It's kicking off, but they're still talking

The renewed saber-rattling between the United States and Iran, along with a few exchanges of fire, has pushed oil prices higher and increased tension across financial markets. Europe has taken the biggest hit, especially as the White House has threatened to reinstate 25% tariffs on auto imports from the region. The main story still centers on oil prices and the pull of AI.

The United States and Iran appear to be continuing talks to resolve the crisis, despite some verbal clashes. Iran’s foreign minister warned others to “beware of being dragged once again into a quagmire by ill-intentioned actors.” The U.S. president said Iran would be “wiped off the face of the Earth” if it attacked U.S. vessels escorting merchant ships and tankers through the Strait of Hormuz. A few shots have been exchanged, victories claimed, and talks are still ongoing. Brent crude has climbed back to $113 per barrel, about 85% higher than at the start of the year. Traffic through the Strait of Hormuz seems to be picking up slightly. Treasury Secretary Scott Bessent has called on U.S. allies and China to help secure the area.

On China, Donald Trump says he’s “looking forward” to meeting Xi Jinping. The two are expected to meet in Beijing on May 14–15. The goal, according to senior U.S. officials, is to maintain stability in the relationship - balancing short-term economic alignment with deeper geopolitical rivalry, especially around AI leadership.

The latest earnings in the sector come from Palantir, a key player in AI deployment. The company beat expectations and raised guidance, but with the stock trading at 116x this year’s expected earnings and 89x next year’s, investors wanted more. Shares fell 2.7% in after-hours trading. Still, demand for AI names remains strong. Micron rose another 6% yesterday, doubling since January 1 and up sixfold over the past year. Memory chips are the current bottleneck in the tech stack, and Micron’s margins are expected to jump significantly. More earnings are due today, especially in European financials, while AMD will lead tech releases in the U.S. this evening.

The macro calendar is also busy. The Reserve Bank of Australia raised rates for the third straight time to 4.35%, as expected, reflecting renewed inflation concerns driven by higher oil prices. That pressure is also visible in U.S. bond yields, with the 30-year back at 5%. Several key indicators are due in the U.S. today, including JOLTs job openings, the ISM services index, and speeches from central bankers.

In Asia-Pacific, Japan is still on holiday for Golden Week, along with South Korea. Hong Kong is down 1.3%, India 0.7%, and Australia 0.4%, while Taiwan’s semiconductor sector is holding steady. European markets are set to open lower, though U.S. futures are slightly positive.

Today's economic highlights:

Today’s U.S. agenda includes the trade balance, S&P Global services and composite PMIs, the ISM services report (with components like employment, prices, and new orders), new home sales, JOLTs job openings and job quits, speeches from Fed officials Bowman and Barr, the RCM/TIPP economic optimism index, total household debt, and API crude oil inventory data later in the day.

• USD/GBP: 0.7385 GBP
• Gold: $4,563
• Crude Oil (BRENT): $112.10 (WTI) $103.23
• United States 10 years: 4.44%
• BITCOIN: $81,500

In corporate news:

• AMD to report earnings after the close.
• Applied materials initiated at buy by Seaport Research Partners.
• Archer-daniels-midland raised its full-year adjusted profit outlook and beat quarterly expectations.
• Biontech announced site closures affecting up to 1,860 employees and plans a share buyback of up to $1B following leadership changes.
• Coinbase announced around 700 job cuts as part of a restructuring to reduce costs and reposition for AI.
• Duolingo dropped after signaling a more moderate growth outlook despite solid quarterly results.
• Dupont jumped after raising full-year guidance and beating Q1 expectations, supported by price increases and a gain from its Aramids divestment.
• Harley-davidson beat revenue expectations, driven by strong North American retail demand.
• Intel rose on reports that Apple is in early talks with Intel and Samsung to produce its main processors.
• KKR beat Q1 expectations on higher fees and stronger transaction-driven revenue.
• Marathon petroleum gained after beating Q1 profit estimates, supported by stronger refining margins.
• Onsemi fell despite beating Q1 revenue expectations, while guiding for stronger Q2 sales on improving auto demand.
• Palantir technologies declined despite raising its full-year revenue outlook and beating quarterly expectations, as investors remain cautious on growth sustainability.
• Paramount skydance gained after beating Q1 profit expectations, helped by cost cuts and improved streaming performance.
• Paypal beat Q1 expectations, supported by resilient consumer spending.
• Pfizer reported Q1 earnings above expectations, driven by strong demand for legacy drugs like Eliquis and Padcev.
• Pinterest jumped after issuing a stronger-than-expected Q2 revenue outlook, driven by ad spending growth.

Analyst Recommendations:

• Advanced Energy Industries: KeyBanc Capital Markets maintains its Overweight rating and raises the price target from $375 to $415.
• Amazon.com: China Renaissance Research maintains its Buy rating and raises the price target from $300 to $326.
• Aon: Mizuho Securities maintains its Outperform rating and lowers the price target from $394 to $389.
• Chevron: HSBC maintains its Buy rating and raises the price target from $215 to $217.
• Duolingo: Evercore ISI maintains its In Line rating and lowers the price target from $114 to $97.
• Equitable Holdings: Barclays maintains its Overweight rating and raises the price target from $49 to $51.
• Hims & Hers Health: Deutsche Bank maintains its Hold rating and lowers the price target from $28 to $25.
• ICG: Morgan Stanley maintains its Overweight rating and lowers the price target from 2800 GBX to 2600 GBX.
• Lumentum Holdings: Loop Capital Markets maintains its Buy rating and raises the price target from $900 to $1400.
• On Semiconductor Corporation: Morgan Stanley maintains its Equal Weight rating and raises the price target from $85 to $87.
• Palantir Technologies: D.A. Davidson maintains its Neutral rating and lowers the price target from $180 to $165.
• Paramount Skydance Corporation: Wells Fargo maintains its Underweight rating and lowers the price target from $8 to $7.
• Pearson: Barclays maintains its Equal Weight rating and raises the price target from 1040 GBX to 1130 GBX.
• Pinterest: KeyBanc Capital Markets maintains its Overweight rating and raises the price target from $23 to $26.
• Vertex Pharmaceuticals: RBC Capital maintains its Outperform rating and raises the price target from $541 to $543.
• Viper Energy: Barclays maintains its Overweight rating and raises the price target from $54 to $58.
• Whitbread: UBS maintains its Buy rating and lowers the price target from 3575 GBX to 2975 GBX