Oil Soars on Iran Tensions as Tech Giants Report Mixed Results

Geopolitics Drives Oil to Wartime Highs

Oil prices have hit a new peak, with Brent crude surging to $126 a barrel overnight, its highest level since the recent conflict in the Middle East intensified. Tensions were stoked further after reports that the US President is being briefed on potential military action against Tehran. The US has confirmed its naval blockade of Iranian ports is an open-ended condition, removing any hope of a quick resolution. The cost of the war is now estimated at $25 billion so far.

This geopolitical uncertainty is injecting significant risk into financial markets, with investors selling stocks and other riskier assets. The physical market is showing clear signs of strain; a recent report showed a massive 6.2 million barrel draw in U.S. crude inventories, a figure nearly 27 times larger than analysts had forecast. This is a classic reminder of how quickly geopolitical events can overshadow economic data, impacting everything from petrol prices for consumers to inflation calculations for central banks.

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Big Tech's High-Stakes AI Gamble

It was a pivotal moment for some of the biggest names in technology as they reported their latest earnings, revealing a market that is aggressively sorting AI hype from actual performance. The theme is clear: spending is colossal, and Wall Street is now demanding to see the payoff.

Alphabet and Amazon Lead the Pack

Alphabet (Google's parent company) was a standout performer, with its shares jumping over 7% in pre-market trading. The company reported a massive 63% growth in its cloud-computing division, which brought in $20 billion, and hiked its 2026 capital expenditure guidance. Its cloud order backlog nearly doubled in the quarter to over $460 billion, and executives noted demand for their AI services was so high they couldn't fully meet it.

Amazon also delivered a strong message, sending shares 3% higher. Its cloud unit, Amazon Web Services (AWS), saw revenues surge 28% to $37.6 billion — its fastest growth in four years. The company disclosed that AI-related revenue is now running at a $15 billion annual rate. However, this growth comes at a cost, with the company's free cash flow—the spare cash it generates—decreasing by 95% over the last year due to huge investments in AI infrastructure.

Microsoft's Cloud Momentum Questioned

While still growing impressively, Microsoft's shares slipped about 2% after its revenue guidance for the fourth quarter came in below expectations. This overshadowed an otherwise strong earnings report where its Azure cloud platform grew by 40%. CEO Satya Nadella revealed that Microsoft's AI business has crossed a $37 billion annual revenue run rate, but the weak forecast highlights the immense pressure on the tech giants to not just grow, but to grow faster than sky-high expectations.

Meta Spooks Investors with Spending Plans

Meta (Facebook's parent company) presented a mixed bag that sent its shares tumbling by 9% in pre-market trading. While revenue grew, the company raised its annual spending forecast to a new range of $125 billion to $145 billion, explicitly blaming "higher component pricing" for AI chips. The company also pointed to headwinds from "internet disruptions in Iran" and a quarterly loss of over $4 billion in its Reality Labs unit.

This spooked the market. Unlike its rivals, Meta lacks a booming cloud division to generate immediate AI-related revenue and paused its share buyback programme to fund the spending, making it feel more like a long-term gamble that has yet to convince shareholders.

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Central Banks Stand Firm Amid Deepening Divisions

Despite the noise from volatile energy prices, major central banks appear to be holding their course, though signs of internal disagreement are emerging and becoming more public.

• US Federal Reserve: The Fed kept interest rates steady, but the decision saw four dissents from voting members, the most at a single meeting since 1992. This signals a deep division about the future path for interest rates. Outgoing Chair Jerome Powell described the current policy as only "mildly restrictive" and noted that Core PCE, the bank's preferred measure of inflation, rose to 3.2% in March. Powell also announced he would remain on the Fed’s Board of Governors until a Justice Department investigation into him is resolved, a move that limits the new administration's influence. Compounding this, the potential successor to Powell, Kevin Warsh, has cleared a key Senate committee, setting up a final confirmation vote and signalling a potential future political shift at the central bank.
• Bank of England & ECB: The Bank of England and the European Central Bank are also expected to keep their key rates on hold at 3.75% and 2.0% respectively. It appears European policymakers are choosing to 'look through' the current inflation spike, believing it to be a temporary result of geopolitics rather than a permanent economic shift.

