Morning Wrap: A Flurry of Decisions from the Fed and BoC, Plus Q1 Mag7 Earnings
Date: 29 April 2026
Geopolitics and the Middle East Conflict
President Trump has directed his advisors to prepare for an indefinite blockade of Iranian ports, following a Situation Room meeting. This decision stems from the assessment that both resuming military action and disengaging from the conflict pose greater risks than maintaining economic pressure. The blockade has resulted in the closure of the Strait of Hormuz, a critical passage for approximately 20% of global oil and LNG supplies. Iran has declared it will not negotiate its nuclear program under current conditions, demanding reparations and sanctions relief, while the U.S. insists on dismantling Iran's nuclear capabilities. The blockade is reportedly impacting Iran's ability to store unsold oil.
Economic Outlook
The U.S. earnings season is showing strength, with over 80% of companies exceeding expectations and Q1 earnings growth around 16%. However, the market is in need of new catalysts for upward movement, particularly as rising costs could negatively impact megacap stocks. The Federal Reserve and the Bank of Canada are expected to maintain current interest rates, with the Fed's decision anticipated later today. The National Institute of Economic and Social Research (NIESR) has downgraded its UK growth forecast, citing the ongoing conflict in Iran as a factor that will keep inflation elevated until 2028.
Oil and Commodities
Oil prices are on a multi-day rally, with WTI crude surpassing $100, potentially attracting further momentum from algorithmic trading strategies. API data indicates a tightening physical supply, with U.S. crude inventories declining by 1.79 million barrels. China has increased its May fuel export quotas, but overall volumes remain low compared to pre-war levels. Natural gas prices have dipped slightly, while gold and silver have seen minor gains.
Asian Session
Japanese markets were closed, leading to reduced liquidity in the region. Asian indices saw moderate gains, with U.S. index futures reflecting optimism from earnings reports but lacking fresh catalysts.
Currencies
The U.S. dollar strengthened amid reports of the extended blockade on Iran. The Australian and New Zealand dollars weakened despite hawkish inflation data, with markets adjusting expectations for the Reserve Bank of Australia's upcoming decisions. The Hungarian forint, South African rand, and Swedish krona also saw declines.
European Corporate Earnings
UBS reported a significant Q1 net income of $3.04 billion, exceeding expectations, and announced a $3 billion share buyback. Santander and Deutsche Bank also reported strong earnings, while Mercedes-Benz's results were slightly below estimates but still positive.
Key Earnings Today
Today marks a critical point in the earnings season, with major companies like Microsoft, Meta Platforms, Amazon, and Alphabet set to report after the market closes. These results are expected to heavily influence market direction, particularly regarding AI monetization and cloud growth. Other notable reports include QUALCOMM and Ford, which will provide insights into the semiconductor and automotive sectors, respectively.
Cryptocurrencies
Bitcoin has seen a slight increase, trading around $77,109 to $77,311, benefiting from the overall risk appetite in the market.
What to Expect from Today's Session
Key events include the Fed and Bank of Canada interest rate decisions, with both expected to maintain current rates. Economic data on durable goods orders and housing starts will provide insights into the U.S. economy's health. In Europe, inflation data will be closely watched, particularly in Germany, as it may impact the ECB's policy decisions. The culmination of the earnings season with major tech reports could significantly influence market trends.