WS #8718

The US-Iran conflict has escalated sharply with Iran's IRGC launching a retaliatory strike against a US base in Kuwait after US strikes on an Iranian communications tower. This marks a significant escalation, with Kuwait confirming it intercepted missiles and drones. The conflict is now directly involving a third country (Kuwait), raising the risk of a broader regional war. Separately, Israel's Netanyahu ordered bombing of southern Beirut, the largest escalation since the April ceasefire, with thousands fleeing. This dual escalation in the Middle East is likely to push oil prices higher and increase risk aversion. Russia banned jet fuel exports until late November due to Ukrainian strikes on refineries, further tightening global fuel supply. On the positive side, a new pancreatic cancer drug (daraxonrasib) nearly doubled survival time in a trial, which could be a catalyst for biotech stocks. The ECB is still likely to raise rates next week despite a slight dip in inflation expectations. UK manufacturing PMI rose to 53.9, the fastest in four years, as firms front-run price increases from the Middle East conflict. China's index reshuffle is set to boost tech weightings, potentially driving inflows into AI and semiconductor stocks. The dominant theme is ESCALATION in the Middle East, with the US-Iran conflict now involving Kuwait and the Israel-Hezbollah ceasefire collapsing.