WS #16169

Geopolitical risk is escalating sharply as the UK authorizes military intervention in the Red Sea and a maritime security incident off Oman pushes Brent crude above $110. This supply shock is driving a rotation out of growth and into energy and defense, with indices showing order book imbalances and tech stocks facing headwinds. The escalation narrative is reinforced by Treasury Secretary Bessent’s comments on critical mineral independence and bond market stability, suggesting a policy response to inflationary pressures rather than a liquidity crisis. In the corporate sector, M&A activity is accelerating, highlighted by Salesforce’s $5.7B acquisition of Braze and Merck’s purchase of Silence Therapeutics, signaling continued consolidation in software and biotech. Meanwhile, the US housing market data missed expectations significantly, with starts falling 5.2%, adding a domestic macro drag. Earnings are mixed, with Halliburton beating on international growth and MSCI beating consensus, while AGNC Investment missed revenue estimates.