From conflict to confidence
Global stock markets delivered another strong performance last week, with major US indexes closing at record highs as investors responded positively to easing geopolitical concerns, lower energy prices, and continued enthusiasm around artificial intelligence.
The rally was initially sparked by reports that the US and Iran were moving toward a 60-day extension of their ceasefire arrangement, alongside discussions aimed at restoring shipping activity through the Strait of Hormuz.
The prospect of smoother energy flows helped push oil prices lower, boosting investor confidence and supporting demand for equities. Although later reports indicated fresh US military strikes against Iranian targets, markets remained resilient amid growing expectations that a broader agreement was close to receiving final approval.
On the economic front, inflation data provided a mixed signal. The US Personal Consumption Expenditures (PCE) Price Index rose 0.4% in April, down from 0.7% in March. However, annual inflation accelerated to 3.8%, compared with 3.5% the previous month, marking the highest reading since May 2023.
Core PCE, which excludes food and energy prices, increased by 0.2% during the month, slowing from March’s 0.3% rise. On an annual basis, core inflation edged up to 3.3%, its strongest level since November 2023. First-quarter US GDP growth was adjusted down to an annualised rate of 1.6% from an earlier estimate of 2.0%, reflecting weaker investment and consumer spending. Despite the downgrade, growth remained stronger than the 0.5% pace recorded in the final quarter of 2025.
Japanese stocks surged to fresh highs, helped by hopes of greater stability in the Middle East. Technology and semiconductor companies led gains as investors continued to back AI-related industries. Meanwhile, Tokyo’s core inflation rate slowed to 1.3% in May from 1.5% in April, falling below expectations and remaining under the Bank of Japan’s 2% target for a fourth consecutive month. European markets also advanced as investors welcomed signs of progress between Washington and Tehran.
Inflation readings surprised on the downside in several major economies, with annual rates reaching 2.8% in France, 3.6% in Spain, 3.3% in Italy, and 2.7% in Germany. The figures strengthened expectations that inflation pressures across the region are rising at a lower-than-expected rate, even as overall price growth remains elevated.
Eurozone CPI indices go to print.
Friday 5th June
US non-farm payrolls data is released.
The prospect of smoother energy flows helped push oil prices lower, boosting investor confidence and supporting demand for equities. Although later reports indicated fresh US military strikes against Iranian targets, markets remained resilient amid growing expectations that a broader agreement was close to receiving final approval.
On the economic front, inflation data provided a mixed signal. The US Personal Consumption Expenditures (PCE) Price Index rose 0.4% in April, down from 0.7% in March. However, annual inflation accelerated to 3.8%, compared with 3.5% the previous month, marking the highest reading since May 2023.
Core PCE, which excludes food and energy prices, increased by 0.2% during the month, slowing from March’s 0.3% rise. On an annual basis, core inflation edged up to 3.3%, its strongest level since November 2023. First-quarter US GDP growth was adjusted down to an annualised rate of 1.6% from an earlier estimate of 2.0%, reflecting weaker investment and consumer spending. Despite the downgrade, growth remained stronger than the 0.5% pace recorded in the final quarter of 2025.
Japanese stocks surged to fresh highs, helped by hopes of greater stability in the Middle East. Technology and semiconductor companies led gains as investors continued to back AI-related industries. Meanwhile, Tokyo’s core inflation rate slowed to 1.3% in May from 1.5% in April, falling below expectations and remaining under the Bank of Japan’s 2% target for a fourth consecutive month. European markets also advanced as investors welcomed signs of progress between Washington and Tehran.
Inflation readings surprised on the downside in several major economies, with annual rates reaching 2.8% in France, 3.6% in Spain, 3.3% in Italy, and 2.7% in Germany. The figures strengthened expectations that inflation pressures across the region are rising at a lower-than-expected rate, even as overall price growth remains elevated.
Equities
Global stocks finished up 0.7% in euro terms and up 1.3% in local terms last week. Year-to-date global markets are up by 11.2% in euro terms and up by 10.5% in local terms. The US market, the largest in the world, finished up at 0.8% in euro terms and at 1.5% in local terms.Fixed Income & FX
The US 10-year yield finished at 4.5% last week. The German equivalent finished at 3.0%. The Irish 10-year bond yield finished at 3.2%. The Euro/US Dollar exchange rate finished at 1.17, whilst Euro/GBP finished at 0.87.Commodities
Oil finished the week at $92 per barrel and is up 62.1% year-to date in euro terms. Gold finished the week at $4,485 per troy ounce and is up 4.9% year-to-date in euro terms. Copper finished the week at $13,808 per tonne and is up 12.0% year-to-date in euro terms.The week ahead
Wednesday 2nd JuneEurozone CPI indices go to print.
Friday 5th June
US non-farm payrolls data is released.
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