Global equity markets continue to demonstrate remarkable resilience despite intensifying macroeconomic uncertainties, with stock futures gaining as investors seized on signs that diplomatic efforts to end the U.S.-Iran war were progressing. According to market expert Seth R Freeman from GlassRatner Advisory, speaking to ET Now, the current rally remains narrowly driven and heavily influenced by the ongoing artificial intelligence theme. When asked about rationalizing the equity market move amid global uncertainty, Freeman emphasized that it is just incredible but we have to remember it is still being led by a very small number of stocks. The concentration of gains in a few large-cap technology names, particularly those tied to AI, has raised questions about the sustainability of the broader rally, but AI remains the dominant force in markets and continues to attract strong investor inflows despite mixed earnings signals from the current season.
Despite mixed earnings signals from the current season, Freeman believes the AI-led enthusiasm still has room to run. According to his analysis, there is still a lot of enthusiasm and there is a lot of money chasing AI and AI related companies. He noted that while Nvidia was up but not as much as expected and there are concerns about technology hardware more broadly, the AI narrative remains the key driver. Freeman explained that markets are forward-looking and continue to price in long-term AI growth, even if short-term earnings surprises are mixed. With most major 'Magnificent Seven' earnings now out, concerns have emerged over whether the AI-led rally may lose momentum, but Freeman maintains that stock prices are supposed to reflect future expectations. The expert noted that AI-linked stocks continue to attract strong inflows and expects the AI enthusiasm to be sustainable for some time.
Oil prices climbed as U.S.-Iran tensions escalated, with physical supplies of oil through the Strait of Hormuz at 95% below regular levels. The geopolitical uncertainty has created supply chain disruptions that could impact global energy markets. According to market reports, oil prices turned lower on hopes for an Iran deal, with crude supplies declining as travel season starts Memorial Day weekend. This development adds another layer of complexity to the current market environment, as rising fuel prices and broader commodity pressures could complicate the Federal Reserve's decision-making path. Freeman warned that this really becomes a deeply political problem very quickly as fuel costs continue to rise, particularly as food prices are already quite a bit higher in the US and now we are seeing even in areas where historically gas prices have been low are now over $4.
Attention is shifting to rising US bond yields and their implications for future monetary policy, with Kevin Warsh becoming Fed Chair today, his first day could be rocky for stocks. Market volatility has intensified with US Treasury yields declining from multi-year highs on Wednesday, as President Donald Trump's comments that the US is in the "final stages" of negotiations with Iran raised expectations for a near-term reopening of the Strait of Hormuz. According to UBS CIO House View, the 10-year Treasury yield fell 10 basis points to 4.57%, and the 30-year yield slid 6 basis points to 5.12%. Freeman noted that political and economic pressure on policymakers is likely to intensify, with policymakers under pressure not to hike rates. The expert explained that the rise in rates or yields reflects exactly what I was saying, just the anticipated inflation coming and that we have not really seen it yet. With equities, bonds, gold, and even crypto reacting to shifting expectations, investors appear to be navigating a market environment increasingly driven by forward inflation bets and concentrated tech optimism.
