11th May 2026

U.S.

Stock Market Performance:

• U.S. equity markets rallied during the week, supported by strong corporate earnings results and continued investor optimism surrounding artificial intelligence (AI).

• Approximately 85% of companies within the S&P 500 Index had reported quarterly earnings results by May 7.

• According to FactSet data, just under 85% of reporting companies exceeded consensus earnings expectations.

• The overall magnitude of positive earnings surprises across the index was approximately 19%.

• The information technology sector outperformed all other sectors, driven by strong momentum in AI infrastructure, semiconductor demand, and AI-related consumption trends.

• Companies exposed to AI development and cloud infrastructure benefited from particularly positive investor sentiment.

• The energy and utilities sectors underperformed and finished the week in negative territory.

Labour Market and Employment Data:

• Initial jobless claims rose modestly to 200,000 for the week ending May 2, compared with 190,000 in the previous week.

• Despite the increase, new unemployment claims remained below the consensus forecast of 205,000, indicating ongoing resilience in the labour market.

• Continuing claims declined to 1.77 million, representing the lowest level recorded since 2024.

• Nonfarm payrolls increased by 115,000 jobs in April, significantly ahead of expectations for 62,000 new jobs.

• Strong hiring was recorded across healthcare, transportation and warehousing, and retail sectors.

• March payroll growth was revised upward from 178,000 to 185,000 jobs.

• Combined payroll gains across March and April marked the strongest two-month period for job creation since 2024.

• The unemployment rate remained unchanged at 4.3%.

• Labour force participation declined to its lowest level since October 2021, indicating fewer individuals were either employed or actively seeking employment.

• Data from Challenger, Gray & Christmas showed layoffs increased 38% month on month during April.

• Despite the monthly increase, layoffs declined 21% compared with the same period last year.

• Information technology firms announced the largest number of job cuts, with many companies attributing reductions to AI-driven efficiency improvements.

Productivity and Economic Activity:

• U.S. labour productivity growth slowed during the first quarter of the year.

• Productivity, measured as nonfarm employee output per hour, rose at an annualised rate of 0.8%, down from 1.6% in the final quarter of 2024.

• On a year-over-year basis, labour productivity still increased by a solid 2.9%.

• Construction spending rebounded by 0.6% in March following a 0.2% decline in February.

• New single-family housing construction projects represented a major source of strength within the construