Tech Earnings Helping Insulate Markets from Middle East Uncertainty

Solid US corporate earnings are proving highly effective at insulating stocks and risk assets from the worst effects of the ongoing US-Iran war. While not every member of the Magnificent 7 has reported yet - with Nvidia still to come - the results delivered so far have been impressive. Strong revenue beats, accelerating demand for cloud and AI services, and aggressive capital expenditure plans have dominated the narrative. This combination of robust earnings and clear corporate conviction in the AI theme has given investors the confidence to largely look through the geopolitical headlines, providing meaningful support to risk assets amid periodic oil spikes and Middle East uncertainty. 

Oil prices, as always, remain extremely sensitive to the latest headlines. Crude pushed higher at the start of the week on reports of increased hostilities between Iran and its UAE neighbour, but the rally quickly faded after President Trump’s ‘Project Freedom’ - the initiative to protect neutral shipping through the Strait of Hormuz - was promptly paused. The White House cited progress on a potential broader deal with Iran, which helped ease some of the immediate pressure. Nevertheless, the Strait of Hormuz continues to act as a major flashpoint. With both sides still enforcing elements of a blockade and physical tanker traffic heavily constrained, oil prices remain anchored above $100. The market is pricing in persistent risk rather than any near-term resolution.