Ceasefire, blockade, and AI heat drive epic reversal of equities and commodities

Inflation surges on energy shock, core remains steady
Inflation accelerated in March, with the Consumer Price Index (CPI) rising 3.3% year-over-year, up from 2.4% in February. Monthly gains came in at 0.3%. The surge was primarily driven by energy costs: gasoline soared 21.2%, while fuel oil prices jumped 30.7% month-over-month, accounting for nearly three-quarters of the monthly increase following the closure of the Strait of Hormuz. Core inflation remained steady, increasing 2.6% year-over-year and 0.2% month-over-month, compared to 2.5% and 0.2% in February. Key drivers included airline fares (+2.7%) and apparel (+1%). Shelter costs rose 0.3% monthly and 3% annually, indicating that service inflation remains relatively tame outside of tariff impacts and war-related pressures. Food prices proved immune to higher energy costs for the month, rising 2.7% annually, while the “food at home” index actually fell by 0.2%.

Nonfarm payrolls rebound, unemployment edges down
Nonfarm payrolls rose by a seasonally adjusted 178,000 in March, a sharp reversal from the 133,000 decline seen in February. This recovery was largely driven by the resolution of strikes and the dissipation of severe winter weather that had suppressed employment in the prior month. The return to work in education and healthcare added 91,000 jobs, serving as the core driver of March’s gains. Additionally, offline service sectors saw a bounce-back, with construction adding 26,000 jobs and leisure and hospitality adding 44,000, reflecting a rebound in previously suppressed demand. The unemployment rate edged lower to 4.3%, though this decline was supported by a shrinking labor force participation rate rather than being solely attributable to strong employment demand.
Oil Market: roller-coaster as ceasefire hopes collide with supply shock fears
After hitting post-conflict highs in late March (Brent: $112.57/bbl), oil prices corrected sharply in mid-April to $90.38. This dip followed a US-Iran ceasefire agreement effective through April 21 and Iran’s temporary concession to ease the blockade on the Strait. However, tensions reignited when the US Navy blocked Iranian ship passage, enraging Iran to re-tighten its grip on the Strait. Consequently, Brent crude rebounded to over $106.

Gold price rally, exhibiting negative correlation with oil and US dollar
Gold traded higher from late March, rising from $4,650 to a ceiling near $4,800, driven by safe-haven demand amid ongoing Middle East conflict, rising inflationary fears, and US-Iran geopolitical tensions. Gold’s movements have been strongly dictated by oil prices and the US dollar, responding to shifts in inflation expectations and the outlook for rate cuts. When oil fell in early to mid-April, easing inflation pressures, gold edged up as hopes for a rate cut resumption were rekindled. Yet when geopolitical risks spike and oil prices shoot higher again, gold tends to bend under pressure: the “higher for longer” rate narrative returns, and the US dollar strengthens on its safe-haven appeal, both headwinds for the non-yielding metal.

US stock market hits all-time highs driven by ceasefire and AI frenzy
Following the temporary two-week ceasefire between the US and Iran, the S&P 500 surged past 7,000 for the first time, gaining more than 10% in just 11 trading days. After the 20-day truce expired on April 21, the decision to extend the ceasefire—pending Iran’s submission of a proposal to end the war—boosted market confidence that a lasting truce is reachable. With the de-escalation of the conflict, the market refocused on the AI investment mania, catalyzed by a boom in AI agents which are capable of performing multi-step tasks. The investment focus is shifting from advanced chips (GPUs) to the broader physical ecosystem—general-purpose computing, memory, power, and cooling—as AI transitions from an era of “training” models to one of “inference” and execution.