Stocks at all time highs, despite oil price increase

Macroeconomic/ geopolitical developments

• US equities extended their rally last week, with the S&P 500 rising 0.91%, the Nasdaq gaining 1.12% and the Dow Jones Industrial Average adding 0.5%, as the S&P 500 and Nasdaq both closed at fresh record highs. Energy and communication services led sector gains amid higher oil prices, while resilient earnings helped offset concerns around rising Treasury yields and geopolitical uncertainty.

• Big Tech earnings remained a key market focus this week, with five Magnificent Seven companies reporting strong results, although rising AI-related capital expenditure plans from Microsoft, Amazon and Meta prompted a more cautious market reaction. Alphabet and Apple stood out, with Alphabet benefiting from surging cloud and AI demand, while Apple impressed investors through strong iPhone and services growth alongside a far more disciplined approach to AI spending.
• The Federal Reserve, Bank of England and European Central Bank all left interest rates unchanged this week, but each adopted a more hawkish tone as rising energy prices and geopolitical uncertainty continue to fuel inflation concerns. Markets increasingly expect central banks to keep policy tighter for longer, with rate cuts potentially delayed as policymakers prioritise price stability over growth risks.

• Middle East tensions remained elevated as ceasefire talks between the US and Iran showed limited progress, leaving the Strait of Hormuz heavily disrupted and keeping markets on edge over the risk of renewed conflict. Brent crude briefly climbed above $126 per barrel (its highest level since 2022) as ongoing supply disruptions fuelled inflation concerns and added further uncertainty to the global economic outlook.
• This week’s US Nonfarm Payrolls report will be a key test of economic resilience, with job growth expected to slow to around 60,000 in April but still point to a stable labor market. Following the Federal Reserve’s more hawkish stance, the data could play an important role in shaping expectations for interest rate cuts later this year.

Global financial market developments

• US and global equity averages were up, the S&P 500 and Nasdaq at fresh records.
• US and European bond yields were higher on the week
• The US Dollar Index was modestly lower on the week.
• Gold futures nudged lower.
• Oil futures prices rallied to a new multi-year peak.

Key this week

Central Bank Watch: The main central bank activity this week is the Reserve Bank of Australia Monetary Policy Statement, Interest Rate Decision and Press Conference on Tuesday and Bank of Japan Monetary Policy Meetings Minutes on Thursday.

Macro Data Watch: The main macro data release this week is the US Employment report on Friday. Some other releases of note are US Service PMI on Tuesday, EU Retail Sales on Thursday and Canadian Employment reports on Friday.

Earnings Watch: US first-quarter earnings season continues this week with highlights from Palantir, AMD, McDonald’s and Disney.

Steve Miley (The Market Chartist)

Editor in chief

Steve Miley is the Market Chartist and has 32 years of financial market experience and as a seasoned expert now has many responsibilities. He is the founder, Director and Primary Analyst at The Mar... Continued