WS #15437

Geopolitical risk has escalated sharply with the US asserting that Iran has lost control of the Strait of Hormuz, driving Brent crude up 3.4% and triggering a broad energy rally. Simultaneously, a naval drone attack on an oil tanker in the Black Sea has added to supply disruption fears, while the Kremlin has issued a series of escalatory statements regarding a plague lab incident and French nuclear missile tests. This macro shock is creating a bifurcated market: energy and defense stocks are surging, while airlines, shipping, and consumer discretionary face margin compression and demand destruction. In contrast to the geopolitical turmoil, US equity indices (S&P 500, Nasdaq) closed at record highs, buoyed by a massive AI infrastructure narrative where SpaceX is reportedly seeking $40 billion to purchase Nvidia chips, and Marvell Technology received a significant analyst upgrade. In the technology sector, the AI narrative remains dominant but faces internal friction; while Nvidia benefits from the SpaceX deal, Meta and Microsoft are reportedly cutting back on Anthropic's Claude usage, signaling a potential plateau in AI spending or a shift in model preference. Meanwhile, Bitcoin has dropped below $84,000, triggering $550 million in liquidations, reflecting risk-off sentiment in crypto despite the broader equity rally. In Europe, France is facing a sovereign debt crisis with surging bond yields and political instability, dragging down the Euro, while the RBI in India has hiked repo rates, adding to global monetary tightening pressures.