US Stock Futures Rise, Set For 8th Consecutive Week Of Gains

US equity futures are higher into the long weekend, with the S&P 500 gaining for an 8th consecutive week higher, its longest streak of weekly wins since 2023 with sustained momentum in popular thematics, thanks to a liquidity boost, supportive macro readings, solid earnings and hopes that the US and Iran are moving closer to a peace deal, not to mention unrelenting enthusiasm for artificial intelligence which is fueling a historic gamma squeeze.

As of 7:30am ET, S&P futures are 0.2% higher, cutting overnight gains of 0.5% by more than half, and Nasdaq future gain 0.1% with most Mag 7 banes higher pre market led by GOOG/L (+0.4%) and NVDA (+0.3%). Bond yields are 1-2bp lower led by the belly of the curve; the 10-year yield is down two basis points to 4.55%; the softer-than-expected Japan CPI drove 30Y JGB yield 3.6bp lower (now back below 4%), which supported global bond markets. The USD is higher, while commodities are mixed: WTI crude added $2.10 to $98.50 this morning; precious metals are lower; Brent rebounded 2.6% to above $105 a barrel, but remained lower for the week. Ags are higher. Economic data slate includes May final University of Michigan sentiment (10am) and Kansas City Fed services activity (11am). Fed speaker slate includes only Waller at 10am

In premarket trading, Mag 7 stocks are mixed (Alphabet +0.06%, Nvidia +0.2%, Apple +0.07%, Tesla +0.05, Amazon -0.2%, Microsoft +0.1%, Meta -0.2%)

US-listed Chinese stocks decline after China’s securities regulator announced plans to penalize three cross-border brokerages, adding to investor concerns around Beijing’s stance toward internet firms. Among large-cap Chinese internet firms, Alibaba (BABA) -4% and Baidu (BIDU) -3%.
Booz Allen Hamilton (BAH) rises 5% after the defense contractor forecast adjusted Ebitda for 2027 that beat the average analyst estimate.
Deckers Outdoor (DECK) gains 2% after the parent company of both Ugg and Hoka reported revenue for the fourth quarter that beat the average analyst estimate.
Estee Lauder Cos. (EL) climbs 10% after the collapse of a proposed combination with Puig Brands SA that would have created one of the world’s largest fragrance and skincare companies.
IBM (IBM) rises 2%, GlobalFoundries (GFS) gains 3% and smaller quantum computing firms climb, putting them on track to build on Thursday’s rally that came after the US government awarded $2 billion to IBM and several other companies as part of an investment push to develop quantum wafer facilities.
IMAX Corp. (IMAX) gains 15% after the Wall Street Journal reported the large-screen theater company is exploring a sale and has approached entertainment companies as potential buyers.
Ross Stores (ROST) rises 4% after the off-price retailer boosted its comparable sales forecast for the full year.
Sweetgreen (SG) gains 6% after JPMorgan raised its recommendation on the restaurant chain to overweight from neutral on new products and an improving balance sheet.
Take-Two Interactive Software (TTWO) rises 2% after the video-game company reported fourth-quarter results that beat expectations and confirmed a Nov. 19 release date for Grand Theft Auto VI.
Workday (WDAY) jumps 7% after the software company reported first-quarter results that beat expectations and gave an outlook that is seen as positive.
Zoom Communications (ZM) rises 7% after the company raised its full-year forecast for both adjusted earnings and revenue. It also reported first-quarter results that beat expectations.

In other news, SpaceX delayed a critical test of its massive Starship rocket just seconds before launch after a pin holding the tower arm in place failed to retract. Polymarket has appointed a representative in Japan and is preparing to lobby for the authorization of prediction markets in the country.

Markets are heading into the weekend on a quieter note, shaking off worries that severe disruptions to energy flows from the Middle East could stoke inflation. Signs that neither Iran nor the US is looking to widen their conflict and growing appetite for a broader group of AI beneficiaries have kept volatility subdued despite conflicting reports around peace talks. A drop in the VIX to the lowest since early February is helping the mood, as are some chunky numbers on announced corporate equity purchases. These have already exceeded $1 trillion for 2026 across new stock buybacks and cash takeovers, according to EPFR data.

