WS #13975

The dominant narrative remains the Strait of Hormuz standoff, with the US-Iran conflict showing no signs of de-escalation. President Trump's claim of 'total control' over the strait and Iran's rejection of that claim, coupled with reports of Iran submitting six conditions for reopening the strait, keeps oil prices elevated and geopolitical risk premium high. Oil prices are oscillating around $82-88 per barrel, with Brent near $88 and WTI near $82, as the market prices in ongoing supply disruption risks. This continues to support energy names (XOM, CVX) while pressuring airlines (DAL, UAL) and shipping (MATX, ZIM). The July CPI report, which matched expectations at 3.4% YoY, has reduced the probability of a September Fed rate hike to ~40%, providing some relief to growth and tech stocks. This has contributed to a strong rally in Asian markets, particularly South Korea's Kospi (+4.4%) and Japan's Nikkei (+1.86%), driven by AI and chip stocks. The AI trade remains robust, with Super Micro Computer and CoreWeave posting strong earnings, lifting the entire AI infrastructure complex. A notable development is Anthropic's reported $6 billion acquisition talks for Decart AI, which could have implications for the AI competitive landscape and Nvidia's positioning. Additionally, reports of over 40 S&P 500 companies booking ~$9.6 billion in tariff refunds, including Apple, provide a one-off earnings tailwind but are not a durable signal. The oil spill from the grounded tanker Caroline Bezengi off Oman's coast is an environmental disaster but has limited direct market impact beyond potential localized shipping disruptions.