On Wednesday, the U.S. stock market declined. By the end of the day, the Dow Jones index (US30) fell by -0.57%. The S&P 500 index (US500) slipped by -0.04%. The tech index Nasdaq (US100) closed slightly higher at +0.04%.

The Federal Reserve kept the federal funds rate in the 3.5-3.75% range, but the decision revealed an unprecedented split within the leadership. The 8-4 vote became the largest internal protest since 1992: one official demanded an immediate rate cut, while three others opposed any signals of easing. The regulator directly linked the high uncertainty to the ongoing conflict in Iran, which threatens price stability. Jerome Powell confirmed he will remain on the Board of Governors after his term as Chair ends, ensuring continuity during the crisis.

Markets interpreted the meeting as a sign that the period of tight policy may last longer due to deep disagreements within the Committee itself. The Canadian dollar (CAD) stabilized at 1.37 per U.S. dollar after synchronized decisions by the Bank of Canada (BoC) and the Fed to maintain current monetary‑policy settings. The Canadian regulator kept the rate at 2.25%, noting that although gasoline and food prices are pushing inflation toward 3%, long‑term expectations remain anchored. Meanwhile, the U.S. dollar received safe‑haven support due to the lack of progress in negotiations between Washington and Tehran.

On Wednesday, European markets closed in the red for the eighth consecutive session. Germany’s DAX (DE40) fell by -0.27%, France’s CAC 40 (FR40) closed down -0.39%, Spain’s IBEX 35 (ES35) dropped by -0.74%, and the UK’s FTSE 100 (UK100) ended the session down -1.16%. The European banking sector showed resilience thanks to strong earnings from HSBC, whose shares rose 3.5% after announcing a buyback and high profits. Today, investors await tomorrow’s decisions from the Bank of England and the ECB. Given the record jump in eurozone inflation expectations to 4%, market participants fear that Christine Lagarde may take a more hawkish stance than previously expected. Fresh inflation data complicates the situation for the European regulator: Germany’s rate rose to 2.9%, and Spain’s to 3.5%, the highest in two years. The UAE’s exit from OPEC has added volatility to commodity markets but has not yet pushed WTI oil below 100 dollars per barrel.

On Wednesday, WTI oil prices surged more than 7%, exceeding 107 dollars per barrel. The sharp jump was triggered by Donald Trump’s statement that the naval blockade of Iran will continue until a new nuclear deal is reached, eliminating any remaining hope for reopening the Strait of Hormuz. The situation is worsened by the UAE’s exit from OPEC and U.S. data showing a critical drop in inventories amid record exports above 6 million barrels per day. The enormous demand for U.S. crude confirms a global supply deficit caused by the paralysis of Middle Eastern logistics, pushing prices to new multi‑year highs.

In Asia, Japan’s Nikkei 225 (JP225) did not trade yesterday, China’s FTSE China A50 (CHA50) rose by +0.79%, Hong Kong’s Hang Seng (HK50) closed up +1.68%, and Australia’s ASX 200 (AU200) fell by -0.27%.

The offshore yuan stabilized at 6.84 per dollar, preparing to end the month in positive territory thanks to unexpectedly strong Chinese data. Despite global instability, China’s manufacturing sector showed impressive resilience: the private PMI jumped to 52.2, the highest since late 2020, and the official index remained in expansion territory for the second month (50.3). The country’s economy is effectively cushioning the Middle East crisis through strategic oil reserves and an aggressive shift toward renewable energy. Markets are now focused on Donald Trump’s upcoming visit to China on May 14-15.

The New Zealand dollar (NZD) stabilized at 0.583, attempting to recover after falling to a three‑week low. The kiwi weakened due to a sharp revision of expectations for the RBNZ rate decision: after comments from Anna Breman about stable core inflation, the probability of a May rate hike fell from 60% to 45%. The situation is worsened by the business climate, which in April turned negative for the first time in three years amid the energy shock and falling exporter profits. The future of the kiwi now depends entirely on whether recession fears outweigh the need to fight inflation at the upcoming central‑bank meeting.