Good morning. Here’s what happened overnight and what you need to know today.
1.
Choke hold: Two oil tankers carrying Saudi crude reversed course in the Red Sea in the first sign that a naval blockade declared by Yemen’s Houthi rebels is disrupting global energy supplies already strained by the standoff over the Strait of Hormuz. The Iran-backed group had warned vessels using Saudi ports could be targeted, a potential new front in the US-Iran war. Brent crude rose above USD90 a barrel, near its highest in a month. The two tankers, which had loaded at the Red Sea port of Yanbu bound for China and India, turned toward the Suez Canal rather than exit through the Bab al-Mandeb strait. The redirection matters because Saudi Arabia has leaned on Yanbu to pipe millions of barrels a day around the Hormuz blockade. The Houthis hadn’t yet fired on ships, and US President Donald Trump said during a meeting with Lebanon’s President Joseph Aoun that the US would act if they did. “If something like that happens, we take care of it.” Meanwhile, US and Iranian forces exchanged fire for the 10th consecutive night, with Trump threatening to soon hit a fortified Iranian nuclear site known as Pickaxe Mountain. (Reuters)(Bloomberg)(NYT)(FT)
2.
Chips ahoy: Wall Street’s main indexes closed higher overnight as a steep rebound in semiconductor stocks pushed past the latest Middle East hostilities and tariff battles, with investors looking ahead to megacap technology earnings for clues on the AI trade. The Nasdaq Composite gained 1.3% and the S&P 500 0.9%, and the Dow was up 0.7%. The Philadelphia Semiconductor Index rallied 5.2% in its second straight advance, after ending Friday more than 20% below its late-June record. Intel climbed on plans to cut more jobs, while memory makers Sandisk and Micron rallied as beneficiaries of the AI infrastructure build-out. AMD rode the broader rebound in beaten-down chip names ahead of earnings. Investors also shrugged off President Donald Trump’s 50% tariffs on a range of Canadian imports and looked past oil settling 2% higher at USD91.01 a barrel for Brent, a five-week high. Meanwhile, Morgan Stanley downgraded Adobe and Salesforce, part of a wave of analyst caution that competition from AI services will erode software growth, pricing power and margins. Elsewhere, Macquarie stood by its ‘outperform’ rating and USD250 target on SpaceX. (Reuters)(Bloomberg)(WSJ)
