(The opinions expressed here are those of the authors.)

By Mike Dolan

May 8 (Reuters) -

Everything Mike Dolan and the ROI team are excited to read,

watch and listen to over the weekend.

From the Editor

Hello Morning Bid readers!

Global stocks roared throughout most of the week, with many

benchmark indices reaching record highs before pulling back

slightly on Thursday. While the stop-and-start prospects for a

U.S.-Iran peace deal created some volatility, the main focus for

markets remained the ongoing AI chip boom, which shows no signs

of slowing.

Things got off to a dramatic start early in the week as U.S.

President Donald Trump's "Project Freedom" plan briefly came

into effect with the stated aim of shepherding stranded ships

through the Strait of Hormuz. That elicited a strong response

from Iran, which struck ships in the Gulf and set a UAE oil port

ablaze, driving up oil prices by some 6% through Tuesday.

But crude prices started tumbling on Wednesday following reports

of a fresh U.S. proposal to end the war, along with bullish

comments from President Trump on the likelihood of a swift

conclusion.

Both Brent and WTI crude dropped below $100 per barrel for the

first time since the second half of April, though Brent only

stayed there briefly, rising back over that threshold as renewed

fighting broke out between U.S. and Iranian forces in the Gulf

on Thursday.

Even if the new U.S. peace proposal eventually leads to a

permanent cessation of hostilities and the reopening of the

strait - a big "if" given that the current plan reportedly

leaves most contentious issues unresolved - that doesn't mean

the energy shock will be resolved anytime soon considering the

level of disruption, particularly in Asia.

Back stateside, U.S. energy exports are continuing to soar -

which has helped global markets during the crisis - but this is

leading to dwindling domestic fuel stocks, which could be bad

news for U.S. consumers already seeing rising prices at the

pump.

Despite all the back and forth in the Middle East this week,

investors appeared far more interested in the AI chip boom,

including upgrades to AI spending projections. Morgan Stanley

now sees the capex growth of the top five hyperscalers topping

$800 billion this year and $1.1 trillion next year, while

Goldman Sachs expects the cumulative spend by 2031 to be as high

as $7.6 trillion.

That has helped push global chipmakers into the stratosphere.

Shares of U.S. giant AMD on Wednesday leapt 15% to an all-time

high after it forecast revenue above expectations on strong AI

chip demand. Just as impressive were the moves in Asia. South

Korea's SK Hynix started the week with a 13% jump on Monday.

This tech rally helped guide indexes to fresh highs through the

week, especially in Asia. South Korea's KOSPI passed the 7,000

mark for the first time on Wednesday as Samsung's market cap hit

$1 trillion. Even as stocks slipped toward the end of the week

on the fresh U.S.-Iran military exchanges, Asian markets

remained on course for strong weekly gains.

The euphoria is sure to reignite the debate about whether we're

heading into an AI-fuelled hyper-bull market or seeing a

dangerous overvaluation that will lead to an inevitable

correction. And what about the surprising resilience of emerging

market stocks?

Elsewhere, government bonds came under pressure this week, with

the U.S. long bond yield touching 5% before pulling back -

drawing buyers once again despite investor appetite being tested

by a whole cocktail of concerns.

Gilt yields were also elevated throughout the week. Where they

go from here may be influenced by how Thursday's UK local

elections affect Prime Minister Keir Starmer's position as

leader of the governing Labour Party. Early results showed

widely expected Labour losses in many councils materializing,

but Starmer insisted on Friday he would not resign. Sterling

pushed higher and gilt yields fell back.

Whoever ends up leading the Labour Party - Starmer or otherwise

- there may be one lesson from the Trump playbook worth taking

on board to avoid jolting bond markets.

In currencies, the yen had another volatile week, spiking

repeatedly against the dollar and briefly touching a high of 155

per dollar on Wednesday. These moves could be the result of

government intervention, with central bank data indicating that

Japan may have spent as much as $32 billion to prop up the

currency this week - on top of the $35 billion thought to have

been spent last week.

Meanwhile, the dollar remained subdued, having given up almost

all its post-Iran war gains. Could it drop far more if the U.S.

and Iran strike a peace deal? There's a lot to suggest that

could be the case. Still, losses may be bounded by the broader

AI boom. China's yuan, meantime, strengthened to three-year

highs ahead of next week's Beijing summit between President

Trump and Chinese President Xi Jinping.

On the macro front, Friday will bring the latest U.S. employment

report, which is expected to show a gain of 62,000 jobs for

April, down from March's 178,000. But the unemployment rate is

expected to remain unchanged at 4.3% and other prints through

the week - JOLTS data, ADP's private sector payrolls and weekly

jobless claims - pointed to a stable labor market.

For more data-driven insights on markets and commodities, check

out Reuters Open Interest. You can learn:

* When does soaring solar power capacity become too much of

a good thing?

* Why might Trump come to regret breaking OPEC?

* Why might the Iran war encourage some Asian countries to

switch from gas to coal?

* Could 4% inflation be the new 2%?

* What exactly is going on in the copper market amid

the confusion of the Iran crisis?

I'd love to hear from you, so please reach out to me at

[email protected].

This weekend, we're reading...

RON BOUSSO, ROI Energy Columnist: This Reuters article looks

at the huge challenges Saudi Energy Minister Prince Abdulaziz

bin Salman faces as he seeks to lead his country and OPEC out of

the greatest oil supply shock in history, compounded by the

UAE's abrupt departure from the producer group.

MIKE DOLAN, ROI Finance & Markets Columnist: Brad Setser at

the Council on Foreign Relations argues in this article that

China may never have truly run down the dollar's share of its

reserves, as so many have assumed over the past decade.

GAVIN MAGUIRE, ROI Global Energy Transition Columnist: The

Resilient Investor examines how much of the new AI

infrastructure is being built in areas at high risk from

drought, fire and flooding.

CLYDE RUSSELL, ROI Asia Commodities and Energy Columnist: A

report from Bain & Co examines the decline in oil exploration -

a long-term problem that likely outweighs the impact of the

closure of the Strait of Hormuz.

We're listening to...

JAMIE MCGEEVER, ROI Markets Columnist: In this podcast,

"Inside the Fed With Kurt Lewis: From Crisis Playbooks to What

Comes Next," the Piper Sandler central bank policy chief and

former special advisor to Fed Chair Jerome Powell discusses how

Fed policymakers assess risk, data, communications and

decision-making - and what may change under incoming chair Kevin

Warsh.

And we're watching...

ANNA SZYMANSKI, ROI Editor-in-Charge: This episode of The

Big View features Brendan Greeley, author of The Almighty

Dollar, who argues that the U.S. inherited rather than invented

its currency. He tells Reuters Breakingviews Global Editor Peter

Thal Larsen that the greenback's global appeal is apt to

survive.

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Opinions expressed are those of the authors. They do not reflect

the views of Reuters News, which, under the Trust Principles, is

committed to integrity, independence, and freedom from bias.