Tensions in the Middle East remain elevated, with Brent crude once again trading above $100 per barrel. At the same time, Wall Street appears to be largely ignoring the risk of what could become one of the most significant energy crises in history, continuing to push toward fresh all-time highs. Meanwhile, earnings season is entering a critical phase, with results from major tech giants such as Meta, Microsoft, and Alphabet.
However, markets will not focus solely on geopolitics and Big Tech earnings. Next week will also bring key interest rate decisions from major central banks (Fed, BoJ, BoE, ECB, and BoC). Most institutions are expected to keep policy unchanged, although surprises cannot be ruled out. In this context, investors should closely monitor USDJPY, gold, and the US500 index.
USDJPY
As early as next Tuesday, we will get interest rate decisions from both the Bank of Japan and the Federal Reserve. While not long ago markets were pricing in a possible rate hike in Japan, the country is currently facing significant pressure from rising energy prices, which are weighing on economic conditions. As a result, markets now expect rates to remain unchanged, similarly to the Fed decision scheduled for Wednesday, April 29.
It is also worth noting that this will most likely be Jerome Powell’s final meeting as Chair of the Federal Reserve, although there is still a possibility that his potential successor, Kevin Warsh, may not be confirmed by Congress before May 15. USDJPY remains elevated, with the 160 level continuing to act as a strong resistance zone.
Source: xStation5
GOLD
The gold market is largely overlooking the broader energy backdrop. This is partly because oil prices, while elevated, are still hovering around $100 per barrel, and a comprehensive agreement between the U.S. and Iran remains distant. At this stage, gold is reacting primarily to expectations around inflation and interest rates. Moderately rising inflation tends to support gold, but a sharp and sustained spike—similar to that seen in the late 1970s and early 1980s—could force a significant repricing of U.S. rate expectations.
Powell’s remarks following the Fed decision will be key, particularly in terms of how the central bank assesses inflation risks. If geopolitical tensions ease and inflation proves transitory, investors may refocus on structural drivers such as high global debt levels and the ongoing diversification of reserves away from the U.S. dollar toward gold.
Source: xStation5
US500
The S&P 500 index and its futures have reached new all-time highs, suggesting that investors are largely dismissing geopolitical risks and focusing instead on expectations of improving economic conditions. So far, earnings results have been strong. Tesla reported both revenue and profit growth, while also pointing to robust long-term prospects in AI and robotics. This week’s results from Meta, Microsoft, and Alphabet will be crucial. These companies are likely to determine whether the AI-driven narrative can continue to push major U.S. indices to even higher levels. All three are scheduled to report after the close of Wednesday’s trading session.
Source: xStation5
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