WS #15443

Geopolitical tensions in the Middle East are escalating sharply, with Houthi attacks on shipping and new US demands for Iran deals driving Brent crude above $101 a barrel. This supply shock is creating a bifurcated market: energy and defense stocks are rallying on the back of physical constraints and war spending, while airlines and consumer discretionary face margin compression from higher fuel costs and inflationary pressures. The RBI's rate hike in India further complicates the macro picture, tightening liquidity in emerging markets just as the dollar strengthens on safe-haven flows. In the technology sector, the narrative is shifting from pure AI hype to infrastructure reality. SpaceX's $40 billion plan to buy Nvidia GPUs signals massive, sustained demand for AI compute, supporting the bullish thesis for Nvidia and its supply chain. However, regulatory headwinds are mounting, with Finland halting Google's data center projects and the US continuing to restrict chip exports to China. This regulatory friction contrasts with the strong demand signals, creating a mixed environment for cloud and semiconductor equities.