Hormuz, oil and interest rates remain unchanged: the market buys US profits, but remains hostage to geopolitics.

A weekend where diplomacy counted more than budgets

Between the weekend and the trading sessions on Monday, April 27th and Tuesday, April 28th, financial markets experienced a seemingly contradictory phase: Wall Street reached new highs, but beneath the surface, oil, rates, the dollar, and safe-haven assets began to move again. The common thread was once again the Middle East. On Saturday, Trump canceled the trip to Pakistan by US envoys Steve Witkoff and Jared Kushner, deeming the Iranian proposal too weak and the diplomatic mission too costly. The decision dampened expectations of a swift breakthrough in the negotiations, just as Iranian Foreign Minister Abbas Araghchi was moving between Pakistan, Oman, and Russia.

The situation was further complicated by the attack during the White House Correspondents' Dinner, with a suspect accused of attempting to assassinate Trump. For the markets, the key issue isn't just the episode itself, but the political message: the United States enters a crucial week with high internal tensions, a still-open external war, and a central bank challenged to ensure its communications are correct.

Hormuz remains the true hidden price of the market

The decisive step came between Monday and Tuesday, when Iran sent the United States a proposal to reopen the Strait of Hormuz, but postponed the nuclear issue until a later stage. In effect, Tehran attempted to separate the immediate energy issue from the more weighty strategic issue of nuclear enrichment. Washington, however, remained cold: Trump was described as disappointed by the proposal, and the market began to price in a "no" or at least more protracted negotiation scenario.

The results were immediately visible in oil. Brent crude rose above $111 a barrel, with some readings as high as $111.50 and others as high as $112.16, while WTI touched around $100. This isn't just a technical rebound: the market is paying a risk premium on one of the world's most important energy arteries. Meanwhile, the World Bank estimates a 24% increase in energy prices for 2026 linked to the Middle East war, with an average Brent price of $86 but potentially as high as $115 if the conflict continues.

The Emirates' exit from OPEC changes the energy balance

Amid this tension, structural news has arrived: the United Arab Emirates announced its withdrawal from OPEC and OPEC+, effective May 1st. The Emirates, once among the group's largest producers, are aiming for greater production flexibility, with a capacity of up to approximately 5 million barrels per day. In the short term, the news has alleviated some supply concerns; in the medium term, however, it weakens OPEC's ability to control price expectations.

Stocks: America still stronger than Europe, but with a technological crack

On the stock market front, the US market continued to show strength on Monday, with the S&P 500 and Nasdaq both posting record closes. On Tuesday, however, the picture cooled: the S&P 500 lost about 0.7%, the Nasdaq 1.3%, while the Dow Jones remained more stable. The move is interesting because it wasn't driven solely by oil: selling in artificial intelligence stocks also weighed on the market, with Nvidia down 2.9%, Broadcom down 5.2%, and Micron down 5.8%.

ETFs confirmed the intraday picture: SPY was down about 0.61%, QQQ was down 1.17%, while DIA was almost unchanged. In Europe, the ETF on the Euro Stoxx 50 was down about 0.67%, consistent with a market more sensitive to energy costs and less protected from US tech profit growth.

Rates, dollar, and gold: Market sees no immediate cuts

Bonds tell the same story. The 10-year US Treasury yield has risen to 4.34%, while the Federal Reserve is expected to hold steady. The Bank of England is also expected to leave rates unchanged at 3.75%, with a very cautious vote expected, while the Bank of Japan has kept its rate at 0.75%, but with three out of nine members in favor of a hike. In other words, expensive energy is making it more difficult to cut rates, even if growth is not stellar.

The dollar remained strong: the DXY index was seen nearing 98.48, the EUR/USD nearing 1.17, while the pound fell 0.3% to $1.3488. Gold, however, corrected: spot gold fell to around $4,628 an ounce, down around 2% on Tuesday. This is an important signal: at this stage, the market isn't buying gold just out of fear, but is also valuing it against real interest rates, the dollar, and expectations of less accommodative central banks.

Macro data: consumers more confident, housing weaker

On the macroeconomic front, the United States sent two distinct signals. The Conference Board's consumer confidence index rose to 92.8 in April, from 92.2 in March, beating more cautious expectations. This is a small but significant improvement, as it comes amid high gasoline prices and a continuing war. However, the housing market continues to slow: the national Case-Shiller index rose only 0.7% annually in February, the 20-City Composite by 0.9%, while FHFA prices remained unchanged on a monthly basis and increased by 1.7% annually.

The message is clear: the American consumer hasn't collapsed yet, but the cost of money and energy is dampening the assets most sensitive to financing. This is the issue the Fed will have to address: if it cuts too soon, it risks rekindling energy inflation; if it remains too rigid, it risks squeezing credit, housing, and consumption.

Why HSBC is looking more to the US than to Europe

HSBC's decision to raise US equities to "overweight" and reduce Europe (excluding the UK) to "neutral" fits into this scenario. The reason is concrete: in the United States, approximately 30% of companies have already published their first-quarter results, 84% have beaten expectations, and the average surprise was 12%. Europe, however, remains more vulnerable to energy costs and margin pressure.

The week, therefore, leaves a clear indication: the market isn't ignoring risks, it's selecting them. It continues to buy America because it sees profits, technology, and the ability to absorb shocks. It penalizes Europe, gold, and cyclical assets more when interest rates remain high. And it continues to look to Hormuz as the true global risk trigger: if it reopens, the market can breathe; if it remains frozen, oil, inflation, and central banks will once again dictate the price of everything.