This Week in Review: Strait of Hormuz Tensions Rise Amid US-Iran Confrontation, Trump Threatens Tariffs Again, Tech Giants Lose $800 Billion in Market Value in a Single Day
BlockBeats News, July 25th. This week, the global market revolved around four main themes: escalating US-Iran conflict, continuous tariff escalation by the US, yen exchange rate plummet, and concerns about AI capital expenditures in tech stocks, intertwining risk aversion sentiment and policy disturbances:
The international oil price became the biggest trading theme this week. With the US military continuing to strike Iran and Houthi threats to Red Sea shipping, Brent crude oil surpassed $100 per barrel for the first time in two months, with both oil types set to close higher for the third consecutive week. The US dollar rose to 163.98 against the yen, hitting a new high since November 1986. In the US stock market, the Dow fell for the third consecutive week, the S&P 500 and Nasdaq fell for the second consecutive week, Tesla plummeted 14.5% on Thursday, with a nearly 18% weekly decline, marking its largest weekly drop since 2022. The market value of the seven technology giants evaporated by nearly $800 billion in a single day.
The US-Iran conflict has entered a new stage, with the two straits in an emergency situation. The US has completed its 13th consecutive night of strikes on Iranian military targets and deployed B-1 bombers to enhance its attack capabilities. The Iranian Revolutionary Guard has claimed to have attacked US facilities in Kuwait, Bahrain, and Jordan as well as Larak Island. Navigation in the Strait of Hormuz remains blocked, with the Houthis announcing a blockade of Saudi Arabia at sea and attacking two Saudi oil tankers, further escalating the conflict risk to the Red Sea. Diplomatic efforts between the US and Iran are still ongoing, but Iran has rejected a 10-day ceasefire proposal, with the US believing that Iran lacks sincerity in negotiations.
The US has intensified tariffs within a week, affecting nearly 60 economies. The Trump administration has taken consecutive actions this week: imposing a 50% tariff on about $20 billion of Canadian goods (effective August 19), adjusting aluminum import tariff policies, establishing investment incentives for preferential tax rates, announcing a two-year tariff exemption for imported generic drugs, and then gradually imposing 100% to 200% tariffs from 2028, imposing a 25% tariff on most Brazilian goods, and invoking the 301 clause tariffs on 60 economies for not adequately prohibiting forced labor products, replacing the temporary global tariffs that expired that day, covering 99.4% of US imports.
The yen broke below the 163 mark, hitting a new low since 1986. The Japanese Ministry of Finance and Cabinet Office have sent multiple signals of readiness to intervene this week, but as of Friday, there have been no actual signs of market intervention. The US Treasury Department's semiannual exchange rate report identified the yen as significantly undervalued, keeping Japan on the currency policy watchlist but not labeling it as a currency manipulator.
Concerns about AI capital expenditures dealt a heavy blow to tech stocks. In the second quarter, Alphabet's revenue increased by 24% year-on-year, with its cloud business growing by 82%. However, due to raising its 2026 capital expenditure forecast to the range of $195 billion to $205 billion and having negative free cash flow (-$5.9 billion), its stock price plummeted after the earnings report.
Tesla's revenue grew by 26% year-over-year to $28.236 billion, but operating profit plunged by 57%, with a profit margin of only 1.4%. This decline was exacerbated by a 142% year-over-year surge in capital expenditures. The company's stock price plummeted by about 14% on Thursday, marking the largest drop among the seven tech giants. Meanwhile, during the same period, OpenAI, AMD, SpaceX, and others continued to increase their investments in computing power and chip technology.
