The Week the War Entered the Earnings Channel and the Market Chose a Side

This was the week the Iran conflict stopped being a commodity story and became an everything story. Oil surged 16%. Intel posted its best trading day in nearly four decades. Consumer sentiment collapsed to a level not seen in the history of the survey. The Fed’s incoming chair declared “regime change” at his confirmation hearing. And beneath all of it, a structural divergence opened between what the American and Canadian indices own that will define advisor conversations for the rest of the quarter. Five charts capture what happened, and what it means heading into Wednesday’s Bank of Canada decision.

1. The $105 Oil Week

Brent crude posted a weekly gain of approximately 16%, the largest since the conflict began in late February. The move was driven by a convergence of escalatory developments: Iran’s Revolutionary Guard seized two container vessels in the Strait of Hormuz on Wednesday (the first ship seizures of the war), Trump ordered the Navy to “shoot and kill” vessels laying mines in the strait on Thursday, and a Pentagon assessment shared with Congress estimated six months to fully clear Iranian-laid mines from the waterway.

The EIA published a striking analysis on Thursday showing that the Dated Brent spot price had surged to a premium of more than $25 per barrel above the front-month futures contract in early April, reflecting extreme near-term market tightness. Futures contracts, which price crude for later delivery, are pricing resolution. Spot markets, which price crude for immediate delivery, are pricing scarcity. That gap is the market’s way of saying it believes the strait will reopen eventually but that the physical supply disruption is real and intensifying now.

For Canadian energy producers, the picture is paradoxically mixed. Higher oil prices improve margins for Suncor, CNQ, and Cenovus. But the TSX’s failure to rally alongside oil this week reveals a second-order problem: the inflation expectations embedded in $105 Brent are repricing the entire Canadian rate outlook, and that repricing weighs on the financials and real estate sectors that dominate the rest of the index.

What it means for clients: Energy-heavy portfolios are performing. Balanced portfolios with Canadian bank and REIT exposure are absorbing the inflation drag. The conversation is not about oil: it is about what $105 oil does to the rate path.

2. The Structural Divergence

The S&P 500 closed Friday at 7,165.08, a new all-time high, powered by a 24% surge in Intel shares (its best day since 1987), a 14% gain in AMD, and the semiconductor index’s 18th consecutive positive session. The Nasdaq gained 1.63% on Friday alone. The TSX closed at 33,904.11, essentially flat for the week, ending a multi-week winning streak. The Dow fell 0.16% as IBM’s 9% decline and Salesforce weakness dragged the price-weighted index lower.

The divergence is structural, not cyclical. What the American indices own, semiconductors, AI infrastructure, and technology platforms, is thriving in an environment of accelerating capital expenditure that BlackRock estimates has seen hyperscaler spending projections for 2026 to 2030 rise by more than 25% since October. What the Canadian index owns, energy, banks, and materials, faces a more complicated set of cross-currents. Energy benefits from $105 oil, but the inflation it produces weighs on banks through higher default risk and tighter lending conditions, and on real estate through rising fixed mortgage rates. The TSX cannot benefit from the oil price without absorbing the macro damage it causes to the rest of the index.

Kevin Burkett, portfolio manager at Burkett Asset Management in Victoria, captured the dynamic on Friday: while the near-term oil contract has been extremely volatile on Hormuz flows, the futures curve continues to price in resolution. The TSX is caught between a spot market that is getting worse and a futures market that expects it to improve.

What it means for clients: Clients with primarily Canadian equity exposure are underperforming clients with U.S. large-cap exposure by a meaningful margin this month. The gap is not temporary: it reflects what each index owns and how those holdings respond to $105 oil.

3. The Earnings Split

All five of these companies beat earnings estimates. All five reported revenue above consensus. The divergence in their stock reactions reveals the war’s second channel into portfolios, one that no commodity chart can show.

Intel crushed expectations with adjusted EPS of $0.29 versus the $0.01 consensus, driven by 22% revenue growth in its data centre business as AI demand accelerated. CEO Lip-Bu Tan called CPUs “an indispensable foundation of the AI era.” AMD surged 14% alongside Intel. Texas Instruments rose 6% on industrial and automotive demand recovery. Hardware tied to physical infrastructure is thriving because the AI capital expenditure cycle is accelerating regardless of geopolitical conditions.

