged from 3,800 vehicles in October 2024 to 50,000 in July 2026, a roughly 13-fold increase per FT data cited by Brussels Signal.

Chinese brands grabbed a record 11.7% of Europe's new-car registrations in August, up from 7.1% a year earlier, with BYD alone selling 26,007 cars, up 128% year-over-year. In Germany, Chinese car registrations jumped around 90% in August, lifting their share to a record 8% from 4.4%. The EU bilateral trade deficit with China has grown to around 2% of EU GDP, or more than €1 billion per day per Bloomberg. German factory orders plunged 10.6% month-over-month in August, ten times worse than the 1.0% drop expected.

Volkswagen shares jumped as much as 4.6%, Renault 6.1%, and Mercedes 2% on the news; Goldman's European autos basket was up 90 basis points mid-morning. Deutsche Bank expects the Šefčovič-Wang meeting this week to bring "no major breakthrough" and anticipates an anti-subsidy probe into Chinese plug-in hybrids after the October 15-16 EU summit, with tariffs taking effect "in early 2027 at the earliest." China dismissed earlier talk of voluntary export caps last month as a "serious violation" of WTO rules; 140,000 jobs are at risk at Volkswagen alone.

US-Iran Conflict Costs and Military Losses

A Congressional Research Service report detailed US military losses in the Iran conflict: 25 aircraft, 49 drones, and 7 helicopters. Fifteen F-15E Strike Eagle fighters, one F-35C Lightning II, and two A-10 Thunderbolt II attack aircraft were destroyed in combat or friendly fire. Seven KC-135 Stratotanker aerial refuelling aircraft, one EC-3 Sentry AWACS, and one MC-130J were lost; the MC-130J was destroyed by US forces during a search-and-rescue operation inside Iran. US forces lost at least 45 MQ-9 Reaper drones, three MQ-1 multi-role UAVs, and one MQ-4C Triton maritime surveillance drone.

The Congressional Budget Office estimated in September the cost of replacing the lost equipment (as of 1 August) at $1.9 billion to $3.3 billion, depending on Pentagon replacement plans. President Donald Trump said in Baltimore that "we have to finish up [the conflict with Iran], and it's only a question of which way: do we want to do it the nice way or the not so nice way?" He also stated that Iran's "missile drone manufacturing capacity is way down" and "it'll soon be gone." The US and Israel launched a war against Iran on February 28; Washington and Tehran signed a memorandum of understanding in June envisaging an immediate ceasefire, but the US resumed large-scale attacks on July 8, accusing Iran of breaching agreements concerning the Strait of Hormuz.

US Secretary of State Marco Rubio said Wednesday that Iran has passed up multiple chances to reach a deal on its nuclear program. Vice President J.D. Vance said any agreement to resolve the seven-month conflict must include a commitment by Iran to a meaningful reduction in its nuclear enrichment. The Trump administration recently signaled an end to any large-scale use of force against Iran and a transition to putting economic pressure on the Islamic Republic through sanctions instead.

AI Infrastructure and Energy Demand

Google struck a new long-term nuclear power deal with Constellation Energy for 890 MW of capacity at existing Illinois sites, equivalent to what would be produced by a new nuclear reactor. The deal was announced on Tuesday, October 6, and Constellation Energy stock rose 12.25% following the announcement. Separately, Google signed a 507 MW nuclear power purchase agreement with Fortum at Loviisa, Finland's first nuclear PPA, with a 22-year tenor. The deal keeps the Loviisa plant, which supplies 10% of Finland's electricity, from retiring in 2030.

Schneider Electric acquired PTC for $22.6 billion as part of a broader strategy for smarter power infrastructure amid the datacenter boom. SpaceX plans to raise $40 billion in debt to buy Nvidia chips, according to the Financial Times. Apollo Capital Management and several banks are in discussions with SpaceX to help facilitate the purchase, which will primarily rely on the investment-grade debt market. The amount is described as being as much as the company generates in revenue.

HSBC plans to cut about half of senior and specialist roles and up to 70% of financial advisors in its UK private wealth division as part of an AI-driven restructuring. CEO Georges Ellwanger, who took office in September 2024, has made AI adoption central to his strategy for simplifying the bank's structure. In a strategy report published earlier this year, Ellwanger identified wealth management as an area where new technology could deliver the greatest effect, writing: "We will arm our client managers with AI tools, enabling them to serve clients faster while increasing the relevance of the services provided."

Our read

The RBI's rate hike and the EU's move against Chinese hybrids signal a tightening of macroeconomic and trade conditions in key growth markets, which will likely pressure borrowing costs and supply chain stability for technology firms operating in these regions. The completion of the Paramount-Warner Bros merger creates a dominant media entity with significant debt, potentially altering content licensing costs and distribution dynamics for streaming services. The escalating violence in the Strait of Hormuz and the resulting record freight rates pose direct risks to energy logistics and inflation expectations, particularly for Gulf and EU-based businesses reliant on imported fuels. Meanwhile, the massive capital expenditure on AI infrastructure by Google, SpaceX, and others indicates a structural shift in energy demand, driving hyperscalers into long-term nuclear power contracts and reshaping the utility investment landscape.

This analysis was produced automatically by a large-language-model system from the public sources listed below. It is AI-generated content: it reflects the sources and the model's processing, not an editorial opinion, and may contain inaccuracies. It is not investment, financial or legal advice and contains no call to action; base decisions on the original sources and on advice from qualified professionals.

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