Iran Proposes Reopening the Strait of Hormuz! AI Craze Shifts Market Attention, Central Bank Storm Looms This Week

Despite the stalled negotiations between the US and Iran, and with almost no oil being shipped through the Strait of Hormuz, the stock market’s attention has once again shifted to the ongoing artificial intelligence boom.

Driven by Intel’s unexpectedly strong revenue forecast, artificial intelligence supply chain stocks were in demand on Monday (April 27), pushing markets in Japan, South Korea, and Taiwan to new historic highs.

With markets expecting G10 central banks to keep rates on hold this week and a fragile ceasefire in the Middle East still in place, the focus has shifted to the key pillar of the artificial intelligence rally: the spending plans to be disclosed by hyperscale cloud providers in earnings reports later this week.

Asian chip manufacturing companies reported record earnings last week. South Korea’s SK Hynix, a major supplier to Nvidia, reported a fivefold jump in quarterly profit, propelled by robust global demand for artificial intelligence chips. Samsung’s operating profit is expected to surge eightfold from January to March, reaching nearly $38 billion.

TSMC also reported record first-quarter profits, marking eight consecutive quarters of double-digit growth. Share prices are struggling to keep up with soaring profits, but are surging as well. SK Hynix’s share price has almost doubled this year; according to the World Federation of Exchanges, the market capitalization of Korean and Taiwan stocks has now exceeded that of the German stock market.

On the Iran issue, Axios reported that Iran has set conditions for reopening the Strait of Hormuz and put nuclear negotiations on hold for now. This news boosted the markets on Monday. According to the plan, Iran is willing to reopen the Strait of Hormuz and agree to a ceasefire before any nuclear talks begin.

The proposal, delivered to the White House via Pakistani intermediaries, represents a major shift in Iran’s negotiating stance. Tehran is no longer seeking to resolve both the nuclear dispute and the Strait of Hormuz crisis simultaneously, but instead is looking to separate the two issues: first ensuring the reopening of the strait and demanding the lifting of the maritime blockade by the US, with nuclear negotiations postponed until a later stage. This approach is, in part, intended to circumvent serious divisions within Iran’s leadership. The divisions center on how far Iran is willing to meet US demands, including a long-term suspension of uranium enrichment and moving enriched uranium stockpiles out of Iran.

The White House refused to comment on the details of the proposal. White House spokesperson Olivia Wales stated that the US will not negotiate through the media and will only accept a deal that permanently prevents Iran from obtaining nuclear weapons.

Germany’s May consumer confidence data will be released Monday. Ahead of the European and Bank of England meetings, investors may start to adjust some of their aggressive short-term rate positions that are betting on upcoming central bank rate hikes.