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By Max A. Cherney SAN FRANCISCO (Reuters) -AMD said on Monday it will supply artificial intelligence chips to OpenAI in a multi-year deal that would bring in tens of billions of dollars in annual revenue and give the ChatGPT creator the option to buy up to roughly 10% of the chipmaker. The deal offers OpenAI an opportunity to take a stake in one of Nvidia's most formidable rivals and is a powerful endorsement of Advanced Micro Devices' (AMD's) AI chips and software. "We view this deal as certainly transformative, not just for AMD, but for the dynamics of the industry," AMD executive vice president Forrest Norrod told Reuters on Sunday. The agreement covers the deployment of hundreds of thousands of AMD's AI chips, or graphics processing units (GPUs), equivalent to six gigawatts, over several years beginning in the second half of 2026. AMD said OpenAI would build a one-gigawatt facility based on its forthcoming MI450 series of chips beginning next year, and that it would begin to recognize revenue then. AMD executives expect the deal to net tens of billions of dollars in annual revenue. Because of the ripple effect of the agreement, AMD expects to receive more than $100 billion in new revenue over four years from OpenAI and other customers, they said. "Other people are going to come along with it because this is really the pioneer, a pioneer in the industry that has a lot of influence over the broader ecosystem," AMD strategy chief Mat Hein said. The deal with AMD will help OpenAI build enough AI infrastructure to meet its needs, OpenAI CEO Sam Altman said in a statement. Analysts, on average, estimate AMD will generate revenue of $32.78 billion this year, according to LSEG data. As part of the arrangement, AMD issued a warrant that gives OpenAI the ability to buy up to 160 million shares of AMD for 1 cent each over the course of the chips deal. The warrant vests in tranches based on milestones that the two companies have agreed on. The first tranche will vest after the initial shipment of MI450 chips set for the second half of 2026. The remaining milestones include specific AMD stock price targets that escalate to $600 a share for the final installment of stock to unlock. AMD has 1.62 billion shares outstanding and is valued at $267.23 billion, according to LSEG data. Its shares closed on Friday at $164.67. OpenAI has a valuation of $500 billion. OPENAI WANTS MORE GPUs OpenAI has worked with AMD for years, providing inputs on the design of older generations of AI chips such as the MI300X. The San Francisco-based AI company has been taking a number of steps to ensure it has the chips needed for its future needs. In September, Nvidia announced an investment of up to $100 billion in OpenAI that included a plan to supply at least 10 gigawatts worth of Nvidia systems. The plan includes OpenAI deploying a gigawatt of Nvidia's next-generation Vera Rubin chips in late 2026. In addition to using Nvidia hardware, cloud computing giants such as Alphabet's Google and Amazon build their own in-house processors. Similarly, OpenAI is in the process of developing its own silicon for AI use and has partnered with Broadcom, Reuters reported last year. OpenAI and its main backer Microsoft also announced last month that they had signed a non-binding agreement to restructure OpenAI into a for-profit entity, signaling further changes in the governance of the fast-growing AI company. A person familiar with the matter said the deal with AMD does not change any of OpenAI's ongoing compute plans, including that effort or its partnership with Microsoft. (Reporting by Max A. Cherney in San Francisco; Additional reporting by Deepa Seetharaman in San Francisco; Editing by Muralikumar Anantharaman)

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(Reuters) -U.S. bank Fifth Third said on Monday it will buy regional lender Comerica in an all-stock deal valued at $10.9 billion. The deal will create a lender with combined assets of about $288 billion, making it the ninth-largest U.S. bank. A wave of consolidation is sweeping through the banking industry as lenders seek scale, diversify revenue streams and prepare for lighter regulation under the Trump administration. Comerica shares jumped 12% before the bell on the news, while Fifth Third fell 2.6%. (Reporting by Manya Saini in Bengaluru; Editing by Arun Koyyur)

