WS #15880

The geopolitical crisis in the Middle East is escalating rapidly, marked by the sinking of a container ship in the Strait of Hormuz and renewed Houthi strikes on Saudi Aramco infrastructure. This supply shock has pushed Brent Crude to $106.04, compounding the market's negative reaction to hotter-than-expected US CPI data (3.7%). The dual pressure of inflation and war is driving Treasury yields higher, which is triggering a broad selloff in rate-sensitive sectors, particularly airlines and fiber-optic connectivity, while simultaneously lifting energy and defense equities. In the technology sector, a divergence is emerging. While macro headwinds from rising rates are pressuring AI infrastructure stocks like Super Micro Computer (SMCI) due to export compliance issues, ASML reported a massive earnings beat, and GlobalFoundries surged on a $21B US-Japan funding deal. This suggests that while demand destruction fears are real, capital expenditure commitments in the US semiconductor supply chain remain robust. Meanwhile, Apple's HomeView launch is being viewed as a modest positive for services revenue, though it does little to offset broader macro concerns.