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Markets extended their rally for a third straight week, with some major indices reaching fresh highs or moving close to them. Investors increasingly believed the Middle East conflict might be shifting, at least temporarily, from escalation to negotiation.

That conviction strengthened sharply on Friday when Iran’s foreign minister said the Strait of Hormuz was open to commercial shipping under the terms of the ceasefire. Oil fell quickly, equities pushed higher, and the market reacted as though the most immediate supply risk had begun to ease. By the close, sentiment was clearly more constructive than it had been in recent weeks.

But the optimism did not survive the weekend intact. On Saturday, Iran reversed course and said the strait had returned to strict control, arguing that continued U.S. pressure on Iranian ports breached the ceasefire arrangement. Reports of gunfire toward a tanker attempting transit were a reminder that the situation remains unstable. With the ceasefire due to expire on Wednesday and further proposals still under discussion, the market goes into the new week facing the same underlying question.

Was this the start of a genuine de-escalation, or simply a short-lived pause?

The gains were real. The relief was real too. But by Saturday evening, the assumption underneath both had already come back into question.

Magnificent 7:

The Magnificent Seven are worth a brief update. The group has diverged considerably this year. Tesla and Microsoft led this week on strong momentum, though both remain in negative territory year-to-date following difficult starts to 2026. Meta and Alphabet have recovered more convincingly and are now in positive territory for the year. Nvidia and Amazon are also positive year-to-date. Apple lags the group, essentially flat for the year. The Mag 7 story in 2026 has been less about the group as a whole and more about which companies have provided clearest evidence of AI translating into earnings - a distinction that maps reasonably well onto the year-to-date performance split.

AI stocks:

Microsoft led the hyperscalers despite being the weakest year to date, suggesting investors may be rethinking how quickly its AI spending can turn into revenue. Meta and Alphabet also had strong weeks, while Amazon continued to benefit from having the clearest near-term AI infrastructure revenue story.

In semis, AMD stood out and has now rebounded sharply from its earlier lows. The recent strength in AMD, ARM and Intel suggests semiconductor exposure is widening beyond Nvidia. By contrast, TSMC and ASML were quieter, which looks more like consolidation after earlier strength than any shift in the long-term case.

Broadcom and Arista remained firm in networking, while Vertiv, Schneider and Dell extended the move in infrastructure. That still points to a market leaning toward the physical backbone of AI deployment. Super Micro was the standout mover, but given its weak recent backdrop, the jump looks more like a short-covering rebound than a genuine change in fundamentals.

China AI flipped last week’s pattern, with Baidu outperforming and Alibaba lagging, reinforcing how selective that trade remains. Enterprise AI also bounced, but the gains in Palantir and Snowflake looked more like relief in a rising market than any real clearing of the pressure on software economics.

🇺🇸 United States

Producer price inflation came in below expectations in March, with services inflation flat and core PPI barely rising - a welcome reading after last week's hotter-than-expected consumer prices. Jobless claims fell, pointing to a labour market that remains steady despite the broader uncertainty. Manufacturing surveys from New York and Philadelphia both improved sharply, with new orders and shipments strengthening. The housing market remains weak - existing home sales declined and builder sentiment fell further - but the interest rate and confidence picture may shift depending on how the Strait of Hormuz situation develops next week.

🇪🇺 Eurozone

The IMF cut its eurozone growth forecast to 1.1% for 2026, down from 1.3% in January, warning that the conflict could trigger a major energy crisis without a durable resolution. Industrial production returned to growth in February, offering a modest bright spot, but German wholesale prices surged in March, driven heavily by energy and metals. The ECB signalled it is in no hurry to raise rates, with the French central bank governor explicitly pushing back against expectations of an imminent move. The bank faces the same dilemma it faced two weeks ago - a softening economy pulling in one direction, imported inflation pulling in the other.

🇬🇧 United Kingdom

The UK surprised to the upside with February GDP growth of 0.5%, well above expectations. The IMF nonetheless cut its 2026 growth forecast for the UK to 0.8%, the largest downward revision among the G7, reflecting the cumulative impact of the energy shock on a services-heavy, gas-dependent economy. The tension between a better-than-expected February and a deteriorating forward outlook captures the UK's situation precisely - the damage from the conflict has not yet fully arrived in the data.

