Cautious markets, rising oil and the next phase of AI

Summary

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Podcast Summary: Moving Markets

Episode: Cautious markets, rising oil and the next phase of AI
Date: April 28, 2026
Host: Roman Canciani (Julius Baer)
Guests: Lucia Ciaculovic (Product and Investment Content), Carsten Menke (Head of Next Generation)

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Episode Overview

This episode provides a concise, insightful recap of the most recent market developments, focusing on investor caution amid geopolitical and central bank uncertainty, surging oil prices, notable corporate news, and the continued expansion of artificial intelligence (AI) and related capital expenditure (Capex). Special attention is given to the shifting AI landscape, hardware supply constraints, and expectations for major tech earnings. The discussion is rich in market context and strategic analysis, highlighting both immediate market moves and longer-term investment themes.

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Global Market Update (00:47–06:49)

Europe: A Cautious Start to the Week

• Investor Mood: "It was a bit of a cautious start overall. Even without big data releases, geopolitics and central banks stayed front and center." (Lucia, 00:58)
• Market Performance:
  • The Stoxx 600 reversed early gains, down for the fifth time in six sessions, reaching lowest levels since the ceasefire announcement.
  • UK’s FTSE 100 outperformed broader Europe.
• Sector Trends:
  • Wind energy stocks were a bright spot:
    • Nordex (Germany) up nearly 6% on strong Q1 results.
    • Orsted (Denmark) up ~4%, Vestas posted modest gains.
  • "It was a reminder that earnings do still matter." (Lucia, 01:50)

US: Steady but Hesitant

• Indices:
  • S&P 500 and NASDAQ touched new intraday record highs; gains marginal (S&P 500 up 0.1%).
  • Dow edged slightly lower.
• Key Movers:
  • Oil prices capped enthusiasm.
  • Semiconductor ETF slipped after an 18-session winning streak.
  • The "Max 7" (top US tech stocks) outperformed ahead of results from Alphabet, Microsoft, Amazon, Meta.
  • Nvidia hit record market capitalization.
• Memorable Moment:
  • "Rising oil prices kept enthusiasm there... Nvidia led the Max 7 gains, reaching a new record market capitalization." (Lucia, 02:18–02:54)

Tech Headlines: AI and Hardware

• OpenAI & Microsoft:
  • "OpenAI announced that Microsoft will no longer have exclusive access to its AI models. That opens the door for OpenAI to work with other cloud providers. Investors viewed this as Microsoft losing a potential edge." (Lucia, 03:14)
• Qualcomm:
  • Stock up after reports of partnership with OpenAI on AI chips for smartphones, supporting OpenAI’s hardware ambitions.
  • AI "spreading beyond data centers into consumer devices." (Lucia, 03:30)

Energy: M&A and Oil Prices

• Shell’s Major Acquisition:
  • "Shell agreed to buy Canada’s Arc Resources in a deal valued at around US$16 billion... to boost long term oil and gas production at a time when energy security remains a major concern." (Lucia, 04:04)
• Commodities:
  • Brent jumped nearly 3% (trading above $110), US crude near $100.
  • Elevated oil prices rekindle inflation concerns, put pressure on gold.
  • "The higher oil prices fed inflation concerns once again, and this weighed on gold." (Lucia, 05:13)

Bonds and Interest Rates

• US Treasury:
  • Yields edged higher ahead of key Fed meeting and “lukewarm” 2/5-year note auctions.
• Eurozone Bonds:
  • Remained stable; traders focus on upcoming ECB meeting.

Asia-Pacific Overnight

• Central Banks:
  • Bank of Japan left rates unchanged (0.75%), but a close vote raises June hike expectations and boosts the yen.
• Markets:
  • Nikkei pulled back >1% after record highs; Topix up 0.7%.
  • HK, China, Australia declined; South Korea KOSPI notched a record high.
• Geopolitical Note:
  • Reports of possible Strait of Hormuz reopening if US lifts its blockade (uncertainty remains).
  • "Asia Pacific markets traded mixed overnight, with geopolitics still dominating sentiment." (Lucia, 05:40)

Day Ahead & Macro Calendar

• Focus: US consumer confidence (expected modest decline), ongoing earnings season.
• Futures: US stock futures trending lower at last check.
• Closing Remark: "Let’s see what the day brings." (Lucia, 06:49)