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By Mike Dolan What matters in U.S. and global markets today By Mike Dolan, Editor-At-Large, Finance and Markets As U.S. markets mull the lengthening government shutdown, the week started with political drama in Japan and France – with the yen and euro falling sharply against the dollar and both gold and the euro/yen exchange rate vaulting to all-time highs. Sanae Takaichi's shock weekend win to lead Japan's ruling Liberal Democratic Party and become Japan's next Prime Minister sent the dollar surging above 150 yen and the Nikkei soaring almost 5% to new records above 48,000. With Takaichi opposed to Bank of Japan tightening and a supporter of further fiscal stimulus, her win has sent long-shaky 30-year Japanese government bond yields to new record highs and sent Japan's yield curve to its highest in a month as October BoJ rate hike bets evaporated. Just as markets were digesting the news from Tokyo, Prime Minister Sebastien Lecornu and his government resigned hours after Lecornu announced a cabinet line-up, making it the shortest-lived in modern French history and knocking stocks and the euro lower. With French politics back in limbo and possibly facing yet another election, the CAC40 French stock index fell more than 1.5% and euro zone stocks dropped too, with the euro falling back below $1.17 and 30-year French bond yields popping higher. The upshot for U.S. markets that are warily watching the length of the government shutdown stateside and the looming earnings season there is that stock futures and the dollar are higher ahead of Monday's bell and long-term Treasury borrowing rates are rising again. Irking the bond markets on another bad day for debt market around the world was a rise in oil prices after the OPEC+ output rise at the weekend fell short of many expectations. In today's column, I discuss Germany's looming fiscal "sugar rush". Today's Market Minute * Japan's ruling party picked hardline conservative Sanae Takaichi as its head on Saturday, putting her on course to become Japan's first female prime minister in a move set to jolt investors and neighbours. * The U.S. administration will start mass layoffs of federal workers if President Donald Trump decides negotiations with congressional Democrats to end a partial government shutdown are "absolutely going nowhere," a senior White House official said on Sunday. * Trump said on Sunday that talks with Hamas to end Israel's war in Gaza and release hostages held by the Palestinian militant group were advancing rapidly. * OPEC+'s continued oil output increases are eroding the group's spare production capacity, a vital cushion that has helped to mitigate volatility in recent years. Energy traders may therefore face rockier days ahead, writes ROI energy columnist Ron Bousso. * The tin market is once again bubbling on supply chain trouble, this time in Indonesia, where the government has launched a sweeping clamp-down on illegal mining. Read the latest from ROI metals columnist Andy Home. Chart of the day Sanae Takaichi's surprise weekend win to lead Japan's ruling LDP and become the next prime minister sank the yen, sent long-term Japanese borrowing rates soaring and lit a fire under Tokyo equities. Takaichi is opposed to further Bank of Japan interest rate rises and, as an ally of former PM Shinzo Abe, is keen on stimulating the economy further.   Today's events to watch * New York Fed's September global supply chain index (1000) * US corporate earnings: Constellation Brands * European Central Bank President Christine Lagarde and Bank of Spain Governor Jose Luis Escriva speak; Bank of England Governor Andrew Bailey speaks Want to receive the Morning Bid in your inbox every weekday morning? Sign up for the newsletter here. You can find ROI on the Reuters website, and you can follow us on LinkedIn and X.  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)

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PRAGUE (Reuters) -Executives from Boeing and Airbus dampened speculation of imminent decisions to replace their best-selling narrowbody models, telling a major audience of investors that it would take time to achieve the required jump in performance. The Wall Street Journal reported last week that Boeing was in the early stages of developing a 737 successor. But marketing chief Darren Hulst told the International Society of Transport Aircraft Trading that a launch is "some way off" while a senior Airbus executive said it would "take a bit of time" to achieve the 25-30% efficiency gain needed to attract the market. Both executives were speaking in response to questions on stage during an ISTAT gathering in Prague. (Reporting by Tim Hepher; Editing by Emelia Sithole-Matarise)

