WS #14399

The Middle East tensions continue to escalate, with Iran-backed Houthi rebels seizing the strategic Red Sea port city of Mocha, intensifying the conflict with Saudi-backed government forces. This development, alongside ongoing hostilities in the Strait of Hormuz and the Red Sea, has reinforced the bearish sentiment for energy stocks, particularly airlines and shipping, while lifting the prospects for energy beneficiaries. The U.S. 10-year Treasury yield remains at 4.9%, and inflation concerns persist due to recent PPI data. The tech sector remains mixed, with no major shifts in sentiment. The recent Oracle earnings beat and the acquisition of ACV by Copart have introduced positive signals in the tech and industrial sectors, which may counterbalance the bearish sentiment from the Middle East tensions. However, the IEA's warning of a 1.74 million bpd oil supply gap by 2026 and the Houthi advances in the Bab el-Mandeb Strait have intensified the bearish outlook for energy stocks and raised concerns about the potential for further escalation in the region.