WS #12885

The dominant narrative remains the DE-ESCALATION in US-Iran tensions, with diplomatic talks continuing. Iran held Hormuz calls with Saudi Arabia and Oman, and Trump hailed 'good talks,' though Iran denies direct negotiations. This supports the previous de-escalation thesis, with oil prices likely to remain under pressure. However, new signals emerge: Houthi threats are disrupting Saudi Red Sea oil exports, with empty supertankers heading to Egypt's Sidi Kerir to collect Saudi crude as traffic at the kingdom's key Red Sea export hub dwindles. This introduces a new supply-side risk that could partially offset the Hormuz de-escalation. Separately, South Korea's KOSPI index plunged 10.7%, signaling potential contagion from the AI selloff or geopolitical jitters. In corporate news, Unilever (UL) upgraded FY2026 outlook after strong Q2 sales, while Barclays (BCS) upgraded its 2026 income target. Safran raised FY2026 outlook. The AI capex selloff narrative carries forward, with over $1 trillion wiped from US stocks concentrated in memory chip stocks (NVDA, SK Hynix, Micron). A contradictory MAG7 signal emerges: Meta (META) is winning while Google's capex spooks, suggesting rotation within tech. The Fed is expected to hold rates steady at the July meeting, with Polymarket bets showing no change. The Strait of Hormuz traffic normalization timeline remains uncertain, with Polymarket bets on return to normal by August 15 or 31.