🇯🇵 Japan

The BoJ declined to signal a rate hike, with Governor Ueda describing the current environment as too uncertain for a clear policy steer. Manufacturer sentiment fell sharply in April, the biggest monthly drop in over three years, with the energy shock and supply chain disruption cited as the main factors. Real wages continue to grow, but the policy path depends heavily on whether the Strait of Hormuz situation resolves before inflationary pressure becomes entrenched.

🇨🇳 China

First-quarter GDP came in at 5.0% year-on-year, ahead of expectations and accelerating from the prior quarter. The headline number was solid, but the detail was uneven - export growth slowed sharply in March after a strong start to the year, retail sales disappointed, and property investment continued to fall. Credit data rebounded seasonally but undershot expectations. The picture is one of an economy with enough momentum to meet its targets, but not enough domestic demand to be self-sustaining if external conditions deteriorate further.

🇮🇳 India

No major data releases this week. The RBI decision from last week set the frame - rates on hold, flexibility preserved, June the key meeting to watch. The partial reopening of the Strait of Hormuz on Friday provided some relief for India's oil import bill, though Saturday's reversal will have complicated that picture over the weekend.

🌐 Artificial Intelligence and Tech

Anthropic's dispute with the Trump administration showed signs of easing this week. CEO Dario Amodei met at the White House with Chief of Staff Susie Wiles and Treasury Secretary Scott Bessent in what both sides described as a productive discussion on cybersecurity, AI safety, and maintaining US leadership in the field. The meeting appears to have been partly catalysed by Mythos Preview - the Pentagon itself has continued using Claude models in the Iran conflict, and officials in other departments have reportedly been encouraging banks to test the new model. The Pentagon blacklisting and the legal battle remain unresolved, but the two sides appear to have decided to wall off that dispute from broader engagement. The shift is significant: two months ago this relationship had no floor.

Anthropic launched Claude Design, an experimental product that allows users - particularly founders and product managers without a design background - to generate prototypes, slides and one-pagers through a conversational interface. It sits in Anthropic Labs, the company's early-stage product incubator, and represents a push into practical creative tooling rather than raw model capability.

Cerebras filed to go public this week, reviving an IPO attempt it had previously withdrawn following a national security review of its ties to Abu Dhabi-based investor G42. That relationship has since been restructured. The company reported revenue of $510 million in 2025, up from the prior year, and swung to profitability with net income of nearly $88 million. A $10 billion compute contract with OpenAI, signed in January, transformed the investor narrative from a company with a promising chip to one with a credible revenue pipeline. It is targeting a Nasdaq listing under the ticker CBRS, with a listing window now pointing toward May. The IPO would be the first significant public market test of whether the market for alternatives to Nvidia's GPU architecture can attract durable institutional capital.

Google rolled out a side-by-side browsing mode for AI Mode on Chrome desktop, allowing users to click links from AI-generated responses while keeping the conversation in view. The feature is a direct response to one of the consistent criticisms of AI search - that it breaks the normal web-browsing flow rather than enhancing it. Whether it resolves the deeper question of how AI search affects traffic to publishers remains to be seen.

Hyundai confirmed a $26 billion US investment commitment through 2028, with robotics and physical AI as the central priorities. The announcement formalises a strategy the company has been building toward since acquiring Boston Dynamics - integrating AI-driven humanoid robots into its manufacturing operations, beginning with sequencing tasks at its Georgia plant from 2028. Boston Dynamics is partnering with Google DeepMind on AI foundation models for the Atlas robot. Hyundai's framing of this as a transition from automotive to physical AI is a deliberate repositioning - one that a number of other industrial companies will be watching closely.

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Crypto highlights

XRP led the complex this week, which is unusual and worth noting. It has spent most of 2026 in the lower half of the group's performance table, and the move looked less like a thematic rotation and more like catch-up within a broadly risk-on week.

Ethereum had a solid week, continuing to recover ground lost over the past several months.

Bitcoin gained more modestly - consistent with its recent pattern of acting as a macro sentiment gauge rather than a driver. When risk appetite improves, the rest of the complex tends to move more than Bitcoin; when it deteriorates, Bitcoin tends to hold up better.

SPOTLIGHTS

Links to earlier spotlights :

The Rolling AI boom

New AI search battle

US Reserves

Residential property ;

Japan ;

India - an emerging economic power ;

Recession ;

AI chips ;

Bitcoin halving ;

US National Debt ;

Gold ;

Nvidia ;

The $84 trillion wealth transfer ;

Crowdstrike issue