Morning Brief: Trump threatened to destroy Iranian infrastructure in retaliation for strait attacks

Core Snapshot

🛢️ Trump stated the U.S. will bomb one Iranian bridge or power plant every time Iran fires at vessels transiting the Strait of Hormuz. Houthi forces issued threats to fully block vital Red Sea trade routes.

📉 The U.S. carried out airstrikes against Iran for an 11th consecutive night. Crude oil rallied to a six-week high; risk-off sentiment pressured tech valuations, though major U.S. indices only edged lower.

📊 The World Bank’s chief economist warned that an escalation of Middle East warfare could drag the 2026 global GDP growth rate down to 1.3%.

I. Market Outlook

Key Catalysts

Trump issued public retaliatory threats targeting Iranian critical infrastructure. U.S. military strikes on Iranian territory stretched to 11 straight nights, with Iran promising reciprocal countermeasures.

Houthi groups threatened to shut Red Sea shipping passages that handle the bulk of Saudi crude exports; crude futures jumped sharply amid dual supply choke point risks. WTI crude advanced 2.95% to $86.83 per barrel, while Brent crude rose 3.36% to $94.07, hitting a six-week intraday peak.

Exclusive Insight

Geopolitical risk sentiment now prices simultaneous supply disruptions across both the Strait of Hormuz and Bab el-Mandeb. The World Bank’s worst-case growth scenario is rapidly materializing: prolonged regional conflict could cap global growth at 1.3% and push headline inflation to 4.5%. U.S. stocks saw limited downside as investors priced in partial conflict containment, yet the synchronized rally in oil prices and long-dated Treasury yields keeps consistent downward pressure on richly valued tech and semiconductor names.

II. Overnight Market Performance

— US Stocks: Dow -0.01% at 52218.58; S&P 500 -0.14% at 7498.96; Nasdaq -0.57% at 25690.90. Oil strength suppressed tech shares, but broad market losses remained muted.

— European Stocks: STOXX 600 +0.6% to 647.07, marking the highest close since July 6. DAX +0.58%, CAC 40 +0.89%, FTSE 100 +1.24%.

— Fixed Income: US 10Y Treasury yield rose 2.65 bps to 4.655%, hitting a peak since May 20. The 2Y/10Y yield curve flattened to a 35-basis-point spread.

— Commodities: September WTI Crude +2.95% at $86.83; Brent Crude +3.36% at $94.07. Spot Gold +1.31% to $4130.07/oz; Silver +1.55% to $59.7171/oz.

— Forex: DXY edged down 0.03% to 101.14. EUR +0.1% to 1.1410, JPY +0.02% at 163.13.

— Crypto Assets: Bitcoin hovered near $66,000; Ethereum +0.78% at $1935.74.

III. Macro Headlines

🛢️ Trump threatens Iranian infrastructure strikes, Houthi groups threaten Red Sea blockade

Trump vowed targeted retaliation against Iranian bridges and power plants for any Hormuz strait aggression. Houthi militants notified shipping firms to halt cargo loading/unloading at Saudi ports, bringing the Bab el-Mandeb Strait under imminent blockade risk. U.S. airstrikes against Iran have run for 11 consecutive nights.

Insight: Dual energy choke point risks are fully priced into crude markets, with Brent breaking above $94. Every 10-dollar upward move in oil lifts global inflation expectations by roughly 0.5 percentage points, the core dynamic behind the World Bank’s dire growth forecast.

📊 World Bank chief economist: Escalated Middle East war may cut global growth to 1.3%

World Bank chief economist Gill noted the severe downside scenario — six months or longer of sustained regional conflict — is now highly plausible. Global inflation could surge to 4.5%, with heavily indebted emerging markets facing the most severe economic fallout.

Insight: The World Bank previously projected 2.5% global GDP expansion for 2026; the 1.3% worst-case figure represents a halving of baseline growth. Higher energy costs will transmit through fertilizer, grain and industrial raw material prices, triggering cascading inflationary pressure worldwide.

🛢️ EIA: U.S. crude inventories rose 2 million barrels last week

As of the week ending July 17, total crude stockpiles climbed to 411.7 million barrels. Gasoline inventories added 765,000 barrels to 211.3 million barrels. Lower refinery run rates, reduced export volumes and higher import levels drove the inventory build.

Insight: Bearish inventory data was overshadowed by compounded supply risks across the Hormuz and Bab el-Mandeb straits, relegating domestic U.S. stock levels to a secondary market factor.

IV. Global Corporate News

📉 Wall Street AI trade momentum fades; Philadelphia Semiconductor Index enters bear market

SK Hynix ADR plunged more than 13%, Sandisk fell over 12%, AMD lost more than 5%, Nvidia slipped 2%. Hedge funds have drastically reduced exposure to AI-linked equities and leveraged ETFs over the past five to six weeks.

The SOX index has corrected more than 22% from its mid-June peak. The pullback extends beyond fundamental shifts, primarily driven by broad fund rotation and shifting investor risk appetite. Near-term stabilization hinges on cloud providers raising forward AI capital expenditure guidance.

🤖 Google delays flagship Gemini 3.5 Pro launch, stock down nearly 5% after hours

Reports indicate Gemini 3.5 Pro development has fallen months behind schedule, with coding performance failing to meet internal benchmarks. Google’s cloud division posted its largest quarterly revenue expansion, yet a planned $15 billion increase in 2026 capital spending triggered investor scrutiny over margin compression risks.

🚗 Tesla Q2 free cash flow turned negative at $1.1 billion, the first negative print in over two years

The negative cash flow stemmed from accelerated investment into AI infrastructure, battery production capacity, robotaxi fleets and next-generation manufacturing technology.

V. Key Focus Today

· U.S. Weekly Initial Jobless Claims: Labor data will shape market pricing of July Fed rate hike odds.

· ECB Monetary Policy Decision & Lagarde Press Conference: Monitor ECB’s stance on energy-driven inflation risks amid hawkish meeting minutes.

· Intel & SAP Earnings: Test underlying demand for semiconductors and enterprise IT spending trends.

· AMD Advancing AI Summit, CEO Lisa Su Speech: Ahead of AMD’s AI conference, Nvidia showcased mass production progress for its Vera Rubin CPUs; competition between the two chip giants expands from GPUs to full-stack hardware ecosystems.