Global equity funds draw inflows for the 7th week on earnings optimism.

Global stocks ⁠roared throughout ⁠most of the week, with many benchmark indices reaching record highs before pulling back slightly ⁠on Thursday. While the stop-and-start prospects for a U.S.-Iran peace deal created some volatility, the main focus for markets remained the ongoing AI chip boom, which shows no signs of slowing.

Things got off to a dramatic start ​early in the week as U.S. President Donald Trump’s “Project Freedom” plan briefly came into effect with the stated aim of shepherding stranded ships through the Strait of Hormuz. That elicited a strong response from Iran, which struck ships in the Gulf and set a UAE oil port ablaze, driving up oil prices by some 6% through Tuesday.

But crude prices started ‌tumbling on Wednesday following reports of a fresh U.S. proposal to end the war, along ‌with bullish comments from President Trump on the likelihood of a swift conclusion.

Both Brent and WTI crude dropped below $100 per barrel for the first time since the second half of April, though Brent only stayed there briefly, rising back over that threshold as renewed fighting broke out between U.S. and Iranian forces in the Gulf on Thursday.

Even if the new ⁠U.S. peace proposal eventually leads to a ⁠permanent cessation of hostilities and the reopening of the strait - a big “if” given that the current plan reportedly leaves most contentious issues unresolved - that doesn’t mean the energy shock ​will be resolved anytime soon considering the level of disruption, particularly in Asia.

Back stateside, U.S. energy exports are continuing to soar - which has helped global markets during the crisis - but this is leading to dwindling domestic fuel stocks, which could be bad news for U.S. consumers already seeing rising prices at the pump.

Despite all the back and forth in the Middle East this week, investors appeared far more interested in the AI chip boom, including upgrades to AI spending projections. Morgan Stanley now sees the capex growth of the top five hyperscalers topping $800 billion this year and $1.1 trillion next year, while Goldman Sachs expects the cumulative spend by 2031 to be as high as $7.6 trillion.

That has helped push global chipmakers into the stratosphere. Shares of U.S. ​giant AMD on Wednesday leapt 15% to an all-time high after it forecast revenue above expectations on strong AI chip demand. Just as impressive were the moves in Asia. South Korea’s SK Hynix started the week with a 13% jump on Monday.

This tech rally helped guide indexes to fresh highs through the week, ⁠especially ⁠in Asia. South Korea’s KOSPI passed the 7,000 mark for the first time ⁠on Wednesday as Samsung’s market cap hit $1 trillion. Even as stocks slipped ​toward the end of the week on the fresh U.S.-Iran military exchanges, Asian markets remained on course for strong weekly gains.

The euphoria is sure to reignite the debate about whether we’re heading into an AI-fuelled hyper-bull market or seeing a dangerous overvaluation that ​will lead to an inevitable correction. And what about the surprising resilience of emerging market stocks?

Elsewhere, government ⁠bonds came under pressure this week, with the U.S. long bond yield touching 5% before pulling back - drawing buyers once again despite investor appetite being tested by a whole cocktail of concerns. 

Gilt yields were also elevated throughout the week. Where they go from here may be influenced by how Thursday’s UK local elections affect Prime Minister Keir Starmer’s position as leader of the governing Labour Party. Early results showed widely expected Labour losses in many councils materializing, but Starmer insisted on Friday he would not resign. Sterling pushed higher and gilt yields fell back.