Morning Wrap: A Flurry of Decisions from the Fed and BoC, Plus Q1 Mag7 Earnings ⚡ (29.04.2026)

GEOPOLITICS AND THE MIDDLE EAST CONFLICT

• The Wall Street Journal reported that President Trump has instructed his advisors to prepare for an extended, indefinite blockade of Iranian ports. The decision was made following a Monday Situation Room meeting – Trump assessed that resuming the bombing campaign or disengaging from the conflict both carry greater risk than maintaining economic pressure. The Strait of Hormuz, through which approximately 20% of global oil and LNG supplies flow, remains closed.

• Diplomacy remains deadlocked. Two days ago, Iran declared it would not discuss its nuclear programme under current conditions. Tehran is demanding reparations, sanctions relief and some form of control over the Strait of Hormuz, while Washington insists on the dismantlement of Iran's nuclear programme. A senior US official stated that the blockade is "visibly biting" – Iran is struggling to store its unsold oil.

ECONOMIC OUTLOOK

• The US earnings season remains strong – over 80% of companies have beaten expectations, with Q1 earnings growth at around 16%. However, the market needs fresh catalysts to push higher. Any signals of rising costs could trigger a negative reaction, particularly for megacaps whose weight in the indices is enormous. Today brings a culmination of Mag7 earnings reports.

• Central banks offer no hope of dovish pivots. Neither the ECB nor the Bank of England has room to ease given persistent inflation driven by the energy crisis. The Fed is also not planning any changes – inflation is picking up again. This evening brings the FOMC decision (rates expected to hold at 3.50–3.75%) and the Bank of Canada decision (expected to hold at 2.25%).

• NIESR has cut its UK growth forecast, warning that the Iran war will keep inflation above target until 2028. Canada has also trimmed its growth forecasts, posting a smaller-than-expected deficit in its spring statement.

OIL AND COMMODITIES

• Oil continues its multi-day rally. WTI's breach of the $100 level could attract additional momentum from algorithmic and trend-following strategies.

• API data confirms physical supply tightening – US crude inventories fell by 1.79 million barrels (the second consecutive weekly decline), gasoline by 8.47 million barrels, and distillates by 2.60 million barrels. This is evidence that the Hormuz closure is translating into real physical shortages, not just paper market volatility.

• China has doubled its May fuel export quotas to 500,000 metric tons, but volumes remain a fraction of pre-war levels. Beijing is treating fuel exports as a strategic tool, centrally designating volumes and destination countries. For smaller Asian economies, the relief is minimal – diesel and jet fuel markets in the region remain tight.

• Natural gas (NATGAS) was one of the few commodities in the red (-0.30%). Gold gained marginally (+0.10%), while silver rose more strongly (+0.90%).

ASIAN SESSION

• Japanese markets were closed for Showa Day, significantly reducing regional liquidity and eliminating cash US Treasury trading during the Asian session.

• Asian indices posted moderate gains – China's CHN.cash rose 1.05%, Japan's JP225 (futures) +0.73%. US index futures in pre-market trading: US100 +0.35%, US500 +0.17%, reflecting earnings optimism but a lack of fresh upside catalysts.

CURRENCIES

• The US dollar strengthened during the Asian session, supported by reports of the extended Iran blockade. USDPLN rose to 3.6296–3.6309, EURPLN to 4.2476–4.2493. The dollar index (USDIDX) was virtually unchanged (+0.01%) at 98.55.

• The Australian and New Zealand dollars were the weakest currencies of the day (NZD -0.4%, AUD -0.3%). The AUD weakened despite hawkish inflation data – Q1 CPI came in at 4.1% y/y (in line with expectations), but the core trimmed mean at 3.5% y/y proved slightly softer on a quarterly basis (0.8% vs. 0.9% expected). Markets now price a ~75% probability of an RBA hike on May 5 (vs. 85% before the data). Australia's Treasurer Chalmers warned that inflation will peak at higher levels than previously anticipated.

• The Hungarian forint (-0.3%), South African rand (-0.3%) and Swedish krona (-0.2%) also weakened. The Japanese yen was relatively stable – commentators emphasise that "the Bank of Japan cannot save the yen." USDJPY at 159.67–159.68.

