The Daily: Hormuz Holds, Oil Climbs, and AI Keeps Leading

MACRO – What’s Driving Overnight Risk? 

Overnight Price Action 

• Asia: Mixed; KOSPI +5% to fresh record highs on semiconductor strength while Japan and Australia traded lower
• Europe: Lower; cyclicals under pressure as crude oil rebounds
• U.S.: Futures modestly lower; Nasdaq outperforming broader indices again following semiconductor strength in Asia
• Rates: Treasury yields higher; oil rebound pushing inflation expectations upward
• FX: Dollar firmer; strongest session in roughly a week
• Commodities: Brent back above $104; copper and industrial metals rallying sharply

Catalysts 

• President Trump and Iran rejected each other’s latest peace proposals over the weekend
• Iran offered partial uranium transfer concessions but rejected dismantling nuclear infrastructure
• Trump proposed phased reopening of Hormuz and easing the blockade within a month, with nuclear talks later
• Saudi Aramco CEO Amin Nasser warned oil markets may not normalize until 2027 if Hormuz disruption persists
• More than 40 nations preparing contributions for a European-led Hormuz escort mission as Iran warned any foreign naval deployment would face military response
• Beijing confirmed Trump-Xi summit for May 13-15 with Iran, trade, Taiwan, and Hormuz all on the agenda
• Cerebras Systems reportedly preparing to raise IPO pricing after seeing more than $10B in demand

Market Implication 

Markets are rebuilding geopolitical risk premium after last week’s aggressive unwind. Oil is once again influencing rates, currencies, and inflation expectations while AI leadership continues supporting equities underneath the surface. 

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THEMATIC – Forces Behind the Tape 

1. The Strait of Hormuz is Becoming a Long-Duration Market Story 

Markets entered May assuming the path of least resistance was gradual de-escalation. Instead, the collapse in negotiations is forcing traders to confront the possibility that disruption in the Strait of Hormuz could persist far longer than originally expected, at least until the next diplomatic breakthrough or military headline shifts sentiment again. Saudi Aramco’s warning that normalization may not arrive until 2027 underscored how seriously major energy producers are beginning to frame the situation. Of course, this is not just about energy markets. Copper and industrial metals rallied sharply as traders priced tighter physical supply conditions alongside growing concerns about freight and refining bottlenecks. Treasury yields also pushed higher as inflation expectations rebuilt across the curve. Increasingly, markets (ex-stocks) are treating Hormuz as a durable macro driver with direct implications for inflation, growth, and global trade flows rather than simply another geopolitical headline. 

2. AI Capital Spending Keeps Expanding Globally 

AI infrastructure spending remains the core growth engine inside global equities. Semiconductor, hyperscaler, and compute-linked firms continue attracting capital as investors rotate back toward long-duration growth themes tied to processing power and data center expansion. South Korea’s KOSPI going limit up, again, underscores the ferocity of demand: markets continue rewarding firms closest to the infrastructure layer because several parts of the ecosystem remain supply constrained. Cerebras reportedly attracting more than $10 billion in interest ahead of a potential IPO pricing increase also shows how aggressively investors still want exposure to next-generation compute providers. Public and private capital are sending the same message: demand remains concentrated around processing power, networking, and model deployment capacity. That momentum continues anchoring equity leadership globally, especially across Korea, Taiwan, and the U.S. semiconductor complex. 

3. Global Diplomacy Moves to Center Stage 

This week’s Trump-Xi summit carries a multitude of implications. Discussions are expected to span Iran, energy transit, Taiwan, agricultural trade, and the broader U.S.-China relationship simultaneously, reinforcing how interconnected the global macro environment has become. Energy security, trade policy, military positioning, and technology competition are all feeding directly into one another now, with policy decisions in one area quickly spilling into the rest of the system. The proposed European-led Hormuz naval mission reflects the same reality, with more than 40 countries now discussing shipping security. India urging citizens to reduce gold purchases and fuel consumption also shows how rapidly geopolitical pressure can filter into domestic economic policy. Markets are increasingly being shaped by coordination between governments, central banks, militaries, and industrial policy initiatives, creating a generally more politically sensitive backdrop across every major asset class. 

MICRO – Today’s U.S. Catalysts 

Economic Calendar (CT) 

• 9:00 - April U.S. existing home sales

TRENDING – Retail Radar 

• Strait of Hormuz deadlock pushes oil back above $100
• Copper and industrial metals rally
• AI infrastructure leadership, semiconductor momentum
• Treasury yield rebound
• Trump-Xi summit

KEY LEVELS TO WATCH 

• S&P 500 (/ESM6) – Support/Resistance: 6925/7428 (ATH)
• Nasdaq 100 (/NQM6) – Support/Resistance: 25580/? (ATH)
• Crude Oil (/CLM6) – Support/Resistance: 78.97/110.93
• U.S. 10Y Yield – 4.226-4.481% pivot range
• VIX – gap open above 18 with no legs

Trade Setup Bias 

Neutral-to-constructive equities with continued preference toward semiconductors, AI infrastructure, and hyperscaler-linked names. Tactical caution remains appropriate around transports, consumer cyclicals, and rate-sensitive growth if oil continues climbing. 

Bottom Line 

Markets are repricing the probability that energy disruptions persist longer than previously expected. Oil and rates are moving higher again, while AI infrastructure spending continues providing the primary source of equity-market leadership.