WS #16179

Global equity markets are navigating a bifurcated environment defined by a severe US housing data miss, a resurgence of geopolitical risk in the Middle East, and a critical technology sector divergence. The US housing sector has deteriorated sharply, with housing starts missing estimates by nearly 80,000 units and pending home sales plunging 7.3% month-over-month, signaling a rapid cooling in real estate activity that pressures homebuilders and mortgage-related equities. Simultaneously, geopolitical tensions have escalated, marked by the UK deploying fighter jets to Saudi Arabia and Turkey maintaining troops in Syria and Iraq. This escalation counters the previous ceasefire narrative, lifting defense stocks and energy supply fears while weighing on risk assets. In the technology sector, a clear divergence is emerging. While the broader market faces headwinds from Google Cloud outages in Europe and intensifying antitrust scrutiny on Apple in China, defense-adjacent tech and AI infrastructure remain resilient. Northrop Grumman reported record backlog and raised guidance, and Intel surged 5% on a JPMorgan upgrade, contrasting with the broader tech selloff. This highlights a rotation from consumer tech into industrial and defense technology. Meanwhile, the AI credit cycle shows signs of stress, with CoreWeave bond yields spiking to 15.5%, raising questions about the sustainability of current infrastructure capex levels.