Oil extended its advance on Monday as uncertainty persists over the reopening of the Strait of Hormuz, but that did not prevent major U.S. equity benchmarks from moving to new peaks. The S&P 500 and the Nasdaq both managed to close at higher levels, with the technology sector providing most of the lift as market participants awaited a significant slate of corporate earnings and central bank meetings this week.
In a wider economic commentary, repeated calls for fiscal restraint from institutions such as the IMF are likely to have limited traction, the column argues. Governments are spending heavily to secure energy supplies, strengthen military capabilities and protect resources, and in such a divided global environment budget deficits and elevated public debt are likely to persist.
Recommended reading to contextualize today
- Mediators still seek to bridge U.S., Iran gaps despite no face-to-face talks
- Fed likely to hold rates steady as Powell prepares for possible swan song
- OpenAI breaks off Microsoft exclusivity to free up path for Amazon, Google deals
- DeepSeek’s new AI model does not wow markets in fast-changing industry
- China orders Meta to unwind $2 billion purchase of AI startup Manus
Today’s key market moves
- Stocks: Most Asian markets advanced, with South Korea’s KOSPI rising 2% to a new high and posting a 31% gain in April so far, its best month since 1998. European markets slipped, and the United Kingdom entered its longest losing streak in over a year. U.S. markets were narrowly mixed overall, with the technology-heavy Nasdaq reaching a new high.
- Sectors and shares: Only three of the 11 S&P 500 sectors rose - technology, communications services and financials. Nvidia climbed 4% to a fresh peak and reclaimed a $5 trillion market capitalization, while Micron Technology gained 5.6%. The Philadelphia semiconductor index recorded its first decline in 19 sessions. Domino’s Pizza fell 9%.
- Foreign exchange: The dollar index was little changed. The Canadian dollar touched a seven-week high. Commodity-linked currencies such as the Australian and New Zealand dollars were each up about 0.5%. Bitcoin slipped 2% to trade below $77,000.
- Bonds: U.S. Treasury yields rose 2-3 basis points across the curve, with the 10-year yield posting its strongest close in two weeks. Treasury auctions were mixed - two-year notes drew strong "direct" bids and a decent bid-to-cover ratio, while five-year notes showed a weak bid-to-cover but solid "indirect" demand.
- Commodities and metals: Oil prices climbed, with Brent up about 3% to a three-week high and West Texas Intermediate up roughly 2%. Nickel reached its highest level in nearly two years. Gold fell about 1%.
Today’s talking points
The $1 trillion club
Three potential initial public offerings are drawing attention for their lofty valuations. Elon Musk’s SpaceX is reportedly targeting a valuation of $1.75 trillion in what would be the largest IPO on record, while OpenAI is seeking roughly a $1 trillion valuation. Anthropic has been linked to venture capital offers valuing it at about $800 billion earlier this month, and a Google announcement that it will invest up to $40 billion is expected to push that value higher. Combined, these IPOs could approach roughly $4 trillion in valuation, which represents about 16% of the MSCI World information technology index and could create a significant overhang for software valuations, according to a warning from Candriam.
Canada’s sovereign wealth fund
Prime Minister Mark Carney said Canada will establish its first sovereign wealth fund, named the Canada Strong Fund, with an initial endowment of C$25 billion, equal to $18.4 billion, to invest in large domestic projects. The creation of the fund places Canada alongside other nations that operate sovereign wealth vehicles. The idea of a U.S. sovereign wealth fund has been discussed by President Donald Trump in the past, though that proposal appears to have lost momentum.
Powell’s final policy meeting as chair?
The U.S. Federal Reserve begins a two-day policy meeting on Tuesday that is widely expected to conclude with policymakers leaving rates unchanged. The meeting may mark Jerome Powell’s last as chair, with the path for Kevin Warsh’s nomination to be confirmed by the Senate by May 15 appearing to be clear. Powell’s time as chair is therefore likely nearing its end. He could remain on the Board of Governors through 2028 if he chooses, and observers expect Powell to address his plans and possibly his future status at a post-decision press conference on Wednesday. Commentators are already poised to debate his record and legacy.
Near-term market movers to watch
- Developments in the Middle East
- Further moves in energy markets
- Japan interest rate decision
- Japan unemployment data for March
- India industrial production for March
- European corporate earnings including Barclays, Novartis and BP
- U.S. house prices for February
- U.S. consumer confidence for April
- U.S. Treasury auctions: $30 billion of 2-year floating rate notes and $44 billion of 7-year notes
- U.S. corporate earnings including Coca-Cola, Visa, T-Mobile, Spotify, UPS and Starbucks
Market participants will be closely watching this week’s mix of geopolitical developments, monetary policy signals and corporate earnings for fresh direction.