IBM and ServiceNow told a different story. Both beat estimates and both sold off sharply. ServiceNow’s CFO cited Middle East deal delays directly. IBM held guidance flat despite beating by $0.10 EPS and $300 million in revenue, citing geopolitical uncertainty. The broader software sector fell approximately 5% on Thursday in its worst single-day performance since the conflict began. Enterprise software depends on executive confidence in the planning horizon. When that confidence erodes, purchasing decisions pause. The 80% earnings beat rate that powered the week’s early optimism is backward-looking. What IBM and ServiceNow revealed is the forward-looking drag: customers waiting to commit to software contracts until the conflict’s duration becomes clearer.

What it means for clients: The war’s impact on portfolios is no longer limited to energy and commodity exposure. Clients with U.S. large-cap or global equity funds carrying meaningful SaaS weighting are now exposed to a second channel: the enterprise decision-making cycle slowing under geopolitical uncertainty.

4. The Sentiment Paradox

The University of Michigan’s final April consumer sentiment reading came in at 49.8, revised upward from the preliminary 47.6 but still the lowest reading in the survey’s history. Sentiment declined across every demographic, regardless of political affiliation, income, age, or education. Year-ahead inflation expectations surged from 3.8% in March to 4.7%, the largest one-month increase since April 2025. Long-run expectations climbed to 3.5%, the highest since October 2025.

The same week that consumers recorded the bleakest economic outlook ever measured, the S&P 500 closed at 7,165.08, a new all-time high. The divergence between how people feel and how markets are priced is now wider than at any point during the 2022 inflation surge, the 2020 pandemic, or the 2008 financial crisis. The gap has a specific mechanism this time: visible daily costs (gasoline above $4 per gallon nationally, diesel above $5.80) are dominating consumer perception, while invisible portfolio gains driven by AI-linked semiconductor stocks are driving indices higher. Consumers feel the pump. They do not feel the portfolio, at least not in real time.

The revision from 47.6 to 49.8 reveals something important about the ceasefire effect. The final survey period captured two weeks of ceasefire headlines and a temporary oil price dip. Sentiment responded, moving upward. But the strait never reopened, gas prices barely changed, and the fundamental source of consumer anxiety remained. The headline moved sentiment. The reality did not.

What it means for clients: Clients who feel anxious about the economy are not wrong about their daily experience. Gas prices are elevated and groceries are expensive. But their portfolios, particularly those with U.S. equity exposure, are at or near all-time highs. The advisor’s role is to bridge that gap: acknowledge the daily-cost reality while showing the portfolio reality.

5. The BoC’s Wednesday

The Bank of Canada announces its rate decision Wednesday at 9:45 AM ET, accompanied by the Monetary Policy Report. All 41 economists in the April 21-24 Reuters poll expect a hold at 2.25%. The consensus is unanimous. But the MPR language is the real event, because it must address an environment that has changed materially since the March 18 decision.

The 5-year Government of Canada bond yield sits at approximately 3.11%, some 86 basis points above the policy rate. That spread reflects genuine uncertainty about the rate path. Canadian producer prices rose 2.4% month-over-month in March, driven by energy and petroleum costs from the conflict. March CPI came in at 2.4%, up from 1.8% in February. The BoC warned in March that higher global energy prices would push total inflation up in coming months. That warning is now arriving in the data.

The Warsh confirmation hearing added a new variable. Warsh declared “regime change” at the Fed: a new inflation framework, potentially fewer FOMC meetings, and less forward guidance. The DOJ dropped its investigation of Chair Powell on Friday, clearing the path (though Senator Tillis continues to hold the committee vote). A Warsh Fed that distinguishes between demand-driven and supply-driven inflation, as his academic work advocates, could cut rates into an oil shock that the BoC must hold through. That cross-border divergence would narrow the Canada-U.S. rate differential, strengthen the Canadian dollar against expectations, and complicate every fixed-income positioning assumption advisors have built around the current rate path.

RBC’s Claire Fan captured the BoC’s posture: because core inflation is softening, the Bank has room to be “flexible and patient,” waiting for concrete signs of broadening inflation before acting. But patience has a cost when oil sits above $105 and the Pentagon estimates six months to clear Hormuz mines. The “transitory” framing the BoC needs to justify a hold is getting harder to defend with each week the strait stays closed.

What it means for clients: Clients with mortgage renewals in the May-September window are making fixed-versus-variable decisions with fewer anchors than they had a month ago. The 5-year bond yield at 3.11% directly prices fixed mortgage rates. Wednesday’s MPR language will determine whether that yield rises further or stabilizes.