Midday Mashup
Published
The Middle East energy shock remains the dominant force, but the session's clearest message is that oil disruption fears are now being repriced downward even as supply constraints persist. Energy stocks are the worst-performing sector, with exploration and production names hit hardest: Diamondback Energy falls -7.7%, Matador Resources -6.6%, SM Energy -6.5%, and Magnolia Oil & Gas -6.0%, as the large API crude inventory build and partial supply restoration news undercut the crisis premium built into the sector.
On the supply front, Saudi Arabia is seeking to restore roughly half the capacity of its East-West Pipeline within days by bypassing the damaged section, with a full return expected in about six weeks. Energy Secretary Wright said 18 million barrels flowed out of the Persian Gulf yesterday, with the seven-day average through the Strait of Hormuz running at 11 million barrels per day. Wright also flagged the Defense Production Act as a tool to expand refining capacity and said a US oil company will discuss Venezuela investment today. Continental, controlled by Harold Hamm, is separately expected to reveal details of an oil deal in Venezuela, while the Treasury amended Venezuela sanctions through OFAC to ease the path. The Strategic Petroleum Reserve has fallen to its lowest level since 1982, adding a longer-term constraint to the picture. A US-contracted vessel was hit in an Iranian attack this week, keeping the conflict from fading entirely.
The Bank of Canada's governing council said near-term inflation is likely to remain elevated, citing persistently high gasoline prices and noting that the Iran conflict has raised market expectations for oil prices, with members agreeing that key risks to July forecasts have become more acute. ECB policymaker Pereira said risks have risen considerably over recent months. These signals reinforce the macro pressure building ahead of Wednesday's Federal Reserve decision, where market pricing remains near-certain on a 25 basis point hike.
Technology is the session's clear beneficiary, with optical and AI infrastructure names leading. Lumentum Holdings gains +8.1%, Credo Technology Group Holding +7.0%, Coherent Corp +6.1%, and Astera Labs +5.6%. Google and DeepMind launched an institute to explore artificial general intelligence. Salesforce plans to bring OpenAI models to government environments, and Apple is working on an enterprise server using its own chips and has held talks with Nvidia on network technology.
J.B. Hunt extends its decline to -12.9% in regular trading, dragging the broader freight complex lower alongside Old Dominion, GXO Logistics, UPS, and FedEx. American Airlines says high fuel prices will require capacity adjustments, even as its chief executive expressed confidence in guidance. Coinbase is pursuing tokenized equities backed fully by US stocks, targeting the $70 trillion equity market. Sweden's center-left coalition is projected to win that country's election, and France's Prime Minister Lecornu is seeking budget alignment with the National Rally.