Markets finished the week in a now-familiar pattern: US equities punched to fresh record highs on AI momentum, oil ground higher on Gulf supply concerns, and inflation re-accelerated across the developed world.

The Gulf still dominates

President Trump dismissed Iran's latest peace proposal as "a piece of garbage", and the ceasefire he previously described as "on massive life support" produced no breakthrough this week. Brent traded above US$104 a barrel for much of the week and pushed towards US$108. The IEA's mid-week update was sobering: spot cargoes are pricing close to US$150, OPEC+ April production missed the 36 mb/d target by 25%, and the agency warned the market will remain severely undersupplied through October even if hostilities ended tomorrow. The Trump-Xi summit in Beijing closed without a circuit-breaker on Iran.  China invoked the "Thucydides Trap" repeatedly and pressed hard on Taiwan, while the US readout reaffirmed that Iran cannot acquire nuclear weapons and the Strait of Hormuz must remain open.

Inflation back in focus

US headline CPI lifted to 3.8% year-on-year (from 3.3%), core CPI to 2.8%, and PPI jumped to 5.2%. Even China's PPI turned positive at 2.8% — an unusual break from years of deflation. Energy is now bleeding into shelter, transport and imported goods, so this is no longer a pure fuel story. Markets are pricing around 10 bp of Fed hikes by December and 20 bp by March, even with Kevin Walsh confirmed as the new Fed Chair. The US 30-year auction cleared above 5% for the first time since 2007 and UK 10-year gilts pushed 35 bp higher in a few weeks on political dysfunction.

Australia: budget delivered

The Chalmers Budget restricted negative gearing to newly built investment properties and replaced the 50% CGT discount with indexation plus a minimum 30% tax on capital gains. The 2026-27 cash deficit landed at A$31.5 bn (around 1% of GDP), helped by commodity revenues. The NAB Business Survey lifted five points but remains deeply negative at -24, with purchase costs running at 4.5% quarterly, three times the February pace. Westpac Consumer Sentiment dropped to 80.1, the biggest monthly fall since COVID. Q1 Wage Price Index held at 0.8% q/q (3.3% annualised) and NAB transaction data showed April consumer spending down 1.1%, mostly fuel and travel.

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Key takeaways:

Inflation persistence is real. The RBA's 75 bp of hikes is unlikely to be unwound this year. Review portfolios for genuine inflation hedges — short-duration credit, listed real assets, and energy and materials exposures.

US equity concentration is extreme. AI-related names are now more than 40% of the S&P 500; NVIDIA alone sits near US$5.7 trillion. As IDX Advisors put it this week in the Bloomberg Surveillance podcast, a 30% drawdown in these names is "not a big deal" historically. We agree and that is why we are managing concentration risk while also making sure we have enough exposure to the AI juggernaut .

The Australian outlook is mixed. Cost of living pressures for low-income families is starting to bite and now the affluent are having to reassess their wealth strategy but overall the Australian story remains relatively buffered, copper and iron ore at multi-year highs, and Australia is a net energy beneficiary. The property channel faces a multi-quarter adjustment as the budget reforms bed down. Stay invested, stay diversified, and lean into areas where you have a high probability of making decent long-term returns.