WS #12699

The US-Iran conflict remains the dominant market driver, with the narrative now shifting from potential de-escalation to renewed escalation. Iran has rejected the latest US peace proposal, stating it will no longer allow the US to replenish oil and ammunition reserves through deceptive ceasefires. Iran's IRGC stopped four ships attempting to transit the Strait of Hormuz over the past 24 hours, and Houthi forces claimed missile strikes on Saudi Aramco facilities in Jizan and Yanbu. The US and UK are planning a London summit to form a maritime coalition to protect commercial shipping in the Strait of Hormuz, indicating a potential exit strategy. Oil prices remain elevated near $100/barrel, with Brent crude at $99.55, down slightly from earlier highs. The Hormuz tanker crossings have sunk to the lowest level since May as war risk spikes. This escalation counters the previous de-escalation narrative and keeps energy stocks bullish while pressuring airlines and consumer sectors. In corporate news, SK Group and Nvidia announced a comprehensive partnership valued at over $500 billion for AI factory construction and next-generation memory supply, with SK Hynix co-developing next-generation HBM with Nvidia. This is a significant positive for NVDA and memory stocks. Intel reported strong Q2 earnings, beating estimates by $0.21 EPS with revenue up 25.2% YoY, but PC demand is likely to be tepid in Q3. SLB also beat estimates, with solid international growth and data center solutions revenue up 80% YoY. The US imposed a 10% tariff on India under Section 301, placing India in a lower tier, which provides a relative advantage to Indian exports. Trump also threatened 100% tariffs on generic drugs starting in 2028, hitting Canadian generic drug makers. The EU fined Google €890 million under the Digital Markets Act, prompting Trump to threaten a Section 301 investigation into the EU, potentially leading to tariffs on European imports.