April 16, 2026

The war in Iran and the rise in energy prices was supposed to be devastating for the world economy. Looking at the overnight session you would think the opposite was true. Equity markets ex-Australia all finished the Asian session higher led by 2%+ gains in the Nikkei and Kospi (Kospi now up 23% from its March 31 low and a stones throw from all time highs). The economic data was decent as well. Headline Australian employment was healthy with +52k full time job gains while China’s GDP data topped expectations at 5% YoY with industrial production data better than expected as well (+5.7% YoY). Of course, we may not have felt the full impact of higher oil prices yet. Admittedly, energy might drag on future growth but so far at least, the worst-case scenarios aren’t playing out are they? Sentiment also received a lift from TSMC earnings. Let’s see, a 35% rise in revenue, a 58% jump in profit and an upgraded outlook with the company noting that AI related chip demand remains exceptionally strong with customers still asking for more capacity. The company went further to soothe nerves when executives noted in the earnings call that they did not expect any near term impact on operations from recent energy and supply chain disruptions from the conflict in the Middle East. This helps reinforce the view that AI related capex remains intact despite higher energy and input costs. Keep buying; the AI party is still going strong. The good news continued into Europe where equity indices closed modestly higher. Like Asia, the economic data was better as well with UK GDP easily topping expectations. The data was for the month of February so clearly pre-Iran war which has tempered some enthusiasm around the print but nonetheless a beat is a beat. We are starting to slowly see some of the effects of higher energy prices creep into inflation, as headline Eurozone CPI (for March) came in a touch hotter than expected at 2.6% YoY. Core CPI remains relatively tame at 2.3% year-over-year, as expected. The S&P consolidated above 7K. The general narrative around Iran maintained an air of cautious optimism based on the belief that the two sides continue to work towards a lasting resolution. Those prospects were further enhanced by a 10-day ceasefire announcement between Israel and Lebanon. The U.S. Hormuz blockade remained in effect with more than 10 Iranian ships reportedly turned back after attempting to enter the Gulf of Oman. Overall, Strait ship traffic remained largely unchanged, still down some 90%+ from pre-war levels. Oil prices drifted higher along with the US dollar. Earnings reports continued to trickle in, JB Hunt and PepsiCo offered encouraging results, portending that the U.S. economy remains on solid footing. April Philly Fed data painted a similar picture, topping estimates with strong new orders, but pricing pressures remained stubbornly sticky. The U.S. 10-year yield held above 4.25%. 

* Nikkei +2.38%

* Shanghai +0.70%

* Hang Seng +1.72%

* DAX +0.36%

* FTSE +0.29%

* CAC -0.14%

* DJIA +0.24%

* S&P 500 +0.26%

* Nasdaq +0.36%

* Russell 2000 +0.22%

* BSD Global Tech Hedge Fund -0.04%