AXIOMA ROOF™ SCORE HIGHLIGHTS

• US: Services PMI, factory orders, trade balance, new home sales, and the Jobs report. Earnings from Palantir, AMD, Pfizer, McDonald's, PayPal, Disney, Uber, and SMC.
• Europe: German trade figures for March. Eurozone retail sales.
• APAC: China April trade and PMI data. Minutes of BoJ meeting. RBA rate decision.
• Global: The ongoing ‘will they/won’t they’ US–Iran negotiations over reopening Hormuz.

Negotiators are, by definition, pullers of strings who work behind the scenes. Yet, despite both sides dispatching their éminence grise to Islamabad, a deal between the US and Iran remains elusive.

Hormuz, that narrow esophagus through which the world has, for decades, gorged itself on oil, remains dangerously clogged. The Trump administration tells anyone who asks – and plenty who don’t – that the blockade is working and that this vital organ will soon be back to normal with both function (traffic) and form (freedom of navigation) fully restored as Iran, it insists, is about to cave.

For its part, Iran’s parliament warns to expect function to return, but not form. Hormuz, it insists, will not be born again: freedom of navigation will return, but as pay-to-play.

The stalemate reflects the deep mistrust both sides have of each other. The Trump administration views Iran’s peace proposals with a “can’t imagine that it would be acceptable” attitude. Meanwhile, Iran says it cannot trust a US administration for which nothing writ is holy, not even holy writ.

Each investor spends his or her life anticipating the way other investors anticipate life. So they reach for precedents. The energy shock from Hormuz isn’t totally unknown, contrarians argue. We have the experience of Ukraine in early 2022 as a guide to how investors might react. That year, oil prices declined quickly after the initial shock and ended the year below where they started.

The danger of relying on the past is that sometimes, experience isn’t a great teacher. Sometimes, it’s just experience that you could have done without.

The current geopolitical stalemate around Hormuz has thrust the global economy not into the unknown—we have the energy shock of Ukraine in 2022 in the memory bank—but into the barely known, the just imagined, and the deeply distrusted.

As of now, equity markets keep drifting higher, despite elevated geopolitical risks and profound uncertainty around the economic fallout from the prolonged closure of Hormuz. Faced with that discomfort, investors appear content to stroke the AI fur the way it lies at its softest, enjoying the smooth, reassuring surface of the dominant narrative, rather than running their fingers against the lie of the nap—testing valuations, questioning concentration, or confronting the rougher, darker texture beneath the rally.

This naturally led them back to the AI dominance of the US market and helped it hit consecutive record highs in April, closing the performance gap the US markets had incurred versus Europe year-to-date in the process.

Investors usually point to the economy, earnings, monetary policy, or inflation in the allegory of their investment thesis. Markets are merely the pages it’s written on.

The first two chapters of the 2026 narrative saw investors question how far they had already pushed the AI theme as well as the potential consequences of the new “Crip up or Grip up” foreign policy of the ‘United Hoods of America’. Chapter 3, “March”, was your typical shock-and-awe story, driving both markets and sentiment sharply lower. In the “April” chapter, investors were all medulla oblongata, choosing to ignore uncertainty and adopt a go big (on AI) or go home attitude. Chapter Five, “May”, will have to make room for a Fed succession story and a Trump-Xi meeting which remains on the books despite lacking any of the usual policy ‘gifting’ that normally precedes those kinds of events.

Predicting the future is harder than summarizing the present, because prediction requires you to think through many “what if” alternatives. Summarizing the past can be done in a way that leaves the reader to figure out what it all means.

For now, investors are going into May with less apprehension than they had going into April, but as the bottom charts in the markets below indicate, most of the improvement in sentiment last month was due to a decline in risk aversion rather than an increase in risk tolerance. Declining volumes in April also confirm that the market rally was achieved with a minority of investors, while the bulk of them stood still in the background like inaction figures.