WS #15707

Geopolitical risk is the dominant market driver, with Houthi strikes on Saudi oil infrastructure pushing Brent crude above $106 and WTI near $94. This escalation is actively disrupting global logistics, evidenced by Gulf Air cancelling flights to Riyadh and a major cyberattack crippling French supermarket refrigeration systems. While Saudi Arabia asserts supply continuity, the market is pricing in a depletion of spare oil buffers and a failure of the proposed 'energy ceasefire' with Russia, creating a high-volatility environment for energy and transport sectors. In technology, the narrative is bifurcating. Salesforce is surging on an acquisition of an AI analytics platform and positive analyst sentiment, while Apple faces headwinds from reduced iPhone 18 Pro orders due to memory chip costs. Meanwhile, the AI infrastructure trade is seeing specific momentum with IREN winning a major deal with Anthropic and ASML raising prices for chipmaking parts, signaling sustained demand despite broader macro caution. Macro signals point to persistent inflation and tightening liquidity. The MBA expects two more Fed rate hikes, and retail inflation in India has spiked to 5.54%, driven by food prices. This environment supports the 'higher for longer' thesis, pressuring rate-sensitive sectors while benefiting energy producers and specific defense contractors like Hexcel.