How AI, Geopolitics, and a Rate Hike Collided This Week

Morgan Stanley raised its 12-month target for the MSCI EM equity index to 1,850, citing stronger-than-expected AI and tech earnings in South Korea and Taiwan . While equities surged, emerging-market currencies were more cautious. Investors tracked the on-again, off-again U.S.–Iran peace talks, and oil-exporting Latin American currencies actually outperformed some Asian FX pairs during the month .

The AI-driven optimism was strong enough that emerging-market stocks recorded their best month since 2022 in April, jumping 14.5%, despite the oil price shock from the Middle East conflict .

The U.S.–Iran Framework and the Strait of Hormuz

On May 27, Iranian state television reported that Tehran had received a draft 14-point framework for a memorandum of understanding with the United States . Under its terms, Iran would restore commercial shipping through the Strait of Hormuz to pre-war levels within one month, while the U.S. would lift its naval blockade and withdraw military forces from the vicinity . The framework explicitly excluded military vessels and proposed that Iran manage ship traffic through the strait in cooperation with Oman .

Western reports the following day confirmed that U.S. and Iranian negotiators had reached a 60-day MoU, but both U.S. President Donald Trump and Iran's Supreme Leader Mojtaba Khamenei had not yet approved it . The deal was described as an "initial, unofficial framework" by Iranian state media, and details remained unclear based on the wording and sourcing of the leaks .

This latest diplomatic movement built on an April 8 ceasefire mediated by Pakistan, which had already called for reopening the Strait . By late May, President Trump said publicly that a deal had been "largely negotiated" and would be announced shortly, though he cautioned against rushing into it . The agreement also reportedly included a commitment from Iran not to pursue a nuclear weapon, with a 60-day window to work out how Iran would give up its highly enriched uranium .

Dell's AI Guidance Stuns the Market

Later on May 28, Dell Technologies reported fiscal Q1 2027 results that exceeded even the most bullish expectations. Revenue hit $43.8 billion, up 88% year-over-year, and diluted earnings per share jumped 214% to $4.86 . AI orders reached $24.4 billion for the quarter, with AI server revenue of $16.1 billion and a record AI backlog of $51.3 billion .

What truly moved the stock, however, was the guidance. Dell raised its fiscal 2027 revenue forecast to $165–$169 billion — nearly 50% higher at the midpoint than the prior year — and guided AI server revenue alone at $60 billion . This was a dramatic upgrade from the $138–$142 billion range and roughly $50 billion in AI server revenue announced just three months earlier . The stock surged 32.76% on the news .

Management noted that demand for both AI and traditional servers was outstripping available supply, and order and backlog levels sat at new highs . The AI server build-out is clearly running far ahead of what analysts had modeled.

South Africa Hikes Rates for the First Time Since 2023

On May 28, the South African Reserve Bank's Monetary Policy Committee voted 4-2 to lift the key repo rate by 25 basis points to 7.00%, the first increase in over two years . The prime lending rate moved to 10.50%, effective May 29 .

SARB Governor Lesetja Kganyago cited inflation risks arising from the prolonged Middle East conflict, higher global oil prices, and rising food costs . Consumer price inflation hit 4% in April — above the central bank's 3% midpoint target — and the SARB's updated projections showed headline inflation averaging 4.4% in 2026 before declining to 3.7% in 2027 and returning to the 3% target only in 2028 .

The rate hike partially blunted a roughly $1 billion fuel relief package designed to shield consumers from the oil price shock . The quarterly projection model pointed to one more hike in the current quarter before rates gradually ease, but Kganyago stressed that future decisions would remain data-dependent .

Markets Wait for Concrete Deals

These four stories all circle the same themes: technology-driven growth, geopolitical instability, and the resulting monetary-policy reactions. The AI trade continues to drive equity performance even as the war in the Middle East injects inflation into the global economy. Whether the U.S.–Iran MoU becomes a signed agreement — and whether South Africa's rate hike marks a new tightening cycle or a one-off response — will determine the next chapter.