The AI train can keep driving the market forward
In the early hours of April 29, global markets entered a rare stillness — the kind that precedes consequential moments. Investors across Asia and beyond were suspended between two forces: the Federal Reserve's imminent word on the price of money, and the earnings confessions of the technology giants whose fortunes have come to define the modern economy. Into this fragile pause, geopolitics intruded, as tensions over Iran's contested waters sent oil prices lurching and reminded markets that human conflict has always been the original disruptor of financial order.
- Asian equities slipped while traders held back, unwilling to commit before the Fed and four megacap tech firms — Alphabet, Microsoft, Amazon, and Meta — delivered verdicts that together could move a quarter of the S&P 500's total value.
- Oil whipsawed violently after reports that the Trump administration was preparing for an extended blockade of Iran, threatening the Strait of Hormuz and injecting a raw geopolitical risk premium into every barrel.
- Rising oil prices fed directly into inflation expectations, pushing Treasury yields to multi-week highs and quietly eroding the case for Fed rate cuts that equity markets had been counting on.
- The UAE's surprise announcement that it would exit OPEC on May 1 deepened the sense of fracture in global energy governance, with Morgan Stanley warning that oil and stocks were now moving in dangerous opposition.
- Tech earnings growth of 41% was anticipated, but the AI narrative had already shown cracks — OpenAI's missed targets had rattled sentiment — leaving investors to wonder whether momentum could outlast the mounting pressures surrounding it.
The market was holding its breath on the morning of April 29. Traders across Asia moved cautiously, caught between two events capable of reshaping the week: a Federal Reserve interest rate decision and earnings reports from the technology giants powering the global stock rally. Asian equities edged down 0.2%, though Hong Kong gained over 1%. Nasdaq 100 futures ticked up modestly, recovering from the prior day's selloff driven by skepticism over artificial intelligence investments.
Oil told a different story. Crude swung sharply — dropping to $110.58 a barrel after nearly reaching $112 — on reports that President Trump had directed advisors to prepare for an extended blockade of Iran. The potential closure of the Strait of Hormuz, a critical energy chokepoint, alarmed strategists. Rodrigo Catril of National Australia Bank described a dangerous equilibrium: no bombing, but no resolution, no nuclear deal, no ships moving freely. Elevated oil prices, he warned, would challenge the complacency that had allowed U.S. equities to recover from earlier Middle East losses.
The energy shock was already reshaping bond markets. Treasury yields climbed to their highest levels in weeks as inflation expectations rose and appetite for Fed rate-cut bets faded. Wednesday's central bank announcement loomed large — but first came the earnings. Alphabet, Microsoft, Amazon, and Meta were all due to report, with Apple following Thursday. Together they represent roughly a quarter of the S&P 500. Technology earnings were expected to have grown 41% in the first quarter, with cloud demand remaining robust. "The most important question," said Dennis Follmer of Montis Financial, "is whether the AI train can keep driving the market forward."
Geopolitical fault lines extended further when the UAE announced it would leave OPEC effective May 1, ending six decades of membership and deepening questions about the organization's cohesion. Morgan Stanley warned that markets had entered a new regime in which oil price spikes moved against equities — a negative correlation capable of amplifying losses.
Elsewhere, AI stocks stumbled after OpenAI missed sales and user targets. Visa beat earnings expectations on strong card usage. Starbucks raised its comparable sales outlook. Elevator maker Kone neared a deal to acquire TK Elevator in one of Europe's largest private equity exits. Brown-Forman and Pernod Ricard ended merger talks.
As Asian trading wound down, currencies and cryptocurrencies barely moved — the dollar steady, Bitcoin near $76,400, the euro at $1.1712. Everything was in place for Wednesday's announcements to either confirm or shatter the market's fragile faith in technology, the Fed, and the idea that momentum, once built, can survive the weight of the world pressing against it.
The market was holding its breath. On the morning of April 29, traders across Asia were caught between caution and calculation, waiting for two things that could reshape the week: a Federal Reserve decision on interest rates, and earnings reports from the technology giants that had become the engine of the global stock rally. The mood was tentative. Asian equities edged down 0.2%, though Hong Kong bucked the trend with gains above 1%. Futures tied to the Nasdaq 100 ticked up 0.3%, a modest recovery from the previous day's selloff, when skepticism about artificial intelligence investments had sent Wall Street lower.
