Morning Bid: Oil fear shrouds tech splurge

• Brent crude reached $126/barrel (four-year high) on renewed Iran war tensions and potential U.S. military action, with the 30-year Treasury yield briefly topping 5% for the first time since September
• Fed Chair Powell announced he will remain as a board member after his chairmanship ends next month, preventing an immediate vacancy for President Trump to fill until early 2028
• Tech earnings were mixed: Alphabet surged 8% on cloud strength while Meta dropped 6% on capex concerns, though total 2026 spending from hyperscalers is now expected to exceed $700 billion for AI infrastructure

Market Summary: Oil Surge and Tech Earnings Dominate Trading

Oil Price Spike

Global crude prices surged to four-year highs amid escalating Iran war tensions. June Brent futures hit $126 per barrel, while July benchmarks reached nearly $115/bbl before retreating. Reports suggest Washington is considering resuming military action to break the deadlock.

Federal Reserve Decision

The Fed held rates steady on Wednesday, though three regional presidents voted to remove the "easing bias" from policy statements. Outgoing Chair Jerome Powell announced he will remain as a board member through early 2028 after his chairmanship ends next month. Markets have eliminated all expectations for rate cuts in 2026, with futures 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 mixed performance among mega-cap tech companies. Alphabet shares surged 9% on strong earnings and cloud performance, while Meta dropped 6% due to concerns over increased capital expenditure. Combined 2026 capex from major hyperscalers (Microsoft, Alphabet, Amazon, Meta) is now expected to exceed $700 billion, driven by AI infrastructure investments.

International Developments

Samsung Electronics reported record quarterly profits with a 49-fold jump in chip income, citing severe AI-driven supply shortages expected to deepen through next year. The ECB and Bank of England are scheduled to announce rate decisions today, both expected to hold steady while warning about oil-related inflationary pressures.

Upcoming Events

Key releases include U.S. March PCE inflation data, weekly jobless claims, and Apple earnings.