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The Crypto Crossroads: Retail Cools as Infrastructure Builds

The cryptocurrency sector is sending mixed signals, with retail trading enthusiasm waning while institutional and foundational development accelerates.

Trading Platforms Feel the Chill

Evidence of a slowdown is mounting. Trading platform Robinhood saw its cryptocurrency revenue fall by 47% compared to last year, causing its stock to drop by over 10%. The most recent figures showed a 39.4% quarter-on-quarter drop to $134 million. This trend isn't isolated; decentralised competitor Hyperliquid also posted a 31% sequential decline.

A Central Bank Dips a Toe into Bitcoin

In a notable development, the Governor of the Czech National Bank, Ales Michl, has openly argued for including Bitcoin in the country's sovereign reserves. Citing internal analysis, he suggested a small 1% allocation could boost returns without significantly increasing risk. This marks a significant step towards mainstream institutional consideration.

Wall Street Pushes Deeper into Digital Assets

In another sign of professionalisation, asset manager WisdomTree is making its tokenized US Treasury fund—a digital version of a fund that invests in ultra-safe government debt—available to businesses. This showcases how traditional financial products are being integrated with blockchain technology.

Prediction Markets: A Retail Warning

So-called "prediction markets," where users bet on the outcome of future events, have seen their volumes explode. However, reports indicate that most profits are captured by high-frequency trading firms, serving as a caution to retail participants hoping for easy gains.

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Other Market Movers

US Housing Market Sends Mixed Signals

The anticipated spring rebound in the American housing market is proving complex. In a surprising twist, March housing starts surged 10.8% to their strongest pace in over a year. However, a forward-looking indicator, building permits, actually fell, suggesting builders are cautious about the future.

Pershing Square's Tepid IPO

Billionaire investor Bill Ackman's hedge fund, Pershing Square, received a lukewarm reception on its public debut. The Initial Public Offering (IPO) priced at $50 per share, raising $5 billion at the low end of expectations. The shares then closed their first day of trading down 18% at $40.90. Ackman has stated he plans to hold investor days similar to those held by Berkshire Hathaway.

Company-Specific News

• Visa Signals Consumer Strength: In a clear counter-point to recession fears, payment giant Visa posted its strongest revenue growth since 2022, up 17%. Cross-border transaction volume climbed 12%, suggesting both travel and consumer spending remain robust.
• Ford Races Ahead: The Detroit carmaker sped past earnings expectations and raised its full-year guidance. It benefited from a $1.3 billion tariff refund, with one adjusted earnings metric more than tripling and net income surging roughly 400% from the same quarter a year ago.
• AI's Power Demand: In a stark example of the AI boom's real-world impact, utility company Entergy announced it was increasing its four-year spending plan by $14 billion, almost entirely to build power generation and transmission for a single, massive Meta data centre campus in Louisiana.
• Mixed Fortunes: Payroll giant ADP raised its full-year revenue growth forecast to 6-7%, citing strong demand. In contrast, rising costs forced GE HealthCare to cut its 2026 profit forecast. Elsewhere, strong performance from Taco Bell helped parent company Yum Brands beat estimates, offsetting weakness at its Pizza Hut chain. Car maker Carvana reported record quarterly results, with retail units sold up 40%, sending its shares 9% higher in pre-market trading.

Europe's Cyber Showdown with China

A new law being considered in Brussels could force the removal of Chinese telecom giants Huawei and ZTE from the European Union's 5G networks. In response, China has reportedly threatened to retaliate, setting the stage for a major economic and political confrontation.

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