Tech Layoffs Continue as Middle East Tensions Push Oil Above $105

Geopolitical Tensions Ease, Oil Prices Retreat

Investors are breathing a sigh of relief as crude oil prices fall on hopes that a diplomatic solution to the Middle East crisis may be emerging. Reports that Iranian negotiators are heading to Pakistan have boosted optimism for the resumption of U.S.-Iran peace talks. This is compounded by an extended three-week ceasefire announced between Israel and Lebanon.

This potential thaw comes after a period of extreme tension. The critical Hormuz Strait remains a chokepoint after recent Iranian mine deployments, prompting the US to order its Navy to "shoot and kill" any vessel laying mines and move a third aircraft carrier strike group into the region. The blockade had previously pushed Brent Crude oil to over $107 per barrel, with the head of the International Energy Agency warning of the most significant energy security threat in history. The real-world impact was stark, with companies like American Airlines cutting profit forecasts sharply, citing the fuel shock.

Iran's Economic Collapse

Despite potential peace talks, the standoff has already had a devastating effect on Iran's economy, which is in a state of freefall. The country is grappling with runaway inflation of around 68%, and its currency, the rial, has plummeted. The International Monetary Fund (IMF) now projects the Iranian economy will shrink by a staggering 6.1% this year, a direct consequence of the conflict and economic isolation.

Tech's Great Divide: AI Frenzy vs. Widespread Layoffs

A clear split is emerging in the technology sector, with the Nasdaq Composite pulling sharply off its record highs in its worst session since March. On one hand, the artificial intelligence (AI) boom is creating huge winners, particularly in the chip sector. On the other, many software and consumer-facing tech giants are stumbling and cutting staff to fund their AI ambitions.

The Chip Boom Continues

The iShares Semiconductor ETF has risen for 17 consecutive sessions, signalling a potential 'melt-up' in the chip sector.

• Intel: In a landmark moment, Intel's shares finally cleared the peak of $75.81 set during the dot-com bubble in 2000—a quarter-century wait for a new high. Following a much stronger-than-expected earnings report, its shares are another 27% higher in pre-market trading. Its data centre and AI revenue jumped 22% to $5.05 billion as its core processor chips (CPUs) reasserted themselves as foundational to the AI era.
• Texas Instruments: Shares saw their largest single-day jump since 2000, rising 19% on the back of extremely strong demand from data centres, confirming that the AI spending boom is benefiting the entire semiconductor supply chain.

Software and EV Stocks Stumble

In stark contrast, other parts of the tech world are facing headwinds.

• ServiceNow: The software firm's stock tumbled more than 17% for its worst day on record after it acknowledged challenges stemming from the Middle East conflict.
• IBM: Shares dropped more than 8% after the company held its guidance steady, disappointing investors who hoped for an upward revision after strong quarterly results.
• Tesla: The electric vehicle maker's shares slipped over 3% after it announced spending this year would be $5 billion more than previously anticipated.

The Great Reallocation: Layoffs to Fund AI

Some of the biggest names in tech are tightening their belts, seemingly to fund their colossal AI ambitions:

• Meta (Facebook) announced it is cutting another 8,000 jobs (about 10% of staff) and cancelling plans for 6,000 open roles. This comes as the company plans to spend up to $135 billion on AI infrastructure this year, making it clear that savings from headcount are being ploughed directly into computing power.
• Microsoft launched the first voluntary buyout programme in its history, targeting about 7% of its U.S. staff. The move focuses on long-tenured, higher-paid employees, allowing the firm to cut costs while retaining newer AI-focused talent.
• Nike, Amazon.com, Oracle, and Snap have also announced workforce reductions, with Nike recently axing another 1,400 roles, primarily in its tech department.

The US-China AI Rivalry and Supply Chain Pressures

Tensions between the US and China are escalating. The White House has accused Chinese-backed groups of campaigns to copy American AI models, and Congress is advancing bills to tighten exports of high-end AI chips. This directly impacts sales for companies like Nvidia and AMD.

The complexity of the semiconductor supply chain was further highlighted after shares in Dutch giant ASML plummeted. The drop wiped out nearly $17 billion in market value after a key customer, TSMC, rejected its newest advanced machines for being too expensive.

New Frontiers for AI Investment and Application

The AI boom is also creating novel investment avenues. OpenAI just released GPT-5.5, its next-generation model, only seven weeks after its predecessor, signalling a much faster development cycle. Meanwhile, Robinhood's publicly-traded venture fund has taken a $75M stake in OpenAI, giving retail investors indirect exposure to the firm ahead of a potential 2026 IPO. Elsewhere, a Morgan Stanley report suggests AI could become a '$22 billion cheat code' for the video game industry, with giants like Tencent, Sony, and Roblox set to benefit.

The New Gold Rush: US Races to Break China's Grip on Critical Minerals

Washington has been jolted into action by China's recent curbs on rare earth exports, launching a high-stakes race to rebuild its own supply chain for minerals vital to the technology and defence sectors. China currently processes about 90% of the world's rare earths.

In a strategy that mirrors venture capital, the US government is backing multiple companies with the hope that a few will succeed. This includes funding for firms like MP Materials and USA Rare Earth. The latter recently announced a $2.8 billion acquisition of Brazil's Serra Verde Group to secure near-term supply.

However, these are risky bets. USA Rare Earth, for instance, received a $1.6 billion non-binding deal from the Commerce Department despite not having an active mine. Its main US project in Texas contains low-grade, costly deposits and has yet to complete a definitive feasibility study, making its economic viability uncertain.

