The most significant development this week was a renewed escalation in the Middle East. A large-scale coordinated U.S.–Israel strike on Iran reportedly killed Supreme Leader Ali Khamenei, prompting immediate missile and drone retaliation from Tehran. The Strait of Hormuz has effectively entered blockade conditions, sharply raising the risk of a broader regional conflict.
Markets were firmly in risk-off mode. Crude oil surged on fears of supply disruption, while gold and silver rallied strongly. Global equities declined amid heightened geopolitical uncertainty, and investors rotated into U.S. Treasuries for safety, driving bond yields lower across the curve.
This week's WEFC provides a detailed analysis.
Middle East Escalation Shifts From Political Signaling to Physical Supply Risk, Repricing Oil and Fed Expectations
The coordinated US–Israel strikes on Iran signal a structural escalation rather than a symbolic exchange. Operation “Epic Fury” targeted nuclear, missile, and export infrastructure, while Tehran’s “True Promise 4” retaliation spread across six Gulf states, turning a bilateral clash into a regional confrontation. The focus has shifted to tangible supply disruption. Strait of Hormuz carries about one quarter of global seaborne oil trade; GNSS interference, tanker incidents, and suspended shipping have pushed Brent toward $80. In response, OPEC+ will raise April output by 206,000 bpd, cautiously unwinding prior cuts. Spare capacity remains concentrated in Gulf producers.
As noted in our CEO House View, this escalation materially lowers the probability of Fed rate cuts in the first half.
Markets Reprice SaaS on Structural AI Risk Despite Resilient Revenues and Rising RPO
Enterprise software stocks have declined sharply, driven primarily by multiple compression rather than earnings deterioration. Investors fear that agentic AI could pressure pricing power by enabling in-house alternatives, weakening seat-based growth and renewal leverage. The concern centers on structural margin risk, not immediate revenue collapse. Yet fundamentals remain resilient. Major platforms continue to guide stable or higher revenues, remaining performance obligations (RPO) are rising, and software engineering job postings are recovering. Enterprise IT spending has not contracted meaningfully. The correction therefore reflects a valuation reset after premium pricing, not a breakdown in demand. Markets are repricing expectations—not signaling structural impairment.
Nvidia Delivers Another Beat — But the Stock Fell as Valuation Expansion Stalled
Nvidia delivered fiscal Q4 results above consensus on both revenue and guidance, yet the stock declined. We see two areas that were not perfect. First, inventory rose meaningfully. Although raw materials declined as products moved into work-in-progress and finished goods—consistent with an approaching GB300 shipment ramp—the key question is whether inventory normalizes through H1 2026 deliveries. Second, data center revenue remains heavily concentrated at $62.3B, while automotive and robotics continue to lag, reinforcing dependence on hyperscaler demand.
Markets are now discounting durability of hyperscaler capex into 2026–2027. Until GB300 execution validates sustained demand conversion, valuation sensitivity remains elevated, even in the face of structurally strong AI infrastructure commitments.
This article is exclusive to subscribers. If you're not a subscriber yet, subscribe to MM Max today and gain full access to all our charts, reports, including our full 2026 MacroMicro Economic Outlook series via our Full-Year Intelligence Live Pass, and more. Subscribe Now»
About Weekly Economic and Financial Commentary (WEFC)
The MacroMicro WEFC cuts through the noise, delivering rigorous analysis and in-depth insights on the most critical market-moving events. These topics cover equities, foreign exchange, bonds, commodities, global central banks, international political economy, and more.
At the core of WEFC is a concise Chart Pack, enabling you to grasp market trends at a glance.
Already a subscriber? Click here to log in.
Full Access to Our Services
Comprehensive data at your service
with key indicators for investment insights
Exclusive flash reports
on key events and data
Create your own charts and analysis
including performance backtesting
Hub of professionals to engage
in meaningful discussions and insights
Big Tech earnings week is here! Stay ahead with MacroMicro’s Economic Calendar — track CPI, GDP, and key earnings like Apple & Google all in one place. Check it out »
