InvestMacro

On Thursday, US stock indices closed at new all‑time highs. By the end of the day, the Dow Jones (US30) rose by 0.05%. The S&P 500 (US500) gained 0.58%. The Tech‑heavy NASDAQ (US100) closed higher by 0.91%. The main drivers of the rally were the breakthrough developments in the Middle East: negotiators from the US and Iran finally reached an agreement to extend the ceasefire and gradually unblock oil and LNG shipments from the Persian Gulf, which ultimately deflated speculative pressure in the commodity market and stabilized government bond yields.

In Europe, by the end of the day, Germany’s DAX (DE40) fell by 0.34%, France’s CAC 40 (FR40) closed up 0.21%, Spain’s IBEX 35 (ES35) closed lower 0.19%, and the UK’s FTSE 100 (UK100) ended in the red at 0.64%. The published minutes of the ECB’s April meeting confirmed a deep split within the regulator and strengthened the market’s “hawkish” expectations. It turned out that keeping rates unchanged in April was a compromise and “highly contentious” decision: some officials were ready to vote for immediate tightening. The minutes also show that even the two rounds of monetary tightening planned for this year may not return inflation to the 2% target. Against this backdrop, markets have become more confident that on June 11, the ECB will almost certainly raise key rates by 25 basis points, and are pricing in at least one more similar move before year‑end.

WTI crude oil prices showed high volatility, fluctuating around $89 per barrel. Early in the session, prices jumped by about 2% due to another escalation: the US destroyed several attack drones near the Strait of Hormuz, Kuwait intercepted a missile fired in its direction, and Iran’s Revolutionary Guard threatened a harsh response to attempts by foreign vessels to enter the Persian Gulf. However, prices later erased all gains after an Axios report that the US and Iran had agreed on a preliminary 60‑day memorandum. The document, which still needs approval from President Donald Trump, guarantees unimpeded navigation and obliges Iran to fully clear mines from the Strait of Hormuz within 30 days, sharply reducing the geopolitical risk premium.

The US natural gas prices (XNG) jumped more than 4%, holding above $3.2 per MMBtu and approaching February highs. A powerful trigger for buyers was fresh EIA data. For the week ending May 22, US utilities injected 92 billion cubic feet of gas into storage, noticeably below the expected 95-96 bcf and far below last year’s 104 bcf. As a result, total inventories reached 2.483 trillion cubic feet. Although this level still exceeds last year’s by 0.9% and the five‑year seasonal average by 6.2%, the market surplus continues to shrink.

In Asia on Tuesday, Japan’s Nikkei 225 (JP225) rose by 0.88%, China’s FTSE China A50 closed higher by 0.42%, Hong Kong’s Hang Seng (HK50) declined by 0.73%, while Australia’s ASX 200 (AU200) rose by 0.11%.

The offshore yuan stabilized around 6.76 per dollar, holding near its strongest levels since February 2023. The main support factor for China’s currency was the news of a diplomatic breakthrough in the Middle East. An additional powerful driver for the yuan is the global artificial intelligence boom, which has sharply increased demand for Chinese tech exports. This inflow of foreign currency has significantly eased Beijing’s concerns about excessive yuan appreciation, allowing it to finish May with a second consecutive month of gains despite regular attempts by the People’s Bank of China to restrain the momentum through lower‑than‑expected daily fixings.

The Australian dollar stabilized around 0.71 USD, ending May with a moderate decline of about 0.5%. The main pressure on the “aussie” came from a sharp drop in investor expectations for further monetary tightening by the Reserve Bank of Australia. April inflation came in below predictions, consumer spending weakened, and the labor market showed the first signs of stabilization. As a result, traders reduced the probability of a rate hike at the June meeting to just 5%, although they still estimate the chances of a final move to 4.6% in Q4 2026 at around 70%.

The Governor of the Reserve Bank of New Zealand, Anna Breman, reaffirmed the regulator’s “hawkish” stance in her speech, stating that the Official Cash Rate (OCR) may rise faster and more aggressively than previously expected. Breman emphasized that due to the escalation of the Middle East conflict, New Zealand and its key trading partners face a classic stagflation scenario: slowing economic growth alongside a short‑term spike in inflation caused by supply chain disruptions and rising production costs.

On Wednesday, the US stock market showed restrained dynamics. By the end of the day, the Dow Jones Index (US30) rose by 0.36%. The S&P 500 Index (US500) increased by 0.02%. The Technology‑heavy NASDAQ Index (US100) closed lower by 0.09%. Performance in the technology sector was mixed. Semiconductor manufacturers maintained upward momentum – Micron shares gained another 2% following yesterday’s 19% rally triggered by UBS analysts tripling the company’s target price. At the same time, major software and cloud solution developers came under moderate selling pressure: Microsoft, Amazon, and Alphabet fell by more than 1%.

Bitcoin fell below $74,000, hitting a five‑week low amid a clear cooling of institutional demand. The main bearish factor was the reversal in the US spot Bitcoin ETF sector: after two months of steady inflows, net outflows from the funds exceeded $1 billion in May. Declining speculative interest and overall trader passivity also pushed BTC implied volatility to a nine‑month low, sharply reducing demand for put options used to hedge against market declines.

