Three tankers were struck in the Strait of Hormuz this week. The United States carried out airstrikes on Iranian military targets and reinstated the oil sanctions it had lifted only last month. President Trump declared the ceasefire effectively dead. The Nasdaq closed more than 1% higher on Thursday, a Korean chipmaker raised nearly 29 billion dollars on Wall Street, and oil stayed below 80 dollars. The question hanging over markets this week was not whether escalation would come. It came. The question was why nobody flinched.
Hormuz is burning again
The fragile equilibrium that had held since the June memorandum lasted exactly three weeks. On Tuesday, the Qatari LNG tanker Al Rekayyat and the Saudi supertanker Wedyan were hit by projectiles in the Strait of Hormuz. Less than a day later, a third vessel followed. The American response was swift and hard: the Treasury revoked the temporary waiver on Iranian oil sanctions, after which CENTCOM launched a wave of strikes on Iranian military installations around the waterway.
The shipping data tell the story most sharply. Where an average of 33 tankers per day passed through the strait last week, only thirteen made the crossing on Wednesday. Overnight into Thursday, maritime intelligence firm Windward counted five, with not a single outbound tanker among them. Windward analysts called the combination of the collapsed ceasefire, the reimposed sanctions and the scale of the American strikes the most significant escalation since the opening phase of the conflict in February.
The oil market reacted, but in measured doses. Brent rose 3% on Tuesday to 74.16 dollars and climbed further on Wednesday to 78.19 dollars, a gain of more than 5% on the day. WTI settled Wednesday at 73.52 dollars. Over the full week, oil gained more than 6%. That is substantial, but it bears no comparison to the panic of March, when the same strait shut down entirely. The market is no longer pricing in a full closure, but rather what oil analyst Andy Lipow described as a new normal: periods of missile skirmishes alternating with periods of relative calm in which tankers simply sail on. War as background noise. It is an uncomfortable thought, but it is precisely how the market behaved this week.
Chips: from selloff to comeback in four days
Anyone looking only at the chip sector's weekly result misses the drama that preceded it. The week started gently enough, with the Dow closing Monday at a record 53,056 points and the Nasdaq gaining 1.1%. On Tuesday the mood flipped entirely. The semiconductor index lost more than 4.5%, the Nasdaq 100 fell 1.8% and Micron shed 4.7%. Not even a record profit from Samsung could win investors over. In Seoul it got more painful still: the Kospi plunged more than 8% in morning trade, triggering a twenty-minute halt. The index closed down nearly 5%.
The pattern has become familiar. The chip sector rose more than 80% in the first half of the year, and every doubt about the sustainability of AI investment translates directly into sharp profit-taking. What stood out, however, was that the rest of the market held firm on Tuesday. The majority of S&P 500 stocks closed higher, with insurers and banks at record levels. The rotation from technology into the broader market, which began earlier this month, continued this week.
And then came Thursday. As if Tuesday had never happened, the VanEck Semiconductor ETF climbed 2.5%, Micron gained 4.5% and Sandisk jumped 7.6%. In Europe, ASML, BE Semiconductor and STMicroelectronics recovered broadly as well. The Nasdaq closed 1.3% higher at 26,207 points, while the S&P 500 added 0.8% to end at 7,544. Four days, two faces. Volatility within the sector has become structural, while the trend above it remains intact for now.
SK Hynix makes history on the Nasdaq
In the middle of that turbulence, SK Hynix chose this very Friday for its American debut. The South Korean memory chipmaker is raising some 28 to 29 billion dollars through the issuance of American depositary receipts, the largest initial share sale by a foreign company in Wall Street history. Bigger than Alibaba in 2014, bigger than Saudi Aramco in 2019.
The timing looks bold, but demand was overwhelming. Institutional orders reportedly exceeded the available shares more than sevenfold. That says something about how investors view the sector despite this week's correction. SK Hynix dominates the market for high bandwidth memory with a share of roughly 60%, the memory that sits beside virtually every AI accelerator. The stock has already gained more than 220% this year, pushing its market value past the one trillion dollar mark. The proceeds will go almost entirely toward production expansion, including the new Yongin cluster in South Korea.
For the market, this debut is more than a listing. It is a test. If the largest foreign listing in history succeeds in a week when the chip sector changed direction twice and geopolitics caught fire, it says something about how much capital is still waiting on the sidelines.
A divided Fed and an uncomfortable inflation picture
Beneath the geopolitical headlines, it was almost lost that the Fed published the minutes of its June meeting on Wednesday. They sketched a committee at odds with itself. Some policymakers see room for cuts, others are explicitly keeping a hike on the table. Inflation thereby becomes the referee, and it was precisely there that an uncomfortable signal emerged this week. According to the New York Fed, American consumers' inflation expectations rose to their highest level in nearly three years, and that while oil prices were still falling at the time of the survey.
The renewed rise in oil now comes on top of that. Several strategists pointed out this week that equities at current levels may not be pricing in at least one rate hike in the second half of the year. Next Tuesday, Fed Chairman Kevin Warsh delivers his semi-annual testimony before Congress. Every sentence on inflation expectations will be weighed. Meanwhile, earnings season is gathering pace, with PepsiCo disappointing on Thursday and Delta Air Lines reporting on Friday.
Where this leaves the markets
This week showed how far the habituation has progressed. A conflict that partially froze world trade in March now produces a 6% rise in oil and an equity market that recovers within two days. That may reflect justified composure: both sides have an interest in containing the conflict, and the market has learned that every escalation so far has been followed by de-escalation. It may also reflect complacency, because the assumption that every flare-up extinguishes itself is exactly the kind of assumption that costs markets dearly the one time it does not.
For the weeks ahead, three threads are on the table. Passage through Hormuz determines the oil price, the oil price feeds inflation expectations, and inflation expectations determine how much patience the Fed has left. Warsh speaks on Tuesday, earnings season accelerates, and SK Hynix begins regular trading on Monday. The market has learned to live with war. The question is whether it has also learned to recognize when it no longer can.