Those looking for signs of economic resilience can point to the “US exceptionalism” that strategists at Evercore ISI saw in Thursday’s S&P PMI data. They lauded the contributions from domestic energy production, AI capex and wealth creation. Exceptional, too, is the performance by tech and AI since the start of the Iran War. A basket of stocks exposed to the Anthropic AI ecosystem has surged 56% since the start of March while the equal-weighted S&P 500 is flat.

On the subject of AI, Bloomberg notes that talks between the EU and Anthropic over testing banks and companies for digital vulnerabilities have stalled. Lenovo jumped to 26-year highs in Hong Kong trading after AI-related sales surged 84% year-on-year. DeepSeek’s senior management is said to have told potential investors in its ongoing 70 billion yuan ($10 billion) funding round that the startup will prioritize groundbreaking AI research over short-term commercialization.

“We’ve got the biggest capital spending boom since the financial crisis,” said Guy Miller, chief market strategist at Zurich Insurance.“That’s leading to record corporate profitability; we are in this virtuous circle where it’s generating profitability for other suppliers, other companies too.”

“The market is fully aware that headlines will remain volatile, and while oil needs to react for practical reasons, equities have probably moved on,” said Geoff Yu, senior macro strategist at BNY. “The lack of an agreement does not imply re-escalation, so the focus for now will stay with earnings and data.”

In politics, Alberta’s Premier said she’ll call a referendum on whether the energy-rich province should stay in Canada or start a legal process that could eventually lead to its independence. China imposed new export controls on some key chemical ingredients shipped to the US, Mexico and Canada, in a further sign of cooperation with Washington on curbing drug trafficking.

Away from stocks, treasuries gain for a third straight day after yields earlier this week tested multiyear highs. Investors said US authorities remain highly attentive to borrowing costs and that current levels will sharpen the White House’s resolve to find a resolution in the Middle East.

“The administration is well-focused on the bond market, even more than equities in my view, so they won’t allow the curve to steepen much further,” said Andrea Gabellone, head of global equities at KBC Securities.

In Europe, the Stoxx 600 rose for a fifth straight day, climbing 0.5% as the region’s semiconductor-linked stocks such as ST Microelectronics, ASML Holding and Infineon led gains.Here are the biggest movers Friday:

Deutsche Post shares gain as much as 4.5% after being upgraded at Deutsche Bank, with analysts calling an end to the earnings downgrade cycle and saying recent fears over AI disruption and competition are overdone
Softcat shares rise as much as 12%, hitting a six-month high, after the IT services firm lifted its annual underlying operating profit guidance. Analysts said a pull-forward in orders helped and expect consensus estimates to increase
Brembo shares jump as much as 9.3% after the breaking systems maker announced the creation of a joint venture with Ningbo Huaxiang in China
Games Workshop shares rise as much as 3.6% after the Warhammer owner said it expects full-year core revenue and pretax profit to be higher than the previous year
Siemens Healthineers shares climb as much as 1.5% as Barclays analysts note the German medical equipment maker’s upbeat commentary on inflation at its European Leadership conference this week
Puig shares slide as much as 15% at open, the most on record since its 2024 IPO, after the Spanish beauty firm’s merger talks with Estee Lauder collapsed
Julius Baer shares dropped 10% following earnings update that analysts say was disappointing, with weak inflows. Shares had gained 9% YTD through Thursday
Genuit Group shares drop as much as 6.1% after the developer of plastic piping systems warned its annual underlying operating profit will be toward the lower end of analyst expectations
Amplifon drops as much as 3% after the Italian company sold shares to fund its acquisition of GN Store Nord’s hearing-aid business, announced in March
Alerion Clean Power shares drop as much as 11% after the Italian renewable energy company’s board approved a €135.6 million capital increase, excluding pre-emptive rights, for up to 10% of its share capital

