WS #13033

The US-Iran conflict continues to escalate, with the US military launching fresh airstrikes on Iranian targets, including the port city of Abadan, Qeshm Island, and Fars province, after foiling an Iranian missile attack on US forces. Multiple sources (AP, Al Jazeera, CNBC, Guardian, and local reports) corroborate the strikes, with reports of explosions in Bushehr and Qeshm Island. Brent crude initially fell $1.04 to $89.70/barrel but remains elevated above $90, while Japan cut its FY2026 growth forecast to 0.9% from 1.3% due to higher oil prices. The Strait of Hormuz remains a key risk, with Qatar sending its first LNG shipment through the strait since an attack three weeks ago. The Fed held rates steady (9-3 vote) with a hawkish tilt, pushing the 30-year yield to 5.14%, and the Dow fell 2.19%, S&P 500 dropped 1.52%, and Nasdaq declined 1.74%. However, after-hours trading shows a sharp reversal: Nasdaq futures extend gains to 1.0%, S&P 500 futures rise 0.5%, and Nikkei futures are up 2%, driven by Microsoft's strong earnings (Azure revenue up 43%, beating estimates) and a potential rotation into tech. Meta's earnings disappointed (EPS miss, weak guidance) with stock down 7%+ after-hours, but Microsoft's beat provides a bullish counter-signal for the tech sector. Samsung Electronics reported record Q2 operating profit (KRW89.5tn, +1,813.8% YoY) driven by AI memory demand, but warned of widening supply-demand gap next year and DRAM bit growth to be mid-single-digit in Q3. The KOSPI selloff continues amid leverage unwind concerns. OPEC+ has reached a preliminary agreement to lift August oil quotas modestly, contingent on a lasting US-Iran peace deal, which could counter the oil supply crisis. The Todd Blanche AG nomination vote was postponed due to lack of GOP support, a political development that may reduce near-term policy uncertainty. The dominant narrative is ESCALATING US-Iran conflict driving oil and risk-off, but Microsoft's earnings and OPEC+ potential supply increase provide counter-signals. The MAG7 carve-out: Microsoft's strong earnings (MSFT) contradict the broader macro selloff, suggesting a potential tech rotation.