WS #12826

Markets opened sharply higher on Monday as oil prices tumbled over 5% after the U.S. paused its strikes against Iran, easing immediate supply concerns. The de-escalation has sparked optimism that shipping traffic through the Strait of Hormuz could normalize, with European TTF gas plunging 8%. However, the geopolitical risk remains elevated: Houthis and Iran-backed militias continue drone attacks on Saudi oil infrastructure, including strikes on the east-to-Yanbu pipeline, and Saudi Arabia condemned attacks from Iraq. Ukrainian drones also struck Russian oil export terminals. The oil price drop is a strong counter-signal to the prior bullish oil thesis, benefiting airlines and consumer stocks while pressuring energy names. Meanwhile, the Fed decision looms Wednesday with markets pricing a 62% chance of a pause vs. 38% for a 25 bps hike. Nvidia credit risk surged on reports of $750B+ AI infrastructure deals, and Piper Sandler upgraded Rivian to Overweight. Options flow shows heavy put buying in SPY ($691M), ORCL ($104M), and NFLX ($35M), signaling bearish hedging. China said the US agreed to cap replacement tariffs at 20%, up from 12.5%, and China starts mass-producing DUV chipmaking tools, pressuring US semi equipment makers.