Strong corporate earnings boosted the indices. The ECB and the Bank of England left rates unchanged

On Thursday, the US stock market surged sharply. By the end of the day, the Dow Jones (US30) jumped 1.62%, the S&P 500 (US500) gained 1.02%, and the tech-heavy Nasdaq (US100) closed 0.89% higher. The S&P 500 and Nasdaq recorded their strongest monthly gains since 2020. Investor optimism was fueled by strong corporate earnings, which managed to overshadow concerns about an oil shortage and disruptions in the Persian Gulf.

The corporate sector split into clear winners and losers: Alphabet (+10%) and Intel became the stars of the day – the former thanks to record performance in cloud technologies and its Gemini AI, and the latter due to strong demand for its 18A chips. They were joined by Caterpillar (+9.8%) and Eli Lilly (+10%), which raised its profit outlook amid strong demand. Apple also supported the positive sentiment by reporting better‑than‑expected results after the market closed. Meanwhile, Meta and Microsoft continued to decline as markets remained skeptical about their massive spending on AI infrastructure. However, the PCE Inflation Index rose to 3.5%, which, combined with the Federal Reserve’s hawkish stance, sets the stage for a prolonged period of high interest rates. The market is effectively celebrating corporate efficiency while ignoring rising stagflation risks and geopolitical tensions.

The Mexican peso (MXN) stabilized around 17.5 per dollar, remaining near a three‑week low. Pressure on the currency increased after GDP data showed that Mexico’s economy contracted by 0.8% in Q1 2026 – significantly worse than expected. The downturn affected all key sectors, including services and manufacturing.

On Thursday, European markets broke an eight‑session losing streak. Germany’s DAX (DE40) rose 1.41%, France’s CAC 40 (FR40) gained 0.53%, Spain’s IBEX 35 (ES35) added 0.78%, and the UK’s FTSE 100 (UK100) closed 1.62% higher. Support came from the ECB and the Bank of England keeping interest rates unchanged, as well as a decline in oil prices. However, regulators signaled that future decisions will depend on economic conditions: the ECB pointed to persistent risks to inflation and growth, and its president confirmed that a rate hike had been discussed. The Bank of England, in turn, did not rule out tougher measures if the consequences of the conflict with Iran intensified pressure on the economy. Fresh data showed eurozone inflation accelerating to 3%, the highest in several years, while economic growth at the start of the year was weaker than expected.

Silver prices (XAG) posted a strong rebound, rising to $73 per ounce after falling to a monthly low. The recovery was supported by temporary stabilization in oil prices, which cooled government bond yields and revived investor interest in precious metals. Despite ongoing tensions between the US and Iran, the market temporarily shifted its focus from geopolitical risks to fundamental demand factors.

WTI crude prices moved lower after briefly climbing to nearly a four‑year high of around $111 per barrel. Pressure on prices emerged following reports that Donald Trump may be presented with a detailed military options report regarding Iran. The document, prepared by military leadership, reportedly includes scenarios for resuming the conflict, including the possibility of a short but intense series of strikes. Despite the formally active ceasefire, tensions in the region remain high. Restrictions imposed by both the US and Iran have effectively disrupted the functioning of the key oil supply route through the Strait of Hormuz, through which a significant share of global crude exports passes. As a result, the market is facing a severe supply shortage, which international energy agencies describe as unprecedented. Against this backdrop, US oil exports have surged to record levels as buyers seek alternative sources.

In Asia, Japan’s Nikkei 225 (JP225) fell 1.06%, China’s FTSE China A50 (CHA50) slipped 0.08%, Hong Kong’s Hang Seng (HK50) closed negative 1.28%, and Australia’s ASX 200 (AU200) declined 0.24%.

On Friday, the Australian dollar (AUD) hovered near 0.72 USD, ending the week with gains as markets prepare for the upcoming central bank rate decision. The regulator is expected to raise the rate by 25 basis points, marking the third consecutive hike and bringing it to 4.35%. Expectations of further tightening later in the year are growing, as inflationary pressures remain elevated, partly due to global supply disruptions linked to restrictions in the Strait of Hormuz.

The New Zealand dollar (NZD) traded near 0.59 USD after rising about 1.3% in the previous session, supported by a notable weakening of the US dollar. Markets still consider the possibility of further tightening by the Reserve Bank of New Zealand (RBNZ). However, expectations of a rate hike in May have dropped significantly – investors now see the probability at below 30% after the central bank governor stated that core inflation in Q1 remained within the target range. Meanwhile, expectations of tightening in the summer are already largely priced in.