Earlier, Asian equities extended their advance, supported by sustained optimism in artificial intelligence and signs of progress in US-Iran talks. The MSCI Asia Pacific Index climbed as much as 1%, putting it on track to recover losses from the previous week. Japan and Taiwan led broad advances in the region. Interest in AI stocks remained firm amid stellar results from companies. Lenovo Group was the best performer on the Asian benchmark after reporting strong growth in AI-related earnings. In Japan, tech shares led gains, while the Kosdaq gauge extended gains in South korea to a second day, driven by a new government-backed fund for tech firms. Japanese equities rose, “supported by lower interest rates and expectations for an end to the Iran conflict,” BofA Securities analysts including Masashi Akutsu wrote in a note. “From a medium-term perspective, we maintain a preference for AI-related names and a bullish stance on Japanese equities.” Here Are the Most Notable Movers

China’s hottest AI stocks may be among candidates for inclusion in Hong Kong stock gauges, opening access to trading links that may trigger billions of dollars in inflows.
Zhipu shares surge as much as 23% in Hong Kong to a record, with analysts citing the Chinese AI company as a potential candidate for inclusion in the Hang Seng Tech Index.
Lenovo Group Ltd. shares jumped to the highest in 26 years on Friday after reporting strong growth in AI-related earnings that offset difficulties from rising component prices.
SoftBank Group shares surged for a second day, rising as much 13.9%, after the ADRs of its unit ARM Holdings rallied in the wake of earning results from AI chip leader Nvidia, which Jefferies sees as positive for ARM.
Tongcheng Travel’s shares drop as much as 6.6%, after Citigroup cut its price target for the Chinese online travel agent, citing concerns over the greater-than-expected impact of oil price hikes on domestic Travel.
Shares of NetEase rise as much as 5.8% in Hong Kong after the Chinese video games company reported better-than-expected results, thanks to strong game revenue growth and record-high margins after cost-cutting efforts.
Lenovo’s shares rally as much as 11% in Hong Kong to their highest since March 2000, after the Chinese computer hardware maker reported fourth quarter revenue that beat estimates.
Xiaomi’s Hong Kong-listed shares jump as much as 1.6% after the company introduced a performance version of its popular YU7 SUV, which Citigroup estimates could achieve monthly sales above 10,000 units.
Shares of Guzman y Gomez surge as much as 21% after the Australian burrito restaurant chain exits the US market, a move that analysts say will improve future earnings.
Tuas shares slide as much as 10% after the Australian telecommunications firm confirmed that the sale and purchase agreement for its subsidiary Simba to acquire M1 has been terminated.

The Bloomberg Dollar Spot Index is up by 0.2% after closing +0.1% in a choppy Thursday session, Antipodeans lag amid the risk environment and shifting tightening bets. Conflicting reports from the Gulf whipsawed the Buck on Thursday. Traders circulated fabricated reports that a final US-Iran draft had been reached, attributing the report to Al Arabiya, though this was later denied by the outlet. Despite this, progress in talks appears evident, while gaps remain on key issues, uranium and Hormuz. Energy benchmarks have rebounded, and as such, DXY is a touch firmer. The index resides well above significant DMAs, and within recent ranges - today supported by 99.20.

AUD is the worst G10 performer as domestic banks push back on RBA calls. Recent soft PMI, and labour market data which showed a surprise contraction in headline employment change, and an uptick in the unemployment rate prompted NAB and Westpac to push calls for tightening back to August, which both previously expected the first hike expected in June. AUD/USD resides within Thursday's ranges, remaining below 0.72 and supported by 0.71.
GBP is unchanged against the Buck, and a touch firmer against the EUR. Retail Sales missed estimates, with the ONS noting that the poor figure was driven lower by fuel purchases. The PSNB figure also rose from April's print and overshot the OBR's forecast.
EUR/GBP lower by 0.1% and within Thursday's broad ranges. Support around 0.8640. GBP/USD little changed, within recent ranges

In rates, Treasuries gained for a third straight day after yields earlier this week tested multiyear highs. US yields are 1bp-1.5bp richer across the curve with intermediates outperforming, flattening 2s10s spread by almost 1bp; 10-year near 4.56% trails bunds and gilts in the sector by about 2.5bp. SIFMA has recommended a 2pm New York time close of trading for USD-denominated cash bonds ahead of US Memorial Day holiday Monday. IG dollar issuance slate empty so far. One offering was priced on Thursday, bringing weekly total to about 80% vs dealers’ $40 billion forecast. Focal points of holiday-shortened US session include University of Michigan sentiment data and speech by Fed’s Waller on the economic outlook.

