The overnight picture

Monday opened with a clear macro signal from the energy market. Brent crude rose 3.33% and West Texas Intermediate (WTI) gained 3.35% after President Trump rejected Iran's response to a U.S. peace proposal, leaving the Strait of Hormuz — the narrow Persian Gulf chokepoint through which roughly a fifth of the world's seaborne oil passes — closed for another session.

U.S. equity futures slipped in tandem. The pullback reflects a straightforward risk-premium calculation: a prolonged Hormuz closure tightens global oil supply, lifts energy prices, and feeds through to inflation — exactly the combination that makes the Federal Reserve's job harder. The Fed has already flagged the Iran conflict as a material macro risk, warning that a sustained standoff could stoke inflation and weigh on global economic growth.

Asian equity markets showed more resilience overnight, with South Korea's KOSPI hitting a record high on continued AI-driven demand for memory chips, led by SK Hynix and Samsung. That divergence — energy-sensitive Western futures under pressure while tech-heavy Asian indices advance — captures the split character of this market environment.

Today's key themes

Theme 1: Energy as the primary macro driver. The Hormuz closure, if sustained, would represent one of the more significant supply disruptions in recent memory. Oil's move this morning is not a blip — it reflects genuine uncertainty about when, or whether, diplomatic talks resume. Goldman Sachs has already incorporated this risk into its rate outlook, pushing its forecast for the first Federal Reserve interest-rate cut to December 2026. That repricing matters for rate-sensitive assets across fixed income, real estate, and growth equities. Watch the energy complex closely: any signal of diplomatic re-engagement could reverse the crude spike quickly; a further breakdown deepens the inflation narrative.

Theme 2: The Trump-Xi summit and tariff risk. A meeting between President Trump and Chinese President Xi Jinping is expected later this week — the first U.S. presidential visit to China since 2017. U.S.-China tariffs remain the central agenda item, and the stakes are high. A constructive outcome could ease pressure on global supply chains and lift sentiment in sectors exposed to Chinese demand: semiconductors, industrials, and consumer goods. A breakdown adds another layer of macro uncertainty at a moment when markets are already absorbing Middle East supply risk. Currency and commodity markets will be among the first to reflect any signals from Beijing.

Theme 3: AI financing at record scale. Away from the geopolitical noise, Broadcom (AVGO) is in advanced talks for a private-credit financing package of between $35 billion and $55 billion — potentially the largest deal ever in that asset class. Apollo Global Management and Blackstone are among the lenders involved. The funds are earmarked for AI chip development and supply agreements with Google, Anthropic, Meta, and OpenAI. Private credit — loans arranged outside traditional public bond markets — has become the financing vehicle of choice for large-scale AI infrastructure investment. The deal's scale underscores how capital-intensive the AI buildout has become, and how chipmakers are increasingly bypassing conventional bank markets to fund it.

The calendar

No major U.S. economic data releases are scheduled for Monday morning, but the geopolitical calendar is dense. The Trump-Xi summit is the week's most consequential scheduled event for trade-sensitive assets, and any pre-summit positioning or leaks from either side could move markets ahead of the formal meeting.

On the corporate side, Bank of America raised its price target on Intel (INTC) to $96 from $56 while maintaining its Underperform rating — the bank's most cautious stance. BofA's argument: a potential foundry deal with Apple (AAPL), in which Intel would manufacture chips for the iPhone maker, is already reflected in INTC's current share price. The target increase acknowledges the stock's recent rally; the unchanged negative rating signals the bank sees limited incremental upside from the Apple partnership beyond what the market has priced in.

Reliance Industries (RELIANCE) is also in focus after restructuring the planned IPO of its wireless unit, Jio Platforms, to sell only newly issued shares at a proposed valuation of up to $170 billion. Existing backers — including Meta, Alphabet, and Vista Equity Partners — will not sell their stakes in the listing. The all-new-share structure means proceeds flow directly to Jio rather than to selling shareholders, a design that signals growth intent. At $170 billion, the offering would rank among the largest IPOs in emerging-market history and a landmark test of global institutional appetite for Indian capital markets.

Looking further out, Nvidia's (NVDA) earnings report, due later in May, remains the most anticipated single catalyst for AI-sector sentiment. The results will offer a read on whether hyperscaler demand for GPUs is sustaining its pace — context that matters for interpreting Broadcom's record financing ambitions and the broader AI capital cycle.

Watch list

Crude benchmarks. Brent and WTI are the clearest real-time indicators of how the market is reading Hormuz developments. Any diplomatic signal — from either Washington or Tehran — will hit oil first and equities second. Energy sector ETFs and oil-linked currencies such as the Canadian dollar and Norwegian krone will amplify the move.

Rate-sensitive assets. With Goldman Sachs pushing its Fed cut forecast to December 2026 and the Fed itself warning about war-driven inflation, the front end of the U.S. Treasury curve deserves attention. If oil holds its gains through the session, expect the two-year yield to reflect the diminished probability of near-term easing.

AVGO pre-market and intraday. Broadcom's record private-credit discussions are bullish for the stock in isolation, but the broader risk-off tone from Hormuz could cap the move. Watch whether the AI financing story is enough to outrun the macro headwind.

Summit positioning. Trade-exposed names — semiconductors, industrials, consumer staples with significant China revenue — will be sensitive to any pre-summit commentary from either the Trump administration or Chinese officials. NVDA, AMD, and the broader SOXX semiconductor index are the most direct proxies for U.S.-China tech-trade sentiment.

INTC reaction to BofA note. The gap between a $96 price target and an Underperform rating is wide enough to generate confusion. Watch how the stock digests the note: a rally would suggest the market is anchoring to the target; a fade would confirm that investors share BofA's skepticism about the Apple foundry deal's incremental value.