Pharmaceuticals Under Pressure: Regeneron Cuts Prices in White House Deal

In the healthcare sector, biotech firm Regeneron has become the latest drugmaker to strike a deal with the White House to lower prices. The company will offer discounts on certain drugs for American consumers and provide its new hearing-loss gene therapy for free to eligible U.S. patients. This move is part of a growing trend where pharmaceutical companies lower prices in exchange for exemptions from steep government tariffs on their products, with 17 such deals inked so far.

Starbucks Loyalty Programme Changes Brew Success

Changes to the Starbucks loyalty programme are paying off for the coffee giant. The company has seen a significant increase in customer engagement and redemptions since adjusting its rewards scheme. For example, a recent "free Mod Monday" promotion saw more than double the number of point redemptions compared to a previous offer. The changes are successfully encouraging customers to interact more with the brand, a key metric investors will be watching in its upcoming earnings report.

Media Consolidation: Paramount and Warner Bros. Forge a New Streaming Titan

The streaming wars are set for a major shake-up after Warner Bros. Discovery shareholders overwhelmingly approved an acquisition by Paramount. The $111 billion deal, if approved by regulators, will create a media behemoth housing HBO, CNN, and Warner Studios under one roof.

While the deal still needs a green light from the US Department of Justice, Paramount is moving aggressively. It has lined up 20 new shows and appointed a former Netflix executive to build out its content library. The combined entity would be a formidable challenger to Netflix, Amazon, and Disney, though Netflix isn't standing still. After its own bid for Warner Bros. was terminated, it authorised a $25 billion share buyback programme to boost returns for its shareholders.

Exchanges Evolve: Nasdaq Prepares for Near 24-Hour Trading

In a significant shift for market structure, Nasdaq is preparing to launch 23-hour-a-day trading, five days a week, with a target of the third quarter. The move, approved by the US regulator, is a direct response to rising demand from international investors in Asia and Europe who want to trade US stocks during their own business hours.

The new system will split the day into a main 'Day Session' and an overnight 'Night Session'. While this offers more flexibility, it also carries risks. Overnight trading typically has much lower liquidity—meaning fewer buyers and sellers—which can lead to wider price spreads and more volatility, potentially creating challenges for retail investors.

Landmark Shift in US Cannabis Policy

In one of the most significant federal cannabis policy changes in decades, the US administration has reclassified marijuana. It has been moved from a Schedule I drug (alongside heroin) to a less-strict Schedule III category.

This reclassification currently applies to FDA-approved medical marijuana and state-licensed products, not recreational use. The key impact is that it allows legitimate cannabis firms, like Tilray, to operate more like normal businesses, enabling them to deduct standard expenses and gain better access to banking services.

Conflicting Economic Signals Puzzle Investors

Beyond corporate earnings, several economic indicators are sending mixed messages, making it difficult to get a clear read on the market's direction.

Gold Loses Its Lustre

Traditionally, gold prices rise during periods of global uncertainty. However, despite the intense standoff in the Middle East, spot gold prices have fallen for two consecutive days. Some analysts believe that high interest rates are the cause, as they make holding cash or buying bonds—which provide a steady income—more attractive than holding gold, which does not.

Housing and Labour Markets Split

The US property market is telling two different stories. Rising mortgage rates are hurting mainstream homebuilders like D.R. Horton, who are missing estimates. In stark contrast, the luxury housing market is thriving. Similarly, the labour market shows stability but little appetite for growth, with weekly unemployment filings edging higher to 214,000 amid economic uncertainty.

Cryptocurrency Market Heats Up Amid Regulatory Scrutiny

The digital asset world saw a major rally this week, but it comes against a backdrop of increasing regulatory pressure and questions about the sector's long-term health.

Bitcoin Surges on Renewed Optimism

Bitcoin's price climbed toward $78,000, driven by a combination of factors including hopes for de-escalation in the Middle East, which improved general market sentiment. Institutional interest also appears strong, with global crypto funds seeing weekly inflows of $1.4 billion, mostly into Bitcoin and Ethereum products.

Adding to the bullish signs, the amount of Bitcoin held on exchanges has fallen to the lowest level in years. This suggests investors are moving their coins into long-term storage rather than preparing to sell, a classic sign of accumulation that reduces the available supply on the market.

Regulatory Headwinds in New York

While prices rally, the regulatory environment is becoming more challenging. The New York Attorney General has filed lawsuits against major exchanges Coinbase and Gemini, alleging they operated 'prediction markets' without the proper licences. These platforms allow users to bet on the outcomes of future events.

The regulator's office is treating these products as a form of gambling under state law, seeking to force the companies to hand over profits and pay restitution to users. This move represents a significant legal challenge, as it sidesteps technical arguments about crypto's unique nature and applies existing gaming laws directly.

A Market of Contrasts: Innovation vs. Stagnation

Beneath the headline rally, the broader crypto industry is facing headwinds. Venture capital investment has fallen sharply since 2021 as many founders and investors pivot to AI. The market is also suffering from an 'innovation drought', with few new breakthroughs to capture investors' imagination.

This difficult environment is compounded by security fears. Sophisticated AI-powered hacking tools have made decentralised finance (DeFi) protocols a prime target, with nearly $800 million stolen in the first four months of 2026 alone. Despite these challenges, major companies like Stripe and DoorDash are beginning to use stablecoins for real-world payments, showing that institutional adoption is quietly moving forward.

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NOTE: This content is for informational and educational purposes only and does not constitute financial advice. Always do your own research. Not financial advice (NFA).