• The PBOC set the USD/CNY central rate at 6.8608 (vs. market estimate of 6.8347), signalling continued management of yuan weakness. Chinese firms are locking in exchange rates ahead of a record $70 billion dividend season.

• EURUSD edged lower (-0.07%) to 1.17028–1.17037, GBPUSD virtually unchanged (-0.02%) at 1.35086–1.35096.

EUROPEAN CORPORATE EARNINGS

• UBS delivered a blockbuster Q1 result – net income of $3.04 billion (+80% y/y), well above the $2.42 billion consensus. Net new assets in wealth management reached $37.4 billion (vs. $24.9 billion expected). The bank announced a $3 billion share buyback for Q2 and expressed confidence in meeting its 2026 targets, noting that markets remain resilient in anticipation of a diplomatic resolution in the Middle East.

• Santander also beat expectations – net income of €5.46 billion (vs. consensus €4.97 billion), net interest income of €11.02 billion. Deutsche Bank reported revenue of €8.67 billion (vs. €8.55 billion expected), net income of €1.91 billion (+7.7% y/y).

• Mercedes-Benz reported sales of €31.60 billion (slightly below est. €31.8 billion), but adjusted EBIT of €1.77 billion significantly above expectations (€1.6 billion). The operating margin in the passenger cars segment came in at 4.1% vs. 3.17% expected. The company confirmed its 2026 guidance.

KEY EARNINGS TODAY – THE ABSOLUTE PEAK OF THE SEASON

• Today is one of the most important days of the entire earnings season. Before the US market opens, AbbVie, Automatic Data Processing (ADP) and TotalEnergies will publish their reports. However, the real excitement begins after the US close.

• Four "Magnificent Seven" companies report after the bell: Microsoft, Meta Platforms (Facebook), Amazon and Alphabet (Google). These companies carry enormous weight in the S&P 500 and Nasdaq indices – their results could determine the market's direction for days to come. Investors expect not just beats on estimates, but real evidence of AI monetisation, cloud segment growth and sustained profitability. Any disappointment could drag the broader indices lower.

• Beyond the tech megacaps, QUALCOMM, Ford Motor and Carvana also report after the close. QUALCOMM will provide insight into the semiconductor market and mobile chip demand, while Ford will shed light on the impact of rising energy and raw material costs on the automotive sector.

• In Europe, AstraZeneca, adidas and TotalEnergies have already reported before the open, while results from UBS, Deutsche Bank, Santander and Mercedes-Benz (described above) are setting the tone for the morning session. Tomorrow brings another wave of key reports – including Apple, Mastercard, Eli Lilly, Caterpillar and Volkswagen.

CRYPTOCURRENCIES

• Bitcoin gained 1.13%, trading around 77,109–77,311 USD. The cryptocurrency is benefiting from the general risk appetite driven by the earnings season, although it remains sensitive to any deterioration in geopolitical sentiment.

WHAT TO EXPECT FROM TODAY'S SESSION

• The key events of the day are the Fed interest rate decision (20:00 CET) and the Bank of Canada decision (15:45 CET) – in both cases rates are expected to remain unchanged, but the press conferences (Powell at 20:30, BoC at 16:30) could provide guidance on the future policy path amid elevated energy-driven inflation.

• US durable goods orders, building permits and housing starts data (14:30 CET) will provide a picture of the real US economy's health. Official EIA oil inventory data will either confirm or contradict yesterday's API report.

• In Europe, the focus will be on inflation data – German CPI and HICP, which will show how strongly the energy crisis is feeding through into eurozone consumer prices. The data could further limit the ECB's room for any dovish signals.

• This evening marks the absolute culmination of the earnings season – four megacaps report after the bell: Microsoft, Meta Platforms, Alphabet and Amazon. These companies carry gigantic weight in the S&P 500 and Nasdaq, and their results could determine the market's direction for weeks to come. Investors expect not just beats on estimates, but real evidence of AI monetisation, cloud growth and sustained profitability amid rising costs. Markets have been buying every dip in hopes of further geopolitical concessions, but materially nothing has changed – the absence of fresh catalysts with oil above $100 and the Strait of Hormuz shut represents a real threat to the continuation of the rally.