In commodities, WTI crude futures are up around 2%, snapping a three-day decline, following latest Iran comments on uranium and the Strait of Hormuz.

Economic data slate includes May final University of Michigan sentiment (10am) and Kansas City Fed services activity (11am). Fed speaker slate includes only Waller at 10am

Market Snapshot

Top overnight News

Oil rose as an Iran peace deal remained elusive. Iran’s recent attack on UAE’s nuclear power plant is seen as a “warning shot.” BBG
Arabiya and Al Hadath exclusively report the text of the anticipated US-Iran agreement in case of its approval. The agreement includes: an immediate, comprehensive, and unconditional ceasefire on all fronts, a halt to military operations, ensuring freedom of navigation in the Arabian Gulf, the Strait of Hormuz, and the Sea of Oman and establishing a joint mechanism for monitoring and resolving disputes.
Trump said the US will send 5,000 more troops to Poland in a policy U-turn. Separately, Ukraine and its allies are growing confident Russia’s invasion is running out of steam. BBG
China has launched an unprecedented campaign against illegal cross-border trading, threatening severe penalties against popular brokers and ordering existing non-compliant accounts to be liquidated within two years. BBG
China imposed new export controls on some key chemical ingredients shipped to the US, Mexico and Canada, in a further sign of cooperation with Washington on curbing drug trafficking. The targeted substances are primary building blocks used to manufacture illicit fentanyl. BBG
China’s stock exchanges are scrutinizing recent stock rallies that have been fueled by artificial intelligence optimism, asking some listed companies and funds to give more details about their approach to the technology. Regulators have sent inquiries to managers of exchange-traded funds and other funds with heavy exposure to AI-related sectors, asking them to disclose their valuation methodologies and justify the assets they hold. BBG
Japan’s key inflation gauge rose at the slowest pace in four years as the government continued to help ease the cost of living, creating difficult optics for the Bank of Japan to raise interest rates soon. Japan’s core consumer price index, which excludes fresh food, rose 1.4% in April from a year earlier. BBG
The IMF approved the latest review of Argentina’s $20 billion debt deal to unlock about $1 billion, a vote of confidence in Javier Milei despite the country missing a program target. BBG
UK government borrowing hit the highest level for any April in six years, as pressure on public finances mounts from the Iran war and domestic political instability. BBG
House Republican leaders canceled a vote on the war as GOP absences threatened a defeat for Donald Trump. BBG

Iran News

Arabiya and Al Hadath exclusively report the text of the anticipated US-Iran agreement in case of its approval. The agreement includes: an immediate, comprehensive, and unconditional ceasefire on all fronts, a halt to military operations, ensuring freedom of navigation in the Arabian Gulf, the Strait of Hormuz, and the Sea of Oman and establishing a joint mechanism for monitoring and resolving disputes.
US Secretary of State Rubio said there has been slight progress on Iran. Iran is trying to create a tolling system in the Strait, and no nation should accept that. We will be continuing talks with Iran, and there is progress.
"A Pakistani source says that cautious optimism is the prevailing sentiment in the ongoing discussions regarding the planned agreement.", Al Arabiya reported.
Pakistan source said the US and Iran's insistence on raising the bar for their demand regarding uranium and the Strait of Hormuz has led to a "crisis in negotiations", Al Jazeera reported.
Pakistani Interior Minister met again with Iran's Foreign Minister to study proposals for resolving disputes between US and Iran, Al Jazeera reported, citing the Pakistani Embassy.
Pakistan's Interior Minister will remain in Tehran on Friday to continue consultations and meet with Iranian officials, while a high-level source said the Pakistani Army Chief would not travel to Tehran on Thursday night, according to Al Arabiya.
Pakistan's Foreign Ministry spokesperson said China supports mediation efforts and has presented a 5-point initiative.
Iranian National Security Commission member Rezei posted "These negotiations are probably also a hoax and the Americans have no desire for diplomacy"; says "instead of diplomats, send missiles to negotiate."
Iranian Foreign Ministry said "Everything being circulated about the status of the negotiations is not accurate", Al ArabyTV reported.
UAE official said there is a '50-50' chance of US-Iran Strait of Hormuz agreement, AFP reported.
Unconfirmed reports of explosions in the UAE, Tasnim reported. Details of the explosions have not yet been released.
Iraqi ports said search teams have been mobilised within territorial waters after contact was lost with two ships, while they did not receive any distress calls from the two Bolivian-flagged ships with which contact has been lost