Oil told a different story—one written by geopolitics. Crude swung wildly, dropping 0.6% to $110.58 a barrel, but only after climbing nearly to $112 on reports that President Trump had instructed his advisors to prepare for an extended blockade of Iran. The implications were stark: a sustained closure of the Strait of Hormuz, one of the world's most critical energy chokepoints. Rodrigo Catril, a strategist at National Australia Bank in Sydney, saw the conflict settling into a dangerous equilibrium—no more bombing, but no resolution either, no nuclear deal, no ships moving through contested waters. Oil prices, he warned, would likely remain elevated, and that pressure could ripple outward, challenging the complacency that had allowed U.S. equities to climb back from Middle East conflict losses.
The energy shock was already reshaping Treasury markets. Yields had climbed to their highest levels in weeks as elevated oil prices pushed inflation expectations higher and dimmed investor appetite for bets on Fed rate cuts. The central bank's announcement on Wednesday would be the moment of truth. But before that came the earnings. Four of the world's largest technology companies—Alphabet, Microsoft, Amazon, and Meta—were scheduled to report on Wednesday, with Apple following Thursday. Together, these firms represented roughly a quarter of the S&P 500's total value. Their results would carry enormous weight. Technology earnings were expected to have grown 41% in the first quarter, according to Bloomberg Intelligence data. The sector had largely weathered the Iran conflict without disruption, and cloud demand remained robust. "The most important question for investors," said Dennis Follmer at Montis Financial, "is whether the AI train can keep driving the market forward."
The geopolitical backdrop was shifting in other ways too. The United Arab Emirates announced it would leave OPEC effective May 1, ending six decades of membership. It was a significant blow to an organization already fractured by conflict, raising questions about its future cohesion and influence. Morgan Stanley strategists warned that the market was now operating under a new regime—one where oil price shocks moved in the opposite direction from equities, creating a negative correlation that could amplify losses when energy prices spiked.
Elsewhere in corporate news, artificial intelligence stocks had stumbled after reports that OpenAI had missed sales and user targets. Visa had beaten earnings expectations on strong global card usage. Starbucks reported better-than-expected results and raised its outlook for comparable sales growth to at least 5% for the year. The elevator maker Kone was nearing a deal to acquire TK Elevator in what would be one of Europe's largest private equity exits. Brown-Forman and Pernod Ricard, meanwhile, had terminated merger talks.
As the Asian trading session wound down, the setup was clear: a day of waiting, of positioning, of small moves in currencies and cryptocurrencies that reflected the broader uncertainty. The dollar index was little changed. Bitcoin held steady near $76,400. The euro remained at $1.1712. Everything was in place for Wednesday's announcements to either confirm the market's faith in technology and the Fed's next move, or to upend it. The question hanging over every trading desk was whether the momentum that had carried stocks higher could survive the collision of earnings reality, geopolitical supply shocks, and whatever the central bank decided about the cost of money.
Notable Quotes
Oil prices are likely to be supported from here and the complacency of risk assets including US equities could be challenged.— Rodrigo Catril, National Australia Bank strategist
The most important question for investors is whether the AI train can keep driving the market forward.— Dennis Follmer, Montis Financial
The Hearth Conversation Another angle on the story
Why does the Fed's decision matter so much right now, when the real pressure seems to be coming from oil and geopolitics?
Because interest rates are the discount rate on everything. If the Fed signals it's cutting rates, that makes future earnings worth more in today's dollars—it's a tailwind for stocks. But if oil stays elevated because of the Iran blockade, that pushes inflation expectations up, and the Fed might hold steady or even tighten. That's the tension. The market can't have both.
So the technology earnings are almost secondary?
Not at all. They're the reality check. If Alphabet, Microsoft, Amazon, and Meta all report strong numbers—especially on cloud and AI demand—that justifies the valuations. But if they miss, or if they show that AI investments aren't paying off yet, the whole narrative collapses. These four companies are 25% of the S&P 500. They carry the weight.
The UAE leaving OPEC seems like a big deal. Why isn't that getting more attention?
It is, but it's a symptom, not the cause. The cause is the Iran conflict reshaping energy markets. The UAE's exit signals that OPEC's unity is fracturing under geopolitical pressure. It raises questions about whether the organization can even function as a cartel anymore. That's destabilizing for oil prices long-term.
What does the oil volatility actually mean for regular investors?
It means inflation expectations are rising, which pressures bonds and makes stocks less attractive unless earnings growth can offset it. The Morgan Stanley strategists called it a "regime of supply-driven shock"—oil and equities are moving in opposite directions now. That's dangerous for diversified portfolios.
Is there any scenario where this resolves cleanly?
If the Fed signals patience on rates, and tech earnings are strong, and the Iran situation stabilizes, yes. But that requires three things to align. More likely, one of them disappoints, and the market reprices. That's why everyone was treading water on Wednesday morning—waiting to see which way it breaks.