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By David Morgan WASHINGTON (Reuters) -The U.S. government shutdown entered its sixth day on Monday, with President Donald Trump's Republicans and congressional Democrats still at an impasse and the White House threatening to ramp up pressure by ordering mass layoffs of federal workers. The Republican-led Senate was slated to vote again on dueling measures to fund federal agencies, including a Republican stopgap bill approved by the House of Representatives that would fund operations through November 21, and a Democratic alternative. Neither was expected to receive the 60 votes needed to advance. Asked on Sunday night when the government would begin laying off federal workers, Trump said: "It's taking place right now." He blamed Democrats for the impasse but did not elaborate on the layoff plans. The White House has said thousands could be fired if the shutdown persists. Trump's budget director, Russell Vought, has already frozen at least $28 billion in infrastructure funds for New York, California and Illinois — all home to sizable Democratic populations and critics of the president. Trump and his Republican allies have also taunted Democrats on social media with deepfake videos drawing on Mexican stereotypes with images that Vice President JD Vance described as a joke.   But Democratic leaders showed no sign of knuckling under to the White House's hardball tactics, which have caused unease among some centrist Republicans who fear the approach could make the impasse harder to overcome. "What we've seen is negotiation through deepfake videos, the House canceling votes and, of course, President Trump spending yesterday on the golf course. That's not responsible behavior," House Democratic leader Hakeem Jeffries told NBC's "Meet the Press." The partial shutdown, the 15th since 1981, was tied for the fourth-longest in U.S. history on Monday, matching the six-day length of a 1995 shutdown that began after then-President Bill Clinton vetoed a Republican spending bill. The longest shutdown lasted 35 days in 2018-2019, during Trump's first term in office. HEALTH INSURANCE IS A DEMOCRATIC PRIORITY Senate Democrats, who are demanding a permanent extension of federal subsidies to help people afford health insurance under the Affordable Care Act, have voted down the House-approved funding bill, known as a continuing resolution or CR, four times. With a 53-47 seat majority and one Republican opposed to the CR, Republican leaders need at least eight Democrats to support their funding legislation. But only two Democrats and an independent who caucuses with them have crossed the aisle so far.  "All we have to do is get five more Democrats to vote 'yes,' the government opens up, and then we can start talking about all these other things they want to have conversations about," Senate Majority Leader John Thune said on the Fox News program "Sunday Morning Futures."  But efforts to strike a deal have gone nowhere so far.  "In those conversations, the Republicans offered nothing," said Senate Democratic leader Chuck Schumer, who said that any breakthrough would depend on a deal among him, Trump, Thune, Jeffries and House Speaker Mike Johnson.    Some Democrats want a deal on ACA healthcare subsidies in place before open enrollment for next year begins on November 1. "We have to get this done by November 1," Democratic Senator Ruben Gallego told CNN, warning that missing that date would mean higher healthcare costs for enrollees and possibly no insurance coverage at all.  Democrats also want protection against White House actions to withhold or cancel funding allocated by Congress. "If we agree to a CR and nothing more, they're telling us: 'We don't plan to abide by it,'" Democratic Senator Adam Schiff told NBC. "We need some written assurance in the law. I won't take a promise that they're not going to renege on any deal we make." The standoff has frozen about $1.7 trillion in funds for agency operations, which amounts to roughly one-quarter of annual federal spending. Much of the remainder goes to health and retirement programs and interest payments on the growing $37.5 trillion debt. (Reporting by David Morgan; Editing by Cynthia Osterman)