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly higher following the positive handover from Wall Street, where all major indices gained and the Dow notched a record close on what was a choppy session, amid cautious optimism due to contradicting geopolitical headlines. ASX 200 gained with outperformance in the mining, materials and resources sectors, although the upside in the broader market was capped by weakness in telecoms, real estate and defensives. Nikkei 225 rallied amid continued tech strength, with SoftBank shares adding to the recent advances with another double-digit percentage gain, while the latest inflation data was softer-than-expected and could compel policymakers to think twice about a June rate hike. Hang Seng and Shanghai Comp were in the green with the Hong Kong benchmark led higher by tech stocks, including Lenovo and NetEase, as the former was boosted by its earnings results, which showed record FY revenue, while the mainland kept afloat after the PBoC upped liquidity efforts for a third day.

Top Asian News

Chinese regulators and exchanges intensify scrutiny of AI-fuelled market frenzy, pressing listed firms and fund managers to justify valuations, Bloomberg reported citing sources.
China CSRC and seven other departments said they will establish a routine collaborative regulatory mechanism to conduct comprehensive monitoring and inspections. CSRC plans penalties against Futu Holdings, Up Fintech’s Tiger Brokers and Longbridge Securities, including confiscating illegal gains.
China's NDRC said regarding the question on investment from the US, that they never told Chinese tech firms they couldn't take foreign investment, while it added that foreign investment must follow Chinese laws and rules, and should not harm national security and interests. Furthermore, it is planning a policy support framework to accelerate AI commercialisation, and stated that prices are set to remain stable as the domestic supply demand outlook improves.

European bourses (STOXX 600 +0.5%) start the final day of the week entirely in the green, heading into an extended weekend for UK and US assets. This follows comments by US Secretary of State Rubio, via the FT, noting "some good signs" in the US-Iran talks, while Reuters reported, citing an Iranian official, that "gaps have been narrowed". More recently, Al Arabiya released the text of the anticipated US-Iran agreement, which includes an immediate and unconditional ceasefire. However, commentary out of Iran earlier in the morning continues to downplay negotiations, with the Iranian Foreign Ministry saying that everything that has been circulated about the status of negotiations is inaccurate. Sectors highlight the positive bias. Technology (+1.8%) leads, closely followed by Telecoms (+1.3%) and Industrial Goods & Services (+0.9%). To the downside lie Real Estate (-0.6%) and Energy (-0.7%). Chemicals (+0.7%) are eking out mild gains despite a flurry of downgrades within the sector (IMCD/Arkema/Evonik to underweight by JPMorgan).

