U.S. officials said that technological negotiations between the two sides have not stopped, and the "fighting while talking" between the U.S. and Iran is driving strong rebound in technology stocks.

A report citing a US government official revealed that, after two days of escalating tensions in the Middle East that threatened the fragile temporary ceasefire agreement between the US and Iran, technical negotiations between the US and Iranian governments are still ongoing. The official stated on Thursday that the US is still committed to finding a long-term peaceful solution with Iran. Due to the sensitive nature of the discussions, the official requested anonymity. The comments above may alleviate concerns about the resurgence of full-scale war. Previously, the US launched a new round of strikes against Iranian targets in retaliation for what they claimed was a military-level attack on ships in the Strait of Hormuz by Tehran. Iran then retaliated against multiple US military bases in the region over the past two nights. The fact that the US and Iran are maintaining technical negotiations after the recent mutual attacks indicates that both sides have not closed off diplomatic options, leading the market to slightly lower the probability of a full-scale conflict and the long-term disruption of the Strait of Hormuz. However, this does not mean that geopolitical risks have been eliminated. The US has tightened restrictions on Iranian oil sales once again, and both sides still have fundamental disagreements on issues such as maritime passage, frozen assets, nuclear concerns, and control of the strait. Therefore, the more accurate assessment at the moment is "fragile de-escalation" rather than "permanent peace." However, the market has shown conditional optimism: oil prices have shed some of their war premiums, the US stock market has rebounded, with the S&P 500 rising by about 0.8% and the Nasdaq by about 1.3%. SK Hynix and Samsung, which had repeatedly hit circuit breakers this week, occupied a 60% weight on the South Korean KOSPI composite index, rebounding by 5% on Friday after a slight bounce back on Thursday, indicating that traders are shifting away from the scenario of full-scale conflict to the baseline scenario of "manageable friction with ongoing technical negotiations between both sides." On Thursday, shipping through the Strait of Hormuz came to a standstill. Iran maintains that it has control over the waterway, which is one of the major points of contention between the two sides. The US Central Command stated on Thursday, "Iran does not control the Strait of Hormuz." Nevertheless, the US has not reimposed its own blockade. With the upcoming midterm elections in November, Trump is under pressure domestically due to the rise in gasoline prices as a result of the conflict in the Middle East. He is hardly willing to continue military actions for an extended period. When discussing the war at the NATO summit this week, he stated, "I don't believe it will erupt into full-blown conflict again. I think things will be resolved soon." Military engagements and negotiations are happening simultaneously: the fragile ceasefire faces a stress test, the US-Iran game affects the global energy market At the onset of the new round of violent conflicts, Trump hinted on Wednesday that the temporary ceasefire understanding between the US and Iran had "ended," but at the same time stated that he would not prevent negotiations from continuing. Due to several days of funeral services for the former Supreme Leader of Iran, Ali Khamenei, the negotiations between the US and Iran were postponed this week. Khamenei was killed in an airstrike on the first day of joint US-Israeli military operations. The recent escalation of tensions in the Middle East, coupled with the US Treasury's decision to revoke waivers allowing Iran to sell oil globally, poses the biggest challenge to the temporary peace agreement. The heightened tensions have once again significantly slowed down traffic through the Strait of Hormuz. Despite an initial surge in oil prices earlier this week, they have mostly stabilized but remain at multi-week highs, as traders reassess the various risks faced by energy transportation through the strait and the existing transportation channels. The temporary peace agreement signed by the US and Iran initiated a 60-day period of negotiations aimed at reaching a broader peace agreement. The agreement was supposed to accelerate the reopening of the Strait of Hormuz; however, due to the effects of the war, the waterway had essentially been closed before. Both sides have accused each other of breaching the ceasefire agreement. Washington accused Tehran of attacking ships, while Iran claimed that the US government and the Israeli army were interfering with its control of the crucial shipping route through the Strait of Hormuz. Oil prices have risen this week, but they remain well below the historical highs reached in March. The US official characterized Iran's attack on ships in the strait as a terrorist act and stated that Iran's actions did not meet the conditions based on performance outlined in the ceasefire understanding. It is worth noting that since the end of February when a new round of geopolitical conflicts broke out between the US and Iran until the two countries reached a temporary ceasefire agreement, substantial progress has not been made on specific issues such as passage through the Strait of Hormuz, the direction of frozen Iranian assets, Iran's core nuclear issues, enriched uranium assets, and more. The progress of technical negotiations between the US and Iran has become a new macro valve for the AI bull market With oil prices shedding some of their war premiums, and the US stock market and Asia-Pacific stock markets rebounding, traders are shifting away from the scenario of a full-scale conflict between the US and Iran back to the baseline scenario of "controlled friction with ongoing negotiations." The continuation of technical negotiations between the US and Iran has reduced the immediate probability of full-scale war, causing oil prices to shed some of their gains and supporting a strong rebound in global technology stocks; however, most of the energy transportation through the Strait of Hormuz is still disrupted, with Brent and US WTI crude oil prices rising by about 6% and 5% respectively this week, further indicating that the market is trading on the basis of "controlled conflict," rather than the complete disappearance of geopolitical risks. If technical negotiations can be sustained and passage through the strait continues to improve, a decrease in energy prices will ease inflation expectations and term premiums, benefiting long-term government bond assets, global growth-oriented technology stocks, and the currencies of oil-importing economies, while weakening the demand for the US dollar as a safe haven. Conversely, if oil tankers are attacked again or the strait tightens, the market may quickly replay the previous combination of rising oil prices, increasing bond yields, a stronger US dollar, and pressure on European, American, and Asian stock markets. When Trump declared that the ceasefire understanding between the US and Iran had "ended," oil prices surged by about 5%, European stock markets fell by about 1.1%, and bonds weakened simultaneously. This scenario illustrates that this crisis is not a traditional "risk aversion leading to rising bond prices" situation, but rather more like a trade triggered by energy supply shocks. Global technology stocks, especially popular stocks in the AI semiconductor sector with high valuations, are among the most direct beneficiaries of the brief cooling of geopolitical tensions in this round: a decrease in oil prices not only lowers expectations for electricity and broader energy costs for businesses and data centers, but more crucially, it alleviates tail risks of inflation, thereby reducing the pressure on the Federal Reserve to maintain high interest rates or even transition to a tightening policy in the second half of the year, thus lowering the discount rate for future cash flows in DCF models. The recent strong rebound in the Nasdaq and global AI semiconductor stocks is the result of the combined effects of "a significant drop in oil prices + a decline in US bond yields + a positive catalysis in the supply chain." However, if the conflict pushes up oil prices and yields again, high-valuation AI themes will remain the most sensitive stress-testing assets in the global risk landscape.