WS #11632

The US-Iran conflict has escalated sharply, with the US launching a new wave of strikes against Iran, hitting over 80 targets, and revoking the sanctions waiver that allowed Iranian oil sales. This follows Iranian attacks on three commercial vessels in the Strait of Hormuz. Iran retaliated by striking targets in Bahrain and Kuwait, and warned of further measures. The fragile June ceasefire is now at risk of collapse. Oil prices surged over 5%, with Brent crude rising above $76/barrel, reversing recent declines. This escalation is a major escalation of the previous narrative, moving from a stable ceasefire to active hostilities. The oil price spike is the primary market-moving signal, with broad implications for energy stocks, airlines, and consumer sectors. The US strikes and sanctions revocation are a counter-signal to any hopes of de-escalation, reinforcing the bearish macro outlook for risk assets and bullish for energy. Separately, the Supreme Court ruled that Trump cannot fire Fed Governor Lisa Cook, strengthening Fed independence, which is a positive for market stability. China chip stocks rallied on reports Apple is seeking a domestic memory supplier, a positive for Chinese semiconductor names. The Reserve Bank of New Zealand raised rates by 25bps to 2.5%, its first hike since 2023, signaling a tightening bias. Microsoft announced layoffs of 4,800 employees, primarily in Xbox and sales, as it restructures toward AI. OpenAI's GPT-5.6 is set for global launch this Thursday, cleared by the Trump administration, a positive for AI-related tech stocks.