WS #6134

The Iran conflict remains the dominant market driver, with oil prices elevated and diplomatic efforts stalling. Trump rejected Iran's latest peace proposal, and German Chancellor Merz stated the US has 'no strategy' and is being 'humiliated' by Iran. The Strait of Hormuz remains effectively closed, though the first LNG vessel since February has exited the chokepoint. BP reported a massive Q1 profit beat ($3.2B vs $1.38B YoY) driven by the Iran war, confirming the bullish energy thesis. The BOJ held rates at 0.75% with a 6-3 split vote, signaling a hawkish tilt and raising inflation forecasts to 2.8% for FY2026. Ueda's comments highlighted the difficulty of steering policy amid the crisis. In tech, China blocked Meta's acquisition of Manus, a $2B AI startup, citing national security. Google employees protested the company's AI deal with the Pentagon. The Fed, ECB, and BoE meetings this week are key, with markets pricing no change. The attempted assassination of Trump adds political uncertainty but is unlikely to materially shift markets near-term. Overall, the narrative is ESCALATING on geopolitical risk, with energy stocks benefiting and growth/multiple stocks under pressure from higher rates and inflation. Key developments in this window include: (1) Iran's oil storage capacity is nearing its limit, with production cuts potentially permanent within 12-22 days, which could further tighten oil supply; (2) ING raised its Brent price forecast to $150 on re-escalation of the Hormuz crisis; (3) OpenAI missed internal revenue and user targets, causing SoftBank shares to tumble 8% (worst in 6 months); (4) Nvidia's market cap hit a record $5.26 trillion, becoming the most valuable company in history; (5) Google signed a secret AI deal with the Pentagon, marking a strategic return to military contracts; (6) Microsoft is planning voluntary buyouts for up to 7% of US staff as part of AI restructuring; (7) CATL shares sank 8% in Hong Kong after announcing a $5B equity offering; (8) The BOJ's hawkish split vote (3 dissents for a hike) signals a potential June rate increase; (9) US Congress is moving to restrict potential military action against Iran, with a May 1 deadline; (10) Ukrainian drone strikes continue to hit Russian oil infrastructure, including the Tuapse refinery.