Top European News

The next EU-UK summit could be postponed until July at the earliest (vs initial June date), Bloomberg reported citing sources. The prospect that substantial deals won’t be agreed in time.
US Secretary of State Rubio said President Trump is disappointed with some NATO allies. Meeting will set groundwork for NATO leader’s summit.
German Foreign Minister said defence spending will reach more than 4% of GDP in 2026 and on the way to 5%

DXY is higher on the session after closing +0.1% in a choppy Thursday session, Antipodeans lag amid the risk environment and shifting tightening bets.
Conflicting reports from the Gulf whipsawed the Buck on Thursday. Traders circulated fabricated reports that a final US-Iran draft had been reached, attributing the report to Al Arabiya, though this was later denied by the outlet. Despite this, progress in talks appears evident, while gaps remain on key issues, uranium and Hormuz. Energy benchmarks have rebounded, and as such, DXY is a touch firmer. The index resides well above significant DMAs, and within recent ranges - today supported by 99.20. Today sees the UoM final release for May.
AUD is the worst G10 performer as domestic banks push back on RBA calls. Recent soft PMI, and labour market data which showed a surprise contraction in headline employment change, and an uptick in the unemployment rate prompted NAB and Westpac to push calls for tightening back to August, which both previously expected the first hike expected in June. AUD/USD resides within Thursday's ranges, remaining below 0.72 and supported by 0.71.
GBP is unchanged against the Buck, and a touch firmer against the EUR. Retail Sales missed estimates, with the ONS noting that the poor figure was driven lower by fuel purchases. The PSNB figure also rose from April's print and overshot the OBR's forecast.
EUR/GBP lower by 0.1% and within Thursday's broad ranges. Support around 0.8640. GBP/USD little changed, within recent ranges

Central Banks

ECB President Lagarde said long term inflation expectations are broadly well anchored and are particularly attentive to second-round effects.
ECB's Demarco said the ECB will probably need to hike in June. There is not much evidence of indirect inflation effects and the 2026 inflation outlook likely to be revised upwardly. Projections to show if one hike is enough or more is needed.
Westpac pushes back its RBA rate hike call to August and September from a previous call of June and August.

Fixed Income

Global benchmarks are firmer this morning, albeit modestly so. Action throughout the week has been at the whim of mixed geopolitical newsflow, which has led to choppy trade across the energy space. Today, oil prices are firmer (Brent Jul +3%), but reside towards WTD lows. As such, fixed benchmarks trade with tentative gains this morning as negotiation efforts continue.
USTs are firmer by a handful of ticks, though the bias throughout the European morning has been choppy. Nonetheless, US paper remains in the green and within a 109-08 to 109-14+ range. From a geopolitical front, Al Arabiya obtained the text of the anticipated agreement between the US and Iran. All key details can be found on the board at 09:16 BST, but the next sticking points incl. the exchanging of text, and then the beginning of negotiation, which the text suggested should begin within 7 days. Ahead, focus will be on speak from Fed’s Waller, where he will touch on the economic outlook, whilst the final US Michigan Consumer Sentiment is also scheduled. Yields have been of great attention this week, with the US 10yr printing multi-month highs (4.68%), whilst the 30yr soared to levels not seen since 2007 (5.2%). As for today, the 10yr is hovering towards WTD lows (4.56%) as markets remain focused on continued negotiations.
Bunds are firmer by c. 35 ticks, and trade within a 125.06 to 125.30 range. German paper has ultimately followed peers, but has had some domestic data to digest. Early this morning, Final German GDP (Q/Q) was unrevised, whilst the Y/Y metric was revised slightly firmer. Overall, indicative of a resilient economy, though external leads (PMIs) suggest that this may be short-lived. This theme is also seen in the latest Ifo survey, which has stabilised since the last month, though still does not indicate any material improvement in sentiment.
Gilts started with slight outperformance, but now trade alongside peers. Strength followed peers, with outperformance stemming from a cooler-than-expected Retail Sales report. ONS noted the poor figure was driven lower by fuel purchases, suggesting motorists had full tanks, or had stopped stockpiling as fuel prices stabilised higher, given the length of the energy disruption. The PSNB was also published, which rose to 24.3bln (prev. 12.6bln, exp. 24.3bln). Gilts trade within an 87.56 to 87.86 range.