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By Kevin Buckland and Lucy Raitano TOKYO & LONDON (Reuters) -European stocks, bonds and the euro fell on Monday, dragged down by tumbling French assets after the surprise collapse of the government, while political stories in Japan and the U.S. lifted Japanese equities and gold. New French prime minister Sebastien Lecornu resigned on Monday, barely 14 hours after appointing his cabinet. At 0850 GMT, the pan-European benchmark STOXX 600 was down 0.4%, while France's CAC 40 sunk 2%. Shares in French banks were hard hit, with BNP Paribas, Societe Generale and Credit Agricole falling between 4.7-6%. "The bigger concern for the market is really what comes next, because if Macron decides to appoint another prime minister that’s going to be the sixth PM in two years," said Michael Brown, senior research strategist at Pepperstone. Any newcomer would face the same challenging parliamentary arithmetic and problems when trying to pass the budget, said Brown. POLITICAL INSTABILITY IN FRANCE French political instability has ramped up since Emmanuel Macron's re-election in 2022, with no party or grouping holding a parliamentary majority. The euro slipped 0.7% to $1.1667, and sterling was off 0.35% to $1.3423. At 0856 GMT, however, U.S. S&P 500 futures still pointed to gains of about 0.3%, with the cash index having risen to a record high on Friday. In Japan, stocks surged more than 5% to an all-time high while the yen skidded on Monday after fiscal and monetary dove Sanae Takaichi was elected as leader of the ruling party, putting her on course to become the nation's first female prime minister. Meanwhile, gold climbed to a record peak close to $4,000, while leading cryptocurrency bitcoin rallied to a lifetime high on Sunday, with investors increasingly turning to alternative assets as a store of value as the U.S. government shutdown frayed nerves. Japan's Nikkei soared above 48,000 for the first time ever after Takaichi beat the more moderate Shinjiro Koizumi in the Liberal Democratic Party's leadership vote on Saturday, stoking expectations for fiscal stimulus. The yen slumped as much as 2% to beyond 150 per U.S. dollar for the first time since August 1, and slid as much as 1.8% to an all-time low versus the euro at 176.25. Worries about Japan's finances sent the yield on 30-year government bonds to an all-time high. SHORT-DATED JAPANESE GOVERNMENT BOND YIELDS SLIDE At the same time, short-dated Japanese government bond yields slid to a two-week low as traders pared bets on when the Bank of Japan will resume raising interest rates. Market-implied odds of a BOJ hike by year-end fell to 41% from 68% on Friday. A year ago, Takaichi criticised the BOJ's decision to raise rates as "stupid", although her recent rhetoric has been more restrained, saying only that central bank policy should be aligned with the government. "We believe concerns among some investors that the next administration might pursue extreme fiscal expansion or exert political pressure on the BOJ are overblown," Morgan Stanley MUFG Securities economists wrote in a research report, noting that Takaichi's stance appears closely aligned with BOJ Governor Kazuo Ueda's cautious approach to policy normalisation. Most other major share markets around the region were closed for holidays, including mainland China, South Korea and Taiwan. Gold last changed hands around $3,942 after advancing as much as 1.5% earlier to a record just above $3,944. Bitcoin traded around $123,988 following its jump to $125,653.32 on Sunday. Oil prices rose after OPEC+ announced on Sunday it would increase production by 137,000 barrels per day (bpd) from November, the same modest monthly increase as in October, amid persistent concerns over a looming supply glut. In the run-up to the meeting, sources said Russia was advocating an output increase of 137,000 bpd to avoid pressuring prices, but Saudi Arabia would have preferred double, triple or even quadruple that figure to regain market share more quickly. Brent crude futures gained 1.6% to $65.54 a barrel. (Reporting by Kevin Buckland; Editing by Sam Holmes and Ed Osmond)

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By Rocky Swift and Junko Fujita TOKYO (Reuters) -Japanese shares surged to a record high on Monday, while the yen and long-term bonds tumbled as Sanae Takaichi was all but confirmed to become the country's next premier, stoking bets on a revival in big spending and loose monetary policy. The Nikkei 225 Index soared 4.75% to close at 47,944.76. It traded as high as 48,150.04, breaking through three psychologically key thousand-point barriers for the first time ever. The broader Topix gauge jumped 3.1%. The 30-year Japanese government bond (JGB) plunged, sending the yield to a record high. Meanwhile, the yield on the two-year note slid, reflecting expectations of later rate hikes by the Bank of Japan. The yen tumbled nearly 2% against the dollar and traded at an all-time low versus the euro. Takaichi was considered to have