MORNING BID AMERICAS-Chip push, crude pull

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.

Everything Mike Dolan and the ROI team are excited to read, watch and listen to over the weekend.

From the Editor Hello Morning Bid readers! 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. Whoever ends up leading the Labour Party - Starmer or otherwise - there may be one lesson from the Trump playbook worth taking on board to avoid jolting bond markets. In currencies, the yen had another volatile week, spiking repeatedly against the dollar and briefly touching a high ⁠of 155 per dollar on Wednesday. These moves could be the result of government intervention, with central bank data indicating that Japan may have spent as much as $32 billion to prop up the currency this week - on top of the $35 billion thought to have been spent last week. Meanwhile, the dollar remained subdued, having given up almost all its post-Iran war gains. Could it drop far more if the U.S. and Iran strike a peace deal? There’s ​a lot to suggest that could be the case. Still, losses may be bounded by the broader AI boom. China's yuan, meantime, strengthened to three-year highs ahead of next week's Beijing summit between President Trump and Chinese President Xi Jinping. On the macro front, Friday will bring the latest U.S. employment report, which is expected to show a gain of ⁠62,000 jobs for April, down from March’s 178,000. But the unemployment rate is expected to remain unchanged at 4.3% and other prints through the week - JOLTS data, ADP’s private sector payrolls and weekly jobless claims - pointed to a stable labor market. For more data-driven insights on markets and commodities, check out Reuters Open Interest. You can learn: * When does soaring solar power capacity become too much of a good thing?

* Why might Trump come to regret breaking OPEC? * Why might the Iran war encourage some ⁠Asian ​countries to switch from gas to coal?

* Could 4% inflation be the new 2%? * What exactly is going on in the copper market amid the confusion of the Iran crisis? I’d love to hear from you, so please reach out to me at mike.dolan@thomsonreuters.com.

This weekend, we're reading... RON BOUSSO, ROI Energy Columnist: This Reuters article looks at the huge challenges Saudi Energy Minister Prince Abdulaziz bin Salman faces as he seeks to lead his country and OPEC out of the greatest oil supply shock in history, compounded by the UAE's abrupt departure from the producer group.

MIKE DOLAN, ROI Finance & Markets Columnist: Brad Setser at the Council on Foreign Relations argues in this article that China may never have truly run down the dollar’s share of its reserves, as so many have assumed over ⁠the past decade. GAVIN MAGUIRE, ROI Global Energy Transition Columnist: The Resilient Investor examines how much of the new AI infrastructure is being built in areas at high risk from drought, fire and flooding.

CLYDE RUSSELL, ROI Asia Commodities and Energy Columnist: A report from Bain & Co examines the decline in oil exploration - a long-term problem that likely outweighs the impact of the closure of ⁠the Strait of Hormuz. We're listening to...

JAMIE MCGEEVER, ROI Markets Columnist: In this podcast, "Inside the Fed With Kurt ⁠Lewis: From Crisis Playbooks to What Comes Next," the Piper Sandler central bank policy chief and former special advisor to Fed Chair Jerome Powell discusses how Fed policymakers assess risk, data, communications and decision-making - and what may change under incoming chair Kevin Warsh. And we're watching...

ANNA SZYMANSKI, ROI Editor-in-Charge: This episode of The Big View features Brendan Greeley, author of The Almighty Dollar, who argues that the U.S. inherited rather than invented its currency. He tells Reuters Breakingviews Global Editor Peter Thal Larsen that the greenback's global appeal is apt to survive. Want to receive the Morning Bid in your inbox every ‌weekday morning? Sign up for the newsletter here. You can find ROI ‌on the Reuters website, and you can follow us on LinkedIn and X. Opinions expressed are those of the authors. They do not reflect the views of Reuters News, which, under the Trust Principles, ​is committed to integrity, independence, and freedom from bias. (By Mike Dolan; Editing by Andrew Heavens)