WS #6777

The US-Iran conflict in the Strait of Hormuz remains the dominant market driver, with fresh exchanges of fire overnight. Al Jazeera and multiple Bluesky sources report US and Iranian forces traded fire near the Strait, with Iran accusing the US of targeting civilian areas and CENTCOM claiming self-defense strikes. Trump dismissed the strikes as a 'love tap' and insists the ceasefire holds, but the situation is clearly ESCALATING. Asian markets retreated from records (S&P/ASX 200 -1.51%) and oil prices climbed, with Polymarket showing bets on WTI closing above $94 and $97. The renewed hostilities reinforce the bullish case for energy stocks (XOM, CVX, XLE) and bearish pressure on airlines and consumer stocks. Separately, Trump threatened 'much higher' tariffs on the EU if the July 4 deadline is not met, adding to trade uncertainty. European futures are lower (FTSE -0.7%, DAX -0.9%, CAC -1.0%). On the corporate front, Cloudflare announced a 20% job cut despite strong Q1, pivoting to an 'agentic AI-first' model, which may pressure the stock near-term. IREN surged 7% on a $3.4B AI cloud deal with Nvidia, a positive for NVDA and AI infrastructure. Akamai popped 29% overnight on no clear catalyst, suggesting potential M&A or earnings surprise. SK Hynix is reportedly attracting Big Tech funding to expand AI memory chip production, bullish for the semiconductor supply chain. The UK local elections narrative continues but no new data in this window. The dominant narrative is ESCALATING geopolitical risk in the Middle East, with oil prices likely to remain elevated, benefiting energy stocks while pressuring indices and consumer stocks. The EU tariff threat adds a negative layer for European equities and trade-sensitive US sectors.