WS #15564

Geopolitical risk is escalating sharply as Iran intensifies attacks in the Strait of Hormuz, pushing oil prices higher and triggering a broad risk-off response across global equities. This escalation is compounded by a Ukrainian drone strike on the Omsk oil refinery in Siberia, which disrupts Russian refining capacity and further tightens global supply expectations. The combination of Middle East shipping threats and Russian infrastructure damage creates a dual-supply shock, pressuring airlines and refiners while benefiting energy producers. Simultaneously, the macroeconomic backdrop is deteriorating. The St. Louis Fed President has signaled that more rate hikes are necessary to tame inflation, a stance reinforced by Vice President JD Vance's defense of the administration's economic record against rising mortgage rates. This hawkish pivot, combined with bond yields touching 24-year highs, is pulling US stocks away from their recent records and increasing the cost of capital for high-multiple growth stocks. In the technology sector, the narrative remains fractured. While OpenAI's revenue miss continues to weigh on the broader AI theme, Anthropic is making strategic inroads with new enterprise tools and a cybersecurity mission. Meanwhile, Apple is preparing for its October 13 event, and Microsoft faces regulatory headwinds as it is excluded from US visa programs, highlighting the growing intersection of tech and immigration policy.