Three months into the conflict now, anyone attempting to report on the latest developments from Iran and surrounds falls quickly into paradox. Strikes continue to be traded, while the ceasefire continues to be extended. Now a memorandum of understanding is said to have been reached, awaiting signatures. But rhetoric, while generally positive, would not indicate that the sides are that close to settling on an agreement. Thus the deal appears tentative at best. The plan for disposal or otherwise of Tehran’s stockpile of uranium is seemingly still the primary sticking point. On top of that, the “free and open” functioning of the Strait remains a non-negotiable for the US administration. On the Iranian side, the lifting of economic sanctions and unfreezing assets are key items on the table.
Iran claimed overnight to have shot down a US aircraft near Bushehr, a claim firmly denied by the US. This came shortly after four Iranian attack drones were shot down by the US, and a ground control station in Bandar Abbas was struck. The Pakistani foreign minister is on his way to Washington, to be hosted by Marco Rubio in another mediation attempt. Several times this week the US has claimed to be close to a deal, before Iran has downplayed the claims.
In general, markets have been giving more weight to the talk than the action. US crude oil, while choppy again, has pulled back by approximately 9% this week to sit at around $88 a barrel. And the major US indices are back at fresh highs as we head into the week’s final trading session, the Nasdaq up over 10% in May. Something of an outlier in the risk asset department this week has been bitcoin, which slid further towards key support levels, -4.2% to $73,700. Gold has also lost its positive momentum, failing to keep its recent strong correlation with positive equity markets, now hovering around the $4,500 level. Ceasefire optimism also saw traders pull away from the dollar, but only in a consolatory fashion, the USD index at this stage down slightly on the week and sitting close to 99.
Micron Technology Inc.’s market cap doubled from $500 billion in 48 days, a new record for that jump that was beaten only earlier this month by Samsung (82 days). Previously a sector whose multiples have suffered from its cyclical nature, that pattern has been broken thanks to the enormous build cycle now under way in AI infrastructure. The fast-increasing and much more consistent demand for memory-related semiconductors has brought about a re-rating of the companies fulfilling the supply. On top of that, the fundamentals are quite staggering – Micron’s earnings per share are now forecast at $105 for next year, up from $8.07 in 2025.
SK Hynix also joined the $1 trillion club this week. The Korean memory-chip manufacturer, along with competitor Samsung Electronics Co., led that nation’s index to yet more milestones this week. The Kospi is up over 100% for 2026, an incredible run that has inevitably drawn somewhat cynical comparisons with the Nasdaq’s rally back in 1999, and naturally the subsequent bursting of that historic bubble. But again analysts in the space describe this current rally more as part of a structural shift in the demand for memory chips, watering down kneejerk mentions of froth.
You could do a lot worse than following DJT’s investment tips this year. He told the public to buy Dell Technologies Inc on 8 May, and required disclosures showed that he had indeed done the same on his personal account. Yesterday it was announced that a five year, $10 billion software purchase contract had been signed between the Pentagon and…. Dell. The stock was up around 30% in after-market trading. “The whole world, unfortunately, has become somewhat of a casino..”.
Nonfarm payrolls, generally the most closely watched regular global economic release, lands on Friday. May’s data will be as key as ever in determining the likelihood of rate hikes in the coming months, following the recent split FOMC vote. The unemployment rate is expected to remain at 4.3%, with 93k jobs added. Anything significantly weaker would revive concerns around the stickiness of inflation and its effect on the labour market.
Similarly closely watched closer to home will be the Australian GDP figures, released on Wednesday. This week CPI came in at 4.2%, under the 4.4 % expected. Now policymakers will be asking; what effect have the recent rate hikes had on domestic spending, and can households withstand further increases to the OCR? A q/q increase of 0.5% in headline GDP is expected.
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