Macro update
Oil shock drives markets: Brent surged above $113, rising around 7%, after reports the US may consider military action against Iran, heightening fears of prolonged supply disruption.
Geopolitics dominate sentiment: The Strait of Hormuz remains closed and negotiations are stalled, with investors focused on escalation risks and the potential for a sustained global energy shock.
Equities under pressure: Asian indices declined, with Japan’s Nikkei down around 1% and regional benchmarks weaker, as higher oil prices and geopolitical uncertainty outweighed positive earnings momentum.
Big tech split reaction: Alphabet and Amazon gained after strong results, Microsoft was broadly unchanged, while Meta fell as increased AI spending raised concerns over returns.
AI spending theme builds: Major tech firms are ramping up investment, with combined 2026 AI capital expenditure expected to reach roughly $650bn, supporting growth optimism but also raising margin concerns.
Rates and FX backdrop: The Fed held rates but signalled growing internal dissent, global bond yields moved higher, and the dollar remained firm near ¥160 as markets reassessed the outlook for policy easing.