Commodities

In terms of the latest on geopolitics, Al Arabiya/Al Hadath reportedly obtained a draft US-Iran agreement which, if approved, would see an immediate and unconditional ceasefire across all fronts. The draft also calls for a halt to military operations and media escalation, a commitment not to target military, civilian or economic infrastructure and guarantees for freedom of navigation in the Arabian Gulf, Strait of Hormuz and Sea of Oman. The agreement would take effect immediately once officially announced by both sides. Pakistan sources said the US and Iran's insistence on raising the bar for their demand regarding uranium and the Strait of Hormuz have led to a "crisis in negotiations”.
WTI and Brent July futures are on a firmer footing heading into a weekend of risk, and with the sides reportedly hitting a crisis in talks amid raising the bar for demands regarding uranium and the Strait of Hormuz. WTI resides in a USD 96.92-99.43/bbl range while its Brent counterpart trades in a USD 103.77-106.36/bbl parameter.
Spot gold and silver are softer amid the elevated crude prices. Spot gold trades within a narrow USD 4,507-4,546/oz range, while spot silver trades on either side of USD 76/oz in a USD 75.69-77.04/oz range.
Base metal futures are mostly firmer amid the overall risk appetite across stocks amid ongoing headlines regarding Pakistani efforts to narrow the gaps between the US and Iran. 3M LME copper resides in a USD 13.56k-13.69k/t. Note that the LME is closed on Monday amid a UK bank holiday.
China refined fuel exports (ex Hong-Kong) expected to rise slightly from May-June to around 550k MT, according to Reuters sources.
Japan to receive first oil tanker to exit the Strait of Hormuz since US-Iran war began.
Hungary's PM said an explosion took place at a MOL's Tiszaujvaros energy plant. One person dead and several injured.
UAE Presidential Advisor said they were losing out in terms of production under OPEC, leaving it was under consideration for a three-year period.
Barclays said they have maintained their Brent forecast of USD 100/bbl for 2026, with risks skewed higher.

Trade/Tariffs

China adjusts drug-making chemicals export list to countries, reports suggest. Exports of relevant chemicals to the US, Mexico and Canada must apply for licenses in accordance with regulations.
The EU has suspended customs tariffs on certain nitrogen-based fertilisers for one year

US Event Calendar

10:00 am: United States May F U. of Mich. Sentiment, est. 48.2, prior 48.2
10:00 am: United States Fed’s Waller Speaks on Economic Outlook

DB's Jim Reid concludes the overnight wrap

Morning from Helsinki. After a lot of travel recently, next week is mercifully quiet — though the price is one day off work at the end of it, on half-term childcare duty. Speaking of kids, this weekend I’m organising a U9 cricket festival for around 75 of them. Wish me luck. I’ve used AI to sort out all the complicated fixtures, so by next week I’ll know whether it’s the future of humanity or not.

If this had been written as Europe went home last night, it would have been all about the removal of optimism, higher oil, higher yields and weaker equities. However, optimism over a potential deal in Iran turned everything around before a slight pullback into the US close, as differences appeared to remain over nuclear questions and the future status of the Strait of Hormuz. In the end, this has left Brent at $104.30/bbl this morning, about a dollar below where it was at this time yesterday. The tentative optimism meant 10yr Treasuries (-1.4bps) and the S&P 500 (+0.17%) posted modest gains, with equity futures and Asian markets also moving higher this morning.

In terms of Iran developments, a multitude of contradictory headlines drove markets over the past 24 hours. Initially, oil prices fell in the European morning, as Iran’s ISNA reported that Iran was in the process of responding to a US text, with the report also saying the US text “has narrowed the gaps to some extent”. That initial optimism was soon reversed, as Reuters reported that Iran’s Supreme Leader had ordered that the country’s enriched uranium should stay in Iran. This drove a rebound in oil prices, given that the US had been calling for the removal of Iran’s uranium in the talks. However, Al Jazeera and other outlets later reported denials that such a new directive had been issued. Oil prices then saw a renewed decline amid social media reporting that the US and Iran may have reached a draft agreement that would leave nuclear talks for later, though the veracity of those reports was unclear. Optimism partially ebbed again as Iran’s President Pezeshkian suggested that “we will never back down” in talks. There were also questions over the status of the Strait of Hormuz under any deal, with Trump opposing efforts by Iran and Oman to establish a toll system, saying “we want it open, we want it free, we don’t want tolls”.

