Three independent data streams are telling the same story from different angles. TSMC's Q1 results confirmed that AI infrastructure capex is being pulled forward regardless of geopolitical conditions: gross margin reached 66.2% against a 64.5% estimate, Q2 revenue guidance of $39 to $40.2bn exceeded the $38.1bn consensus, and full-year capex was revised to the upper end of the prior $52 to $56bn range. North America now accounts for 76% of TSMC net revenue. The semiconductor supply chain's decoupling from China is not a scenario. It is the current operating reality.
The Federal Reserve is paralysed in exactly the way that is most dangerous for markets. Hammack sees rates in a good place and wants to hold. Goolsbee is warning of double danger from the conflict and tariffs simultaneously. Musalem expects core inflation near 3% through year-end, driven by the oil shock feeding into input costs. The Fed's Beige Book confirmed the paralysis: eight of twelve districts grew at a slight to modest pace, but the conflict was the dominant source of uncertainty across hiring, pricing, and investment decisions. The Fed cannot cut into oil-driven inflation. It cannot hold if growth deteriorates. It is watching the same ceasefire newsflow as everyone else.
PPG Industries announced price increases of up to 20% across paints, coatings, and specialty products, citing petrochemical, energy, and logistics cost pressure. PPG is a real-time leading indicator for industrial input cost transmission across manufacturing, construction, and infrastructure supply chains. If those increases hold, core goods inflation does not fall through year-end regardless of ceasefire outcomes. This is the variable the market is not pricing.
Nikkei 225 cleared 59,000 to a fresh record high, led by technology and underpinned by peace optimism. Hang Seng and Shanghai Composite both gained despite a mixed Chinese data release. Q1 GDP year-on-year beat forecasts and printed at the high end of China's official 2026 target, but the absolute Q1 figure missed expectations. Industrial production for March came in above estimates. Retail sales disappointed. The domestic consumption gap in China remains the structurally weak link in the global reflation thesis, and it widened with this print.
Risk-off dominated across European equities. Euro Stoxx 50 fell 0.73%, FTSE 100 0.47%, CAC 40 0.64%. Information technology was the weakest sector at -1.98%, energy at -0.99%. The war's direct impact on corporate results was visible across multiple earnings reports: Pernod Ricard reported Americas revenue down 8% and the US specifically down 12% in Q3. easyJet absorbed approximately £25m of additional fuel costs in the first half from the conflict. TotalEnergies' European refining margin collapsed from $29.4 per tonne last year to $11.4 per tonne currently. Schroders reported real-time client rotation toward risk-off positioning as AUM fell to £599.4bn from £605.7bn quarter-on-quarter.
S&P 500 reached 7,023 (+0.80%) and Nasdaq 100 26,205 (+1.40%), both at fresh all-time highs. Technology gained 2.08%, leading all sectors. Materials fell 1.30% and Industrials 1.24%, reflecting the real-economy transmission of conflict-related cost pressure. Two data releases stood out. NY Empire State Manufacturing printed 11.00 against a -2.0 expectation, a significant beat that pushes back on the stagflation narrative in manufacturing. Import prices rose 0.8% against a 2.0% expectation, cooler than feared. Neither reading moved price action materially: the market was trading geopolitical newsflow, not economic data.
The divergence between equity market positioning and the unresolved Hormuz situation creates a specific asymmetry. If the ceasefire extends on April 22, the risk-on move already priced is confirmed but the upside is limited: it is largely in the price. If the ceasefire breaks, the reversal in energy, gold, and defensive assets will be sharp from a starting point where those hedges have been substantially unwound. The risk-reward for maintaining energy and commodity exposure as a structural hedge is more attractive than adding to the equity extension at all-time highs.
In rates, ECB's Nagel explicitly named the Strait of Hormuz as essential to the April decision and noted that two weeks of new information could change everything. Kazaks left room for two hikes starting June. European rate markets need to price a wider range of outcomes than they currently reflect. Bund yields will remain sensitive to ceasefire headlines in a way that US Treasuries, already pricing Fed paralysis across the full voting committee, are less so. The SK Hynix $10bn ADR targeting June-July is the next structural event for the semiconductor sector and a direct read-through for AI infrastructure re-rating in Western markets.