Blockade, tech and central banks

It was an eventful session on Tuesday as markets navigated geopolitical tensions, doubts in the technology sector, and upcoming central bank decisions.

US-Iran talks stall: Extended blockade?

The outlook in the Middle East is somewhat grim following President Trump's rejection of Iran's interim proposal. Despite Secretary of State Marco Rubio describing the offer as better than expected, it was clearly insufficient for the Don. While Pakistani mediators have announced that a revised proposal from Iran is apparently in the works, Trump has instructed aides to prepare to maintain the blockade for an extended period.

Brent and WTI (spot) remain elevated, with the former notching a second consecutive positive session north of US$100/barrel, while the latter continues to see buyers and sellers squaring off at the underside of the big figure. The energy sector was the day’s clear outperformer, rising 1.7% on the S&P 500.

OpenAI cracks weigh on stocks

In the equities space, one of yesterday’s key stories was OpenAI falling short of several internal sales/user targets. Per the WSJ, CFO Sarah Friar reportedly raised concerns internally about the company's ability to fund future computing contracts if revenue growth does not accelerate. As I am sure you can imagine, the technology sector took a sizeable hit and was the day’s largest underperformer in the S&P 500. The broader US equity benchmarks also ended the day on the ropes, with the S&P 500 down 35 points (0.5%) to 7,138, the Nasdaq 100 lower by 276 points (1.0%) to 27,029, and the Dow Jones shedding 25 points (0.1%) to 49,141.

The episode revived familiar questions about whether the colossal AI infrastructure spend can be justified by actual revenue generation. Those questions may well be answered, at least partially, tonight, when Meta, Microsoft, Amazon, and Alphabet all report after the US close.

Aussie inflation: Automotive fuel surged 32.8% in March

In the macro space, the March Australian CPI inflation data landed overnight, showing that price pressures increased by 4.6% from 3.7% in February at the headline YY level. Electricity was up 25.4% annually, with transport rising 8.9% and housing up by 6.5% – the two largest contributors to the YY headline number. Headline MM also rose by 1.1%, a move bolstered by automotive fuel surging 32.8% in March, which, according to the report, was the strongest single monthly increase since the series began in 2017.

The Q1 26 (YY) figure rose by 4.1%, which was above Q4 25’s reading of 3.6%, albeit slightly below the 4.2% consensus. Services inflation, by contrast, eased slightly to 3.6%, with rents and medical costs the main pressures.

The YY trimmed mean inflation remained unchanged at 3.3%, and has remained above the RBA’s 2-3% target band since September 2025. The central bank, which hiked to 4.1% in March, has already flagged that further increases may be necessary, and this print does nothing to close that door. Investors have assigned about a 72% chance that the RBA will increase the cash rate by 25 bps to 4.35% next week, down from near-90% odds a day ago.

BoC and Fed ahead

The day ahead will see the BoC meet at 1:45 pm GMT, and is widely expected to keep the overnight rate unchanged at 2.25%. With Canadian headline YY inflation at 2.4%, and the BoC’s preferred measures – CPI trim and median – close to target, along with a loosening jobs market, the central bank is likely to remain on hold for a 4^th consecutive meeting, with rates markets pricing in 37 bps of tightening by year-end. Keep an eye on the MPR for any revisions to growth and inflation forecasts, rather than on the rate decision itself.

The Fed follows on this evening, with rates markets also all but fully pricing in a hold in the 3.50-3.75% range, with -5 bps of easing implied by year-end. This will almost certainly be Fed Chair Jerome Powell's final press conference, with Kevin Warsh awaiting Senate confirmation. Powell's comments on the inflation-growth tension caused by the Iran conflict – and whether he confirms his intention to remain on the Fed board – will be closely watched.