WS #15403

Global markets are navigating a complex divergence between resilient US equity valuations and intensifying geopolitical and energy supply risks. While the S&P 500 continues to climb on the back of AI-driven tech momentum, the underlying macro environment is deteriorating. Oil prices remain elevated near $99, driven by a thinning supply buffer and direct strikes on Russian refining infrastructure, creating a mixed-cohort impact that benefits energy majors while pressuring airlines and shipping. Simultaneously, the Federal Reserve is signaling a cautious approach to inflation, explicitly factoring in AI, tariffs, and energy costs, which keeps rate-cut expectations in check despite a 78-month economic expansion. In the corporate sector, significant M&A activity is reshaping the media landscape with the closing of the Paramount-Warner Bros. Discovery merger, favoring Netflix as a consolidated streaming leader. Meanwhile, the AI narrative is expanding beyond hardware into enterprise software, highlighted by SAP’s acquisition of AI startup TechWolf and DeepSeek’s massive $12 billion funding round, which underscores the relentless capital intensity of the sector. On the macro front, France is facing severe social unrest and fiscal turmoil, threatening European stability, while the US high-yield credit market shows signs of stress with CCC spreads hitting four-year highs, suggesting that the equity rally may be outpacing the underlying credit health.