WS #15919

The geopolitical landscape has sharply escalated following the resumption of Ukrainian strikes on Russian oil refineries, directly violating the Trump-brokered energy truce. This development has reignited supply fears, pushing Brent crude above $104 and WTI near $94, while simultaneously triggering a flight to safety that drove US 10-year Treasury yields down 11 basis points to 5.08%. The market is now pricing in a dual threat: a potential Strait of Hormuz closure and the draining of global oil buffers, with Chevron executives warning that diesel relief may not arrive until 2027. In the technology sector, a divergence is emerging between the AI infrastructure leaders and the broader semiconductor complex. TSMC reported a robust 41% revenue rise, confirming strong AI demand and validating the long-term thesis for the foundry sector. However, this positive signal is being offset by bearish sentiment toward Micron, which slid 4% on concerns regarding Chinese competition and broader AI sector weakness. Additionally, the escalating legal and espionage disputes between Apple and OpenAI highlight the intensifying regulatory and competitive risks facing the AI narrative. Macroeconomic pressures are mounting as inflation fears rattle global equities, with Bursa Malaysia falling sharply and European markets mixed. France faces a sovereign debt crisis as borrowing costs rise, while the UK economy is projected to grow but with sharper household inflation. The combination of sticky inflation, high yields, and geopolitical supply shocks is creating a hostile environment for growth assets, particularly airlines and shipping, while benefiting energy producers and defense contractors.