the most expansionist fiscal and monetary agenda among five candidates in the Liberal Democratic Party race to replace hawkish Prime Minister Shigeru Ishiba. "The Nikkei was on course to reach as high as 48,000 by year-end, but because Takaichi was chosen as the LDP leader, it shot up toward that level already," said Hitoshi Asaoka, the chief strategist at Asset Management One. "The market welcomes her spending policy, but whether she can achieve that goal is not certain, as the LDP is still a minority party. The Nikkei may retreat once before year-end." NEW POLICY DYNAMICS Takaichi began eyeing cabinet posts on Monday, with media reporting she planned to install former defence minister Minoru Kihara as chief cabinet secretary and bring back ex-foreign minister Toshimitsu Motegi as the country's top diplomat. Her pick for finance minister, which will be closely watched by investors, was unclear. In the lead-up to the LDP race, a "Takaichi trade" emerged – long on stocks and bearish on Japanese government bonds, particularly longer maturities – positioning for a win by the veteran lawmaker who is a devotee of the "Abenomics" stimulus policies of the late Shinzo Abe. Yields on two-, five-, and 10-year JGBs had all reached levels not seen since the financial crisis in 2008 in the run up to the LDP election on bets the BOJ could raise rates as early as this month's meeting. Long-term JGB yields had fallen, flattening the so-called yield curve. In a run-off vote on Saturday, Takaichi beat farm minister Shinjiro Koizumi, who was seen as more laissez-faire on monetary policy. "The market had bet that Koizumi would win, and they were positioned for curve flattening," said Miki Den, the senior Japan rate strategist at SMBC Nikko Securities. "But because the bet on Koizumi was so strong, it will take time to unwind the flattening positions." The yen sank 1.8% to 150.13 yen versus the dollar and weakened to 176.22 against the euro, an all-time low. The yen swaps market on Monday indicated a 41% likelihood of a rate hike by December, down from 68% on Friday. As a candidate, Takaichi proposed boosting investment in strategic business sectors, including artificial intelligence, semiconductors, nuclear fusion and defence. Shares in those sectors were among the biggest gainers in Tokyo trading. Mitsubishi Heavy Industries, a major military contractor, jumped 11%, and Japan Steel Works, a supplier of nuclear energy machinery, soared more than 15%.  Yields on long-term debt face upward pressure on expectations Takaichi will push for more deficit spending, adding to concerns about Japan's creditworthiness. The yield on the 40-year JGB, the longest tenor, soared 12.5 basis points to 3.505%. The 30-year yield briefly reached 3.29%, an all-time high. An auction of 30-year JGBs on Tuesday will be closely watched for signs of concerns about Japan's finances and debt management under Takaichi. Despite a modest issuance amount, the debt sale "is expected to be weak because investors —wary of higher term-premia after Ms. Takaichi's ascent and possible fiscal stimulus— are reluctant to add long-duration risk," Shoki Omori, the chief desk strategist at Mizuho Securities, wrote in a note. After her LDP victory, Takaichi told a press conference the government and central bank must work closely to ensure Japan's economy achieves demand-driven inflation backed by rising wages and corporate profits. (Reporting by Junko Fujita and Rocky Swift; Additional reporting by John Geddie and Kevin Buckland; Editing by Sam Holmes)

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ROME/PARIS (Reuters) -A framework agreement between France's Airbus and Thales and Italy's Leonardo to create a major new European satellite manufacturer will still require some weeks, a source told Reuters on Monday. The person familiar with the matter said key details remain under discussion and that the boards of the three companies are working to reach a unified position. Talks between the aerospace companies encountered a setback after existing partners Thales and Leonardo asked for more time, French daily La Tribune reported. Leonardo declined to comment. Thales did not immediately reply to requests for comment. A spokesperson for Airbus said: "Talks with our partners continue and are confidential in nature; it is too early to comment further". Airbus and the other two companies, which own Airbus' main competitor in satellite production, Thales Alenia Space, have been in talks for months to create a new European venture to compete more effectively with rivals from China and the U.S., including Elon Musk's SpaceX. The deal aims at combining Thales Alenia Space and Telespazio – two joint ventures between Leonardo and Thales – Airbus Space Systems, Airbus Intelligence and the space activities owned by Leonardo. La Tribune reported that talks accelerated last week but hit a last-minute obstacle over how workshare would be divided among the three companies. (Reporting by Giuseppe Fonte in Rome, Tim Hepher in Paris and Giulia Segreti in Rome; Editing by Kirsten Donovan and Louise Heavens)