The increased optimism around potential movement towards a deal saw Brent crude decline from above $109/bbl early in yesterday’s US session to settle at $102.58/bbl (-2.32% on the day), before edging higher again to $104.30/bbl as I type. The moderation in oil prices helped Treasury yields reverse initial increases yesterday, with the 10yr yield down -1.4bps to 4.57% after trading as high as 4.63%. They are flat this morning.

That decline in long-term yields came despite more hawkish repricing at the front end, with 2yr yields up +2.8bps to 4.08% as the probability of a Fed hike by December moved up to 82%, its highest level so far this year. These moves came as US data remained solid, with the flash composite PMI stable at an expansionary level of 51.7 in May, while input prices rose at their fastest pace since November 2022 amid the energy shock.

For equities, improved optimism on Iran meant that US stocks erased initial declines, with the S&P 500 (+0.17%) advancing despite trading in the red for most of the session. This leaves the index just -0.74% below its all-time high and on track to post an eighth consecutive weekly gain, which would be the longest such run since 2023. Defensive sectors and blue-chip names led the advance, bringing the Dow Jones (+0.55%) to a new record high. Tech stocks were broadly stable, with the Nasdaq (+0.09%) and the Magnificent 7 (+0.03%) little changed, though Nvidia (-1.77%) fell after its results the previous evening. By contrast, IBM (+12.43%) surged on news that the US administration agreed to award the company $1bn to build a foundry for producing quantum computing chips. Meanwhile, Intuit (-20.02%) and Walmart (-7.27%) were two of the three biggest decliners in the S&P after soft earnings releases.

A positive mood has mostly continued in Asian markets overnight with the Nikkei (+2.29%) leading the way. Most other main markets are up around half a percent. S&P (+0.26%) and Nasdaq (+0.38%) futures are also higher alongside European Stoxx (+0.82%) futures.
This follows a less positive session in Europe yesterday, with several indices losing ground, including Germany’s DAX (-0.53%) and France’s CAC 40 (-0.39%). However, the STOXX 600 (+0.04%) eked out a fourth consecutive gain, supported by equity strength in other countries, including the UK and Switzerland. A similar story played out in bonds, with 10yr bunds (+0.3bps), OATs (+1.0bps) and BTPs (+1.1bps) seeing modest sell-offs, while 10yr gilts (-2.2bps) outperformed. Market sentiment in Europe was not helped by the May flash PMIs, which showed a deepening downturn in activity as the energy shock weighed. The Eurozone composite PMI fell to its lowest level since October 2023, at just 47.5. In France, the composite PMI fell to 43.5, its lowest since November 2020. Even in the UK, which had held up relatively better in April, the May composite PMI was also in contractionary territory at 48.5. Overall, there was a consistent theme of European weakness, raising fears that the energy shock was having a bigger impact than first thought.

Japan CPI came in softer than expected this morning but it hasn't really moved JGB yields. April CPI came in at 1.4% yoy (1.6% expected), with core the same (1.7% expected). Ex fresh food and energy it came in three tenths lower than expected at 1.9%. Base effects and efforts to shield consumers from the impact of higher oil seem to have helped. The probably of a hike in June has gone down from 82.5% to around 78% according to futures. See our economist’s review of the data here.

Finally, there were a few other US data releases that were generally on the positive side. Weekly initial jobless claims fell slightly to 209k in the week ending May 16 (vs. 210k expected), taking the 4-week moving average down to 202.5k, its lowest level since January 2024. US housing starts for April also fell by less than expected, to an annualised pace of 1.465m (vs. 1.410m expected). The exception was the Philly Fed business outlook, which saw a sharp drop to a five-month low.

Looking ahead, data releases include UK retail sales for April, the Ifo Institute’s business climate indicator for Germany in May, and the University of Michigan’s final consumer sentiment index for the US in May. Central bank speakers include ECB President Lagarde, along with the ECB’s Vujcic, Kazimir and Muller, and the Fed’s Waller.

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