Morning Bid: Hormuz and hyperscalers

A look at the ‌day ahead in ​European ​and global markets from Tom Westbrook

While U.S.-Iran talks have stalled, and next to no oil is making its way through ‌the Strait of Hormuz, stock markets' attention has swung back ⁠to the unabated boom in AI.

Artificial intelligence supply chain stocks rallied markets in Japan, ‌South Korea and Taiwan to ‌record highs on Monday on a wave of buying unleashed by Intel's unexpectedly strong revenue forecast.

With G10 central banks seen leaving rates where ​they are this week and the uneasy ceasefire holding in the Middle East, the focus is on the linchpin of AI gains -- ⁠the hyperscalers' spending plans when they report earnings later this week.

Asia's chipmakers reported record-breaking earnings last ​week, with quarterly profit up fivefold at SK Hynix and Samsung projecting an eightfold jump to an operating profit ​of nearly $38 billion for the three months ‌from January to March.

TSMC, which also posted a record first-quarter profit, has logged eight straight quarters of double-digit ⁠growth. Share prices can hardly keep up with the rivers of gold, but they are surging too, with Hynix stock near doubling this year and the market ⁠value of South Korean and Taiwanese stocks eclipsing those of Germany, according to the ​World Federation of Exchanges.

On the Iran front, an Axios report that Iran had proposed conditions for reopening the Hormuz and separating nuclear negotiations for another time, buoyed ‌markets on Monday.

German consumer sentiment for May is due on Monday and investors may start to adjust some ‌of the aggressive short-term rates positions betting on imminent hikes leading into European ⁠and British central bank meetings.

Key ‌developments that could influence ​markets on Monday:

- U.S.-Iran peace talks

- Economics: German consumer sentiment for May

- Earnings: Deutsche Boerse, Verizon, Domino's Pizza

(Editing by ‌Kate Mayberry)

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