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Deep Dive: AI, Hyperscalers & The Capex Boom (06:55–10:27)

The AI Surge and Hardware Constraints

• Market Buzz:
  • "We've seen quite a few high profile launches of new models during the past few weeks... Anthropic reported rapidly rising adoption... annual revenue run rate of more than US$30 billion—30 times higher than a year ago." (Carsten, 07:07)
• Supply Strain:
  • "The flip side of this is growing capacity constraints...more data centers will need to be built." (Carsten, 07:33)
• Market Reaction:
  • Financial markets "pricing hardware scarcity no matter if leading edge or trailing edge," with demand for compute, memory, storage, power management, and cooling "insatiable." (Carsten, 07:51)
  • Optical transceivers highlighted as essential new trend in high-performance data clusters.

Investing Implications: Capex & Power Shifts

• Pricing Power:
  • "Pricing power firmly lies in the hands of equipment providers, including those that supply the data centers with power generators to make them independent from the power grid." (Carsten, 08:27)
• Capex Forecast:
  • "Current consensus of capital expenditures is around US$600 billion for 2026 and 800 billion for 2027, up from 410 billion last year—another doubling of spending." (Carsten, 08:49–09:15)
  • Cost inflation is part of this surge: "Chips, memory and all the other components have become much more expensive during the past few months." (Carsten, 09:15)
• New Data Centers:
  • "Many more data centers will be built during the next few years." (Carsten, 09:20)

Market Watch: Hyperscaler Earnings Approaching

• "On Wednesday we'll hear from Alphabet, Amazon, Meta, and Microsoft. So this is going to be quite an exciting day for investors. Indeed." (Carsten, 09:39)

AI/Cloud Index & Outlook

• Performance:
  • "From its lows in late March, it is up almost 30%, with hardware companies leading and software companies lagging." (Carsten, 09:55)
• Outlook:
  • Despite potential volatility from earnings, "we remain constructive on the cloud computing and AI theme. The expected earnings trend remains very robust, keeping valuations in check." (Carsten, 10:10)

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Notable Quotes

• "It was a bit of a cautious start overall. Even without big data releases, geopolitics and central banks stayed front and center." — Lucia Ciaculovic (00:58)
• "OpenAI announced that Microsoft will no longer have exclusive access to its AI models. That opens the door for OpenAI to work with other cloud providers." — Lucia Ciaculovic (03:14)
• "We've seen quite a few high profile launches of new models during the past few weeks... Anthropic reported rapidly rising adoption of its clothed models, resulting in an annual revenue run rate of more than US$30 billion—30 times higher than a year ago." — Carsten Menke (07:07)
• "The demand for IT equipment seems really insatiable." — Carsten Menke (07:53)
• "Pricing power firmly lies in the hands of the equipment providers." — Carsten Menke (08:27)
• "Current consensus of capital expenditures is around US$600 billion for 2026 and $800 billion for 2027, which is up around from US$410 billion last year." — Carsten Menke (08:49)
• "From its lows in late March, [the cloud/AI index] is up almost 30%, with hardware companies leading and software companies lagging." — Carsten Menke (09:55)

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Key Timestamps

• 00:47 – Europe’s cautious open and wind energy gains
• 02:18 – US indices reach record highs; tech sector focus
• 03:14 – OpenAI/Microsoft partnership changes; hardware implications
• 04:04 – Shell’s acquisition of Arc Resources
• 05:01 – Oil’s surge and inflation spillover
• 05:40 – Asia-Pacific markets and geopolitical updates
• 06:29 – Day-ahead preview and US futures note
• 07:07 – Carsten Menke on the AI model boom and Capex
• 08:27 – Importance of hardware suppliers and Capex projections
• 09:39 – Upcoming earnings from major hyperscalers
• 09:55 – Market performance of cloud/AI index and outlook

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Takeaways

• Market caution prevails amid geopolitics and central bank uncertainty.
• Energy sector dominated headlines with M&A deals and oil price surges.
• AI and hyperscaler capital spending is expanding rapidly, ushering in a new boom for hardware providers and data center builders.
• Hardware companies currently lead in market performance within the AI/Cloud wave, as supply/demand imbalances and pricing power shift expectations.
• Look ahead to key earnings from Alphabet, Amazon, Meta, and Microsoft for further direction on the AI and hyperscaler story.

