Morning Bid: Oil fear shrouds tech splurge

• Brent crude reached $126/barrel (four-year high) on Iran war concerns, prompting the Fed to eliminate its easing bias despite holding rates steady; markets now see a one-in-three chance of a rate hike by April 2027
• Fed Chair Powell announced he will remain as a board member after his chairmanship ends next month, preventing an immediate Trump appointment vacancy until early 2028
• Big Tech earnings showed divergence: Alphabet surged 8% on cloud strength while Meta dropped 6% on capex concerns, but combined 'hyperscaler' AI spending is projected to top $700 billion for the year

Market Summary: Oil Surge and Tech Earnings Dominate Trading

Oil Price Spike

Global crude prices surged to four-year highs amid escalating Iran conflict tensions. Brent futures hit approximately $126/barrel (June contract) and $115/barrel (July benchmark) following reports that Washington may resume military action. The oil price surge is raising inflation concerns across central banks.

Federal Reserve Decision

The Fed held rates steady Wednesday, though three regional presidents voted to remove "easing bias" language from statements. Outgoing Chair Jerome Powell announced he will remain as a board member until early 2028, preventing an immediate Trump appointment. Markets have eliminated all 2026 rate cut expectations, now pricing a one-in-three chance of a rate hike by April 2027. The 30-year Treasury yield briefly exceeded 5% for the first time since September.

Big Tech Earnings

Post-market results showed divergence among mega-cap tech stocks. Alphabet surged 8% on strong cloud performance, while Meta fell 5% on capex concerns. Total spending from hyperscalers is now expected to exceed $700 billion in 2026, supporting continued AI chip demand. Samsung reported record quarterly profits with a 49-fold jump in chip income, citing severe AI-driven supply shortages expected to deepen.

Central Bank Actions

The European Central Bank and Bank of England are expected to hold rates steady but warn of oil-related inflationary pressures during their decisions today.

Market Outlook

Asian markets traded mixed. Key data releases include U.S. March PCE inflation data and Apple earnings. The dollar jumped but faces pressure near 160 yen on Japanese intervention concerns.