Markets opened the week with a clear reorientation toward the AI-led technology cycle even as geopolitical risks around the Strait of Hormuz remain unresolved. U.S.-Iran negotiations have stalled and, according to available reports, virtually no oil is currently transiting the Hormuz waterway. Despite that backdrop, investors responded strongly to momentum in the artificial intelligence supply chain.
Shares tied to AI and the broader semiconductor ecosystem saw heavy buying in Asia on Monday after Intel issued an unexpectedly strong revenue forecast. That wave of demand helped push stock markets in Japan, South Korea and Taiwan to record highs, underscoring how corporate spending on AI and related infrastructure has become the primary market catalyst this week.
At the same time, G10 central banks are largely expected to hold interest rates steady in their upcoming meetings, a factor that has reduced the immediate focus on monetary tightening. The uneasy ceasefire in the Middle East also remained in place, but attention has shifted to the next market linchpin - the spending plans of major cloud providers, commonly referred to as hyperscalers, when they report quarterly results later in the week.
Recent corporate results from Asian chipmakers added fuel to the rally. SK Hynix reported quarterly profit that rose roughly fivefold, while Samsung forecasted an eightfold increase to an operating profit approaching $38 billion for the January-March quarter. Taiwan Semiconductor Manufacturing Co. also posted a record first-quarter profit and has now recorded eight consecutive quarters of double-digit growth.
Stock prices have climbed alongside these outsized earnings, with SK Hynix shares nearly doubling so far this year. The surge in market values for South Korean and Taiwanese equities has been large enough to surpass the combined market capitalization of Germany, based on figures from the World Federation of Exchanges.
On the Iran front, a report attributed to Axios indicated that Iran had put forward conditions aimed at reopening the Strait of Hormuz and suggested separating nuclear discussions for a later time. That development was taken positively by markets on Monday.
Investors will also be watching economic and corporate releases that could influence positioning. German consumer sentiment for May is due on Monday and could prompt adjustments to aggressive short-term rate trades that have been pricing in imminent hikes ahead of European Central Bank and Bank of England meetings. Scheduled earnings that may affect sentiment this week include Deutsche Boerse, Verizon and Domino's Pizza.
Short outlook - The immediate market narrative is dominated by AI-driven demand and semiconductor earnings, while geopolitical and monetary policy signals remain potential triggers for renewed volatility.