The RBNZ has openly acknowledged rising stagflation risks in the economy. Inflation is slowing in Australia

The US stock indices showed mixed dynamics. By the end of the day, the Dow Jones (US30) fell by 0.23%. The S&P 500 (US500) rose by 0.61%. The Technology‑heavy NASDAQ (US100) closed higher by 1.19%. Against the backdrop of cautious optimism surrounding Middle East de‑escalation and a potential agreement between the US and Iran, the tech sector pushed the NASDAQ to a new all‑time high.

The main winner of the session was Micron Technology, whose shares surged by 19.3%, allowing the chipmaker’s market capitalization to surpass 1 trillion dollars for the first time in history. A powerful catalyst was a UBS analyst report that sharply raised the stock’s target price, citing the potential for it to double amid strong demand for memory chips. Positive momentum in the IT sector was supported by Alphabet (+1.4%), Broadcom (+1.9%), and Tesla (+1.8%), while heavyweights Nvidia (-0.2%), Microsoft (-0.6%), and Amazon (-0.4%) corrected lower.

In Europe, Germany’s DAX (DE40) fell by 0.80%, France’s CAC 40 (FR40) closed down 1.03%, Spain’s IBEX 35 (ES35) declined by 0.52%, while the UK’s FTSE 100 (UK100) closed in the green at 0.24%. The yield on 10‑year German government bonds rose to 2.97%, rebounding from the previous day’s six‑week low. The reversal in Eurozone sovereign debt was driven by renewed escalation in the Middle East: new US retaliatory strikes on targets in southern Iran shattered hopes for a quick end to the three‑month conflict and pushed Brent crude prices higher, intensifying investor concerns about persistently elevated global inflation. Additional pressure on bonds (leading to higher yields) came from hawkish comments by ECB official Isabel Schnabel. In an interview with Reuters, she emphasized that the regulator must raise interest rates in June regardless of the outcome of US-Iran diplomatic talks, as the prolonged energy shock has already deeply embedded itself in the European economy.

Prices for US WTI crude oil partially recovered losses and climbed toward 94 dollars per barrel. The movement was driven by another escalation in the Middle East, where new localized clashes erupted amid fragile peace negotiations: the US Navy resumed forced escort of tankers after strikes near the Strait of Hormuz, while Iran’s Islamic Revolutionary Guard Corps (IRGC) claimed to have fired on a US F‑35 fighter jet and several drones allegedly violating the country’s airspace.

In Asia on Tuesday, Japan’s Nikkei 225 (JP225) fell by 0.50%, China’s FTSE China A50 closed higher by 0.75%, Hong Kong’s Hang Seng (HK50) slipped by 0.03%, and Australia’s ASX 200 (AU200) declined by 0.39%.

The New Zealand dollar rose to 0.587 USD in response to the “hawkish” outcome of the Reserve Bank of New Zealand (RBNZ) meeting. As expected, the regulator kept the official cash rate at 2.25%, but significantly toughened its rhetoric, hinting at the inevitability of rate hikes in the coming months. According to the central bank’s updated expectations, the rate may rise to 2.84% by year‑end (implying at least two 25‑basis‑point hikes) due to serious risks of inflation accelerating to 4.3% in the third quarter amid the prolonged Middle East crisis and sharply rising fuel costs.

The Australian dollar slightly weakened, pulling back from its recent weekly high toward 0.71 USD. The local decline in the “aussie” was triggered by fresh data from the Australian Bureau of Statistics showing a sharper‑than‑expected slowdown in inflation. The monthly CPI for April fell to 0.4% (after March’s seven‑month peak of 1.1%), while annual inflation slowed from 4.6% to 4.2% (vs. the 4.4% outlook), largely due to government fuel tax relief. The Reserve Bank of Australia’s preferred trimmed mean indicator rose by 0.3% for the month, and accelerated to 3.4% year‑on‑year, reaching its highest level since late 2024.