Optimism over a US-Iran memorandum of understanding and the expected reopening of the Strait of Hormuz is driving oil prices sharply lower. The deal would lift the naval blockade, remove immediate supply risks, and allow Iranian crude exports, adding supply to the market.
AI revenue strength from OpenAI and Anthropic is fueling semiconductor demand; the SOXX index has rallied about 18.9% since the end of July on AI optimism, lifting chip stocks.
Crude oil traded up to near $89 a barrel as Treasury Secretary Scott Bessent warned of more economic pressure to come on Iran, keeping Iran-related supply risks as a support for oil.
Lower oil prices and declining interest rates are causing a rotation in equity markets from technology and growth stocks into procyclical areas. The Dow Jones Industrial Average is rallying while the Nasdaq 100 is selling off, as cyclicals benefit directly from disinflationary tailwinds.