The Canadian dollar (“loonie”) weakened to below 1.382 per US dollar, marking a six‑week low. The decline of the national currency was triggered by a combination of weak domestic macroeconomic data and a strong contrast in monetary policy rhetoric between Canada and the United States. The Bank of Canada’s (BoC) preferred core inflation indicators fell more than analysts expected, reaching their lowest levels in the past five years. This confirms the Canadian regulator’s view that inflationary pressure outside the energy sector is fading, while the current spike in fuel prices is temporary. According to preliminary estimates, Canada’s GDP growth for the first quarter of 2026 will be at zero, indicating serious risks to economic growth and effectively removing incentives for the Bank of Canada to continue raising interest rates.

European stock indices closed in the green, showing a moderate recovery after large‑scale sell‑offs the day before. By the end of the day, Germany’s DAX (DE40) fell by 0.03%, France’s CAC 40 (FR40) closed up 0.43%, Spain’s IBEX 35 (ES35) rose by 0.49%, and the UK’s FTSE 100 (UK100) closed in the green at 0.13%. A positive driver for Eurozone equities and sovereign bonds was a noticeable decline in energy prices. The cyclical luxury and high‑end consumer goods sector delivered a strong session. Amid hopes for slowing inflation, shares of LVMH, Hermes, Adidas, and L’Oreal surged between 2.5% and 5.5%. The banking sector also closed higher, led by Santander and Intesa Sanpaolo (+1.5%).

Prices for US WTI crude oil plunged more than 4%, falling below the psychological level of $90 per barrel. Quotes approached a five‑week low amid a sharp surge of optimism around a potential peace agreement between Washington and Tehran. State television of the Islamic Republic reported the preparation of an unofficial draft interim agreement intended to end the three‑month war and fully unblock the Strait of Hormuz (which accounts for about 20% of global oil and LNG shipments). Later, Iranian officials confirmed that indirect contacts with Washington were ongoing. The White House quickly denied Tehran’s statements, calling the news of a completed draft “pure fiction,” while Secretary of State Marco Rubio again warned that several more days may pass before a final deal is reached.

In Asia on Tuesday, Japan’s Nikkei 225 (JP225) fell by 0.01%, China’s FTSE China A50 closed lower by 0.44%, Hong Kong’s Hang Seng (HK50) declined by 1.06%, and Australia’s ASX 200 (AU200) rose by 0.69%.

The Australian dollar (AUD) fell to a six‑week low near 0.71 USD amid a sharp 1.1% drop in household spending in April. Consumers, discouraged by expensive fuel and geopolitical instability, began cutting back heavily on food, clothing, and travel, signaling effective demand cooling under the Reserve Bank of Australia’s tight policy.

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.

The US stock indices were closed yesterday due to a banking holiday.

In Europe, by the end of the day, Germany’s DAX (DE40) rose by 2.01%, France’s CAC 40 (FR40) closed up 1.76%, Spain’s IBEX 35 (ES35) gained 2.24%, and the UK’s FTSE 100 (UK100) was closed due to a holiday. Frankfurt’s DAX 40 updated its highest levels since January of this year, making the German stock market the undisputed leader in the European region. The main driver behind such a powerful rally was the positive progress in negotiations between the United States and Iran. Global financial markets enthusiastically welcomed the news about the preparation of a draft peace agreement that could end the ten‑week escalation and restore stability in the Strait of Hormuz. For Germany’s energy‑import‑dependent economy, this became a strong signal of declining future inflation risks and lower business operating costs.

Prices for US WTI crude oil rose to 92 dollars per barrel, partially recovering the previous days’ decline. The reason for the local rebound was new US military operations in southern Iran, which reminded investors of the persistent risks of negotiation failure and kept the market under strong tension. The latest escalation occurred after the US carried out preemptive strikes on Iranian missile launchers and mine‑laying vessels near the Strait of Hormuz, calling it an act of protection of American forces. At the same time, Donald Trump attempted to calm the markets, stating that diplomatic dialogue is progressing successfully, although he warned Tehran of inevitable new heavy strikes in case of a breakdown in contacts. At the moment, the parties are discussing a two‑month temporary ceasefire under which the US would lift the naval blockade, and Iran would fully reopen the Strait of Hormuz to commercial shipping.

In Asia on Monday, Japan’s Nikkei 225 (JP225) rose by 2.87%, China’s FTSE China A50 closed higher by 2.24%, Hong Kong’s Hang Seng (HK50) was closed yesterday, and Australia’s ASX 200 (AU200) gained 0.40%.

The New Zealand dollar fell to 0.584 USD, fully erasing the modest gains of the previous session. The sharp reversal of the “kiwi” occurred after US forces carried out targeted strikes on missile launchers and mine boats in southern Iran near the Strait of Hormuz, which the Pentagon described as an act of self‑defense. This unexpected escalation erased the optimism of recent days regarding the imminent signing of a peace agreement between Washington and Tehran, triggering an investor flight from risk assets into the safe‑haven US dollar.

The currency campaign of the People’s Bank of China aimed at controlled strengthening of the national currency continues confidently. In recent days, the US dollar has shifted to consolidation against the yuan, but last week it closed at its lowest level since May 14, when a three‑year low near 6.7815 yuan per dollar was recorded. Current market sentiment shows that the average outlook of analysts surveyed by Bloomberg, expecting 6.75 yuan per dollar by year‑end, appears too conservative. The observed trend opens the potential for a more aggressive appreciation of the Chinese currency toward 6.60 yuan per dollar.

Singapore’s annual inflation rate in April 2026 stood at 1.8%, maintaining the pace of the previous month and surprising the market, which expected an acceleration to 2%. Nevertheless, this figure remains at its highest level since September 2024, reflecting the prolonged geopolitical crisis in the Middle East, which continues to pressure global supply chains and energy costs.