(The opinions expressed here are those of the author, a

columnist for Reuters.)

By Mike Dolan

May 5 (Reuters) -

What matters in U.S. and global markets today

By Mike Dolan, Editor-at-Large, Finance and Markets

Gulf tensions flared on Monday as U.S. attempts to shepherd

ships through the Strait of Hormuz met resistance from Iran,

including an attack on a UAE oil port. Crude prices leapt in

response, but they've eased slightly heading into Tuesday.

Markets remain torn between the precarious geopolitical

situation on the one hand and dramatic upgrades to U.S. earnings

growth and AI spending forecasts on the other, with global

shares edging higher early on Tuesday.

I'll get into that and more below.

But first, listen to the latest episode of the Morning Bid daily

podcast, where I discuss why markets still appear upbeat despite

the latest tensions in the Gulf.

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GULF SINGE, AI BINGE

Oil prices jumped by about 6% and major U.S. indexes retreated

on Monday as the fresh U.S.-Iran exchanges suggested that we

could see the return of a hot war. Brent and WTI crude settled

at over $114 and $106 per barrel, respectively.

But reports that at least one ship - a U.S.-flagged vehicle

carrier - was escorted out of the strait by the U.S. military

took crude off those highs and helped calm wider markets early

on Tuesday.

Wall Street futures were in the green before the bell, while

European shares opened higher thanks to upbeat earnings. Asian

shares edged down in holiday-thinned trading, with markets

closed in Japan and South Korea.

Investors will be hoping the geopolitical situation doesn't

escalate further, so that they can refocus on what's proving to

be another blockbuster earnings season. Full-year S&P 500

earnings growth forecasts have been revised upward to as high as

23%, from 18% just a month ago.

Driving that was another upgrade of AI spending estimates, with

Morgan Stanley now seeing the capex growth of the top five

'hyperscalers' exceeding $800 billion this year and $1.1

trillion next year. Goldman Sachs reckons the cumulative spend

to 2031 will be as much as $7.6 trillion.

U.S. companies set to report earnings later today include

AMD, Pfizer and KKR.

Elsewhere, markets are keeping a wary eye on transatlantic

tensions after President Trump's threat late last week to raise

tariffs on EU auto imports to 25%. That dragged down European

automakers' shares by around 2% on Monday.

Stateside, a big week for labor market data will also kick off

today with the release of JOLTS job openings data for March. And

in deal activity, investors are puzzling over an audacious $56

billion bid for online retailer eBay by GameStop, the video game

retailer that achieved 'meme stock' fame in 2021.

Chart of the day

Australia's central bank lifted rates for a third time this year

on Tuesday, returning borrowing costs to post-pandemic highs of

4.35% and warning that inflation would remain sticky as the

conflict in the Middle East unleashed a global oil shock.

Money markets imply around a 15% chance of a further move in

June, but an increase to 4.6% by September is fully priced in -

and that would be the highest since late 2011.

Today's events to watch

* U.S. March JOLTS job openings (10 a.m. EDT), March trade

balance (8:30 a.m. EDT), March new home sales (10 a.m. EDT)

* Fed's Michelle Bowman speaks

* U.S. corporate earnings: AMD, Pfizer, KKR

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

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