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This engaging episode artfully combines immediate market news with the underlying structural shifts propelling AI and technology investment themes, offering actionable context for investors and interested listeners.

Transcript

[A]

Good morning and welcome to Julius Baer's Moving Markets podcast. I'm your host, Roman Canciani. Today is Tuesday 28th April, and we'll kick off the show with our usual market update covering the key developments from the past 24 hours. Joining me for that is Luzija Ciaculovic from our product and investment content team, who will bring us up to speed on the latest market moves later. I'm delighted to welcome Carson Menke, our head of Next Generation. With him and I will discuss his latest views on artificial intelligence, hyperscalers and the Capex boom in that field. But first, let's begin with that roundup of the latest developments in global financial markets. Good morning, Lucia.

[B]

Good morning, Roman.

[A]

Yesterday was fairly light on the macro data front, but markets still had plenty to digest. Before we zoom in on specifics, how did investors set the tone at the start of the week?

[B]

It was a bit of a cautious start overall. Even without big data releases, geopolitics and central banks stayed front and center. Investors were watching developments around US Iran talks very closely while also positioning ahead of a busy week for monetary policy. And that combination kept risk appetite in check, especially in Europe.

[A]

Well, let's start there then. European markets were first out of the gate. What stood out to you in Monday's session?

[B]

The Stoxx 600 reversed earlier gains and ended the day lower, falling for the fifth time in the last six sessions and hitting its lowest level since the two week ceasefire was announced. The UK's FTSE 100 lacked the broader market, but more generally performance across sectors was mixed. For example, wind energy stocks were a bright spot. German turbine maker Nordex jumped nearly 6% after posting strong first quarter results. This lifted PE too. Denmark's Orsted gained around 4% while Vestas added modestly as well. It was a reminder that earnings do still matter.

[A]

Indeed. Well across the Atlantic, US Markets seem to tell a slightly different story. How did Wall street start the week?

[B]

So the US market was steady, but a bit hesitant. The S&P 500 and the NASDAQ both touched fresh intraday record highs, but gains were slim. By the end of the session, The S&P5 was up just 0.1% while the Dow edged slightly lower. Rising oil prices kept enthusiasm there. Now chip makers remained in focus with a semiconductor ETF slipping for the first time after an 18 session winning streak. But the max 7 outperformed ahead of the results from Alphabet, Microsoft, Amazon and Meta tomorrow. And it was Nvidia that led the max 7 gains, reaching a new record market capitalization.

[A]

Well, let's stay within tech for a moment then. AI seems to be dominating company headlines again. One story stood out involving OpenAI and Microsoft. What changed there?

[B]

So OpenAI announced that Microsoft will no longer have exclusive access to its AI models. That opens the door for OpenAI to work with other cloud providers. Investors viewed this as Microsoft losing a potential edge. Now we also had news from Qualcomm, which gained after reports that it is partnering with OpenAI on AI chips for smartphones. This supports OpenAI's hardware ambitions and highlights how AI is spreading beyond data centers into consumer devices. So with all that's going on in the AI space, I'm really looking forward to hear Carsten speak on this topic later on the podcast.

[A]

Yes, so am I. Now let's stay with corporate news for a second. Outside of tech, the energy sector delivered a big headline as well. What's the story with Shell?

[B]

So Shell agreed to buy Canada's Arc Resources in a deal valued at around US$16 billion. The acquisition would add roughly 370,000 barrels of oil equivalent per day to Shell's output. The goal is to boost long term oil and gas production at a time when energy security remains a major concern.

[A]

Let's turn to fixed income how did bond markets react ahead of the key central bank meetings?

[B]

So U.S. treasury yields edged higher as investors braced themselves for the Fed meeting. A lukewarm reception to the 2 year and 5 year note auctions contributed to the upward pressure. Meanwhile, Eurozone bonds remained relatively stable with traders focused on the upcoming ECB meeting.

[A]

Commodities were anything but calm yesterday. We already mentioned higher oil price previously,

[B]

yes, so oil jumped as there is still a lot of uncertainty. Brent Crude rose nearly 3% yesterday and is again higher this morning with the June contract trading above 110 US dollars. US crude also advanced with prices just below $100. The higher oil prices fed inflation concerns once again, and this weighed on gold.

