WS #12393

The US-Iran conflict continues to escalate sharply, with the US launching fresh airstrikes against Iran's Revolutionary Guard to 'swiftly punish' them after Iranian missile attacks killed two US service members in Jordan, bringing the total US death toll to 16. The US struck Kharg Island oil terminal, and Iran maintains control of the Strait of Hormuz, threatening commercial shipping. Brent crude has risen to $88.10, up 4.59% on the week, while gold is falling despite the war as inflation fears from higher oil prices drive expectations of Fed rate hikes (51% probability of a September hike). The EU and Gulf states jointly called on Iran to keep the Strait open, rejecting transit fees. Separately, the AI/tech sector faces headwinds: Oracle's credit rating was downgraded to BBB- (just above junk) by S&P Global, with its AI infrastructure spending ballooning debt and cash flow turning negative $23.7B. Nvidia briefly lost its position as the world's most valuable company to Apple amid skepticism about AI investment sustainability. The KOSPI is falling despite strong Samsung/SK Hynix earnings as investors shift focus from profit growth to financing costs and geopolitical risks. Barclays notes European earnings season shows broadening profit recovery, with 13% EPS growth expected for Q2, but warns AI premium valuations need justification.