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(Reuters) -Tesla on Sunday teased an October 7 event, as investors and analysts await a more affordable model to sustain sales momentum, sending shares of the company 2% higher in premarket trading. In a nine-second video posted on social media platform X, the Elon Musk-led automaker showed a vehicle with its headlights illuminated in a dark setting. The company hinted at an event scheduled for Tuesday in a separate video that had "10/7" at the end. Tesla has previously delayed rolling out a lower-cost version of the Model Y in the United States. The company said in June that it had made "first builds" of the vehicle, but would start selling it in the fourth quarter and ramp up output slower than planned. The stripped-down version is designed to be roughly 20% cheaper to produce than the refreshed Model Y and could scale to about 250,000 units a year in the U.S. by 2026, sources told Reuters earlier this year. The teaser follows Tesla’s record quarterly deliveries for the three months ended September, driven by a surge in EV purchases ahead of the expiration of the $7,500 U.S. EV tax credit on September 30. However, analysts expect sales to drop off in the coming months without the incentive. Wall Street expects Tesla's deliveries to jump next year to 1.85 million vehicles, with the cheaper model accounting for 155,610 units in 2026, according to Visible Alpha estimates. Tesla faces challenges from an aging model lineup. The company has not introduced a new mass-market vehicle in years, relying heavily on incremental updates to the Model 3 and Model Y to drive sales. Sales of its last major launch, the Cybertruck, have struggled, with Tesla offering thousands of dollars in discounts for vehicles in inventory in the past few months. A U.S. recall filing in March showed 46,096 Cybertrucks had been built between its introduction in November 2023 and early this year. (Reporting by Mrinmay Dey and Akash Sriram in Bengaluru; Editing by Jamie Freed and Mrigank Dhaniwala)

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(Reuters) -Citigroup has double downgraded UK equities to "underweight" from "overweight", while upgrading Emerging Markets (EM) to "overweight" in a strategic pivot toward cyclical and AI-driven growth opportunities. Analysts at Citi raised their mid-2026 target for the MSCI EM index to 1,465, implying ~7% upside from current levels, while raising their target for the FTSE 100 to 9,700 from 9,300, implying more modest upside from current levels over the same time period. The brokerage in a note on Friday said that the UK's 50% exposure to defensive sectors such as consumer staples and utilities makes it less attractive in a market environment increasingly favouring cyclical and growth-oriented plays. While economic activity has held up, Citi noted that UK growth has been driven by frontloaded trade and government spending, with consumer demand remaining weak. Taken alongside Citi analysts' expectations for earnings growth and market performance to become more dispersed across regions, sectors, and styles in 2026, the outlook for UK stocks becomes less compelling. "While the UK has performed well as an overweight, the potential broadening and demand for cyclicality is less favourable for the index," Citi analysts wrote. Lower energy prices are also expected to weigh on UK earnings, with Citi forecasting a 1% contraction in FTSE 100 earnings for 2025 and with no Bank of England rate cuts expected this year, the macro environment continues to face headwinds. In contrast, Citi sees EM benefiting from a confluence of factors, including a soft-landing scenario in the U.S., anticipated Federal Reserve rate cuts, and exposure to the booming AI theme through markets like Taiwan, Korea and China. "EM is more directly tied to the AI thematic, with exposures looking more similar to the U.S.," the report said, noting that equity inflows into EM remain subdued and could pick up. (Reporting by Rashika Singh in Bengaluru; Editing by Ronojoy Mazumdar)

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