Next Week's Five Major Market Focus Areas

Investing.com - As a new trading week begins, the Iran conflict and its impact on oil prices remain the market’s core focus, but investors should also closely watch many other potential catalysts. In addition to Middle East hostilities, Nvidia CEO will deliver a highly anticipated speech at an event on Monday, and memory chip manufacturer Micron Technology’s latest earnings report will be released later this week. Furthermore, the Federal Reserve is expected to keep interest rates unchanged at the conclusion of its two-day policy meeting, as will the European Central Bank.

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1. Iran Conflict Continues to Escalate

On Monday, US stock index futures rose as the Iran conflict entered its third week. President Donald Trump called on the international community to help reopen the closed Strait of Hormuz.

This narrow waterway off southern Iran carries one-fifth of the world’s oil supply and has become a major focus of the global economy. By cutting off most tanker traffic through the strait, Tehran effectively deprives large economies, especially Asian countries, of critical energy sources.

As a result, oil and natural gas prices surged, threatening to reignite global inflation pressures and putting broader economic activity under strain.

Vital Knowledge analysts stated in a report: “From a market perspective, the core issue of the Iran conflict remains unchanged: the US and Israel hold the upper hand militarily, but the Iranian regime remains firmly in control. Tehran has successfully used the closure of the Strait of Hormuz to hold the global economy hostage.”

The surge in oil prices has become a particular headache for Trump, with signs that his joint efforts with Israel against Iran show little sign of weakening. Washington’s plans for actions that have expanded to affect much of the Middle East, including major oil-producing countries in the Persian Gulf, and the eventual exit strategy, have sparked various speculations.

Trump’s attacks on Iran seem to have already had a tangible impact domestically. Gas prices are rising, and analysts believe this trend could influence Trump’s Republican Party’s performance in the crucial midterm elections in November.

2. Nvidia’s Jensen Huang to Speak at Major Developer Event

Nvidia CEO Jensen Huang will once again be in the spotlight on Monday at the company’s annual developer conference, as investors eagerly await details on new products aimed at countering intensifying competition.

This year, as Huang takes the stage, Nvidia is racing to maintain its long-standing lead in the AI race and to fend off competitors in the rapidly growing AI-accelerated chip sector. Besides peers like AMD and Intel, Nvidia now also faces major tech companies like Alphabet’s Google, which are actively developing their own AI-optimized processors.

The emergence of “inference” in AI—where AI robots perform tasks on behalf of humans—poses another challenge for Nvidia. These models often run on chips different from Nvidia’s traditional products, and some customers like OpenAI and Facebook’s parent company Meta Platforms have indicated they may release their own versions of these AI processors.

In December last year, Nvidia acquired Groq, a startup specializing in low-cost, high-speed inference chips, for $17 billion. Last month, Huang said he would demonstrate how to integrate Groq’s technology into Nvidia’s CUDA platform.

The company also invested about $2 billion in laser manufacturers Lumentum and Coherent, which can use light beams to rapidly transmit information between chips. While these lasers could speed up connections between Nvidia’s chips, their production volume still lags behind that of Nvidia’s popular processors.

Bank of America analysts stated in a report: “We expect Nvidia to announce an expanded AI product portfolio.”

3. Micron Technology to Announce Earnings

This week, memory chip maker Micron Technology will release its latest earnings after the market closes on Wednesday, adding a new chapter to the AI narrative.

The US company reported optimistic second-quarter adjusted profit forecasts last December, driven by sustained supply constraints that pushed up memory chip prices.

As major tech firms race to expand their AI capabilities, demand for advanced data centers and high-end memory chips has increased.

This could be a boon for Micron, whose memory chips are key components in data center servers. Micron expects second-quarter adjusted earnings of $8.42 per share, with a variance of $0.20, nearly double the analyst estimates cited by Reuters.

CEO Sanjay Mehrotra also told investors last year that supply tightness in the memory chip market is expected to persist beyond 2026, adding that Micron can only meet about half to two-thirds of the needs of a few key customers.

4. Federal Reserve Decision Approaching

Beyond the tech sector, investors are preparing for a series of central bank rate decisions this week.

The highlight of the policy meetings will be the Federal Reserve, widely expected to keep borrowing costs unchanged at the conclusion of its two-day meeting on Wednesday.

Fed Chair Jerome Powell will step down in May, and he will likely use one of his final press conferences after a decision to provide the latest commentary on the US labor market and inflation.

Recent employment data has been significantly weaker than expected, highlighting potential instability in employment. Meanwhile, the Iran conflict could intensify inflation pressures. These trends threaten to pull the Fed in two directions: on one hand, cutting rates could support employment but risk fueling inflation; on the other, raising rates could curb price growth but harm the labor market.

Markets will closely watch how the Fed responds to these opposing forces in the coming months.

5. European Central Bank Decision Imminent

For Europe, the threat of disruption in the Strait of Hormuz has reignited inflation concerns, even though the region was considered to have largely contained price growth just a few months ago.

Europe is a major importer of energy products passing through the strait, which could pressure the recently stagnating economy.

As oil and natural gas prices surge, borrowing costs across the continent are also rising, partly reflecting concerns that the European Central Bank may be forced to consider raising interest rates again. The Stoxx 600 index remains under pressure, down more than 5% from pre-war highs.

The European Central Bank, along with other global central banks including the Federal Reserve, will announce their latest monetary policy decisions later this week. Despite ongoing conflict in the Middle East, economists surveyed by Reuters expect the ECB to keep rates unchanged through 2026.

Laurence Booth, Global Markets Head at CMC Markets, told Investing.com: “We expect no major changes to monetary policy this month, but will be closely watching how the Fed and other central banks assess inflation prospects after the surge in oil prices.”

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