[A]

Now, overnight, the bank of Japan left rates unchanged at 0.75%, but a close vote increased expectations of a June hike and pushed the yen higher. What else happened across Asia Pacific overnight and how did markets perform?

[B]

So Asia Pacific markets traded mixed overnight, with geopolitics still dominating sentiment. Investors were looking at reports that Iran may be willing to reopen the Strait of Hormuz if the US Lifts its blockade, although it remains unclear whether Washington is prepared to consider that offer. Now, in terms of markets, Japan's Nikkei fell more than 1%, pulling back after hitting a record high on Monday. But the Topix was up around 0.7%. Shares in China, Hong Kong and Australia all moved lower, but South Korea was the standout, with the KOSPI climbing to a fresh record high.

[A]

Looking ahead to today, the macro calendar remains light. What should investors focus on?

[B]

So we'll get US consumer confidence data for April, with markets expecting a modest deterioration. Beyond that, earnings remain key. Now finally, Roman, as for US stock futures, they were trading lower when I last checked. So let's see what the day brings.

[A]

Many thanks, Lucia.

[B]

Thanks for having me, Roman.

[A]

And with that, over to you, Carsten and good morning.

[C]

Hello Roman. Good morning.

[A]

Good morning. Well, Carsten, as we have heard from Lucia, AI is front and center across financial markets again. Would you agree?

[C]

Absolutely. So we've seen quite a few high profile launches of new models during the past few weeks which have been hitting the headlines. Most notably of course, from Anthropic. The company reported rapidly rising adoption of its clothed models, resulting in an annual revenue run rate of more than US$30 billion. This is 30 times higher than a year ago. The flip side of this is growing capacity constraints, also reported by Anthropic, prompting it to sign new large scale spending commitments. So more data centers will need to be buil.

[A]

And I assume that's why hardware companies have rallied so much, right?

[C]

Yes, indeed. So it almost looks like financial markets are pricing hardware scarcity no matter if leading edge or trailing edge Compute memory storage. The demand for IT equipment seems really insatiable. And the newest trend is optical transceivers which are becoming essential to connect high performance data center clusters. But also demand for non IT equipment, and this is power management systems or cooling systems, remains very, very strong.

[A]

Is this growth at any cost?

[C]

Well, to a certain extent I would say yes. Or put differently, pricing power firmly lies in the hands of the equipment providers, including those that supply the data centers with power generators to make them independent from the power grid. All of this of course hinges on the hyperscaler's capital expenditures which drive the demand for data centers and the related equipment. The current consensus of capital expenditures is around US$600 billion for 2026 and $800 billion for 2027, which is up around from US$410 billion last year.

[A]

Well, that would be another doubling of spending over the next two years, right?

[C]

Indeed. And some of this increase is due to inflation. So chips, memory and all the other components have become much more expensive during the past few months. But yes, this also means that many more data centers will be built during the next few years.

[A]

And the hyperscales are set to report this week, aren't they?

[C]

Yes. On Wednesday we'll hear from Alphabet, Amazon, Met, and Microsoft. So this is going to be quite an exciting day for investors. Indeed.

[A]

Well, with AI back on center stage, how has our cloud computing and AI fared and how do you see the theme going forward?

[C]

Well, the index has done very well, so from its lows in late March, it is up almost 30%, with hardware companies leading and software companies lagging. And even though the hyperscaler's results could cause some volatility following this rapid run, we remain constructive on the cloud computing and AI theme. The expected earnings trend remains very robust, keeping valuations in check. That's all from me for today.

[A]

Thank you very much Carsten, for this comprehensive update.

[C]

You're welcome. Thanks.

[A]

Well, and that's all for today. My thanks to our speakers this morning and thank you all for tuning in. If you enjoyed today's episode and haven't yet subscribed, please do not forget to do so. And please consider leaving us a review on your preferred podcast platform as well. Do join us again tomorrow when Helen will be back speaking with more colleagues about what's moving markets. Until then, have a great day and goodbye for now.

[D]

The information and opinions expressed in this podcast constitute marketing material and are not the result of independent financial or investment research. Please refer to www.juliusbear.com legal podcasts for further other important legal.