WS #6547

The US-Iran conflict in the Strait of Hormuz remains the dominant market driver, with the situation ESCALATING further. Fresh attacks on US Navy destroyers and Iranian strikes on the UAE's Fujairah oil terminal have shattered the fragile ceasefire. Despite this, European stock markets are attempting a modest rebound, betting on de-escalation, as oil prices dip slightly from Monday's highs. Brent crude is around $113, WTI near $104. The RBA hiked rates by 25bps to 4.35%, citing Middle East conflict-driven inflation. The Indian rupee hit a record low of 95.23 against the USD. Key earnings reports are providing some positive signals: UniCredit reported record quarterly profits and launched its €35B Commerzbank takeover bid; Anheuser-Busch InBev beat forecasts with volume growth; Sterling Infrastructure surged 22% on record Q1 results; Hugo Boss topped profit estimates despite geopolitical headwinds. However, the overarching narrative remains the sustained oil supply disruption and its cascading effects on inflation, central bank policy, and currency markets. The 'Project Freedom' initiative by the US to guide ships through the Strait is being met with Iranian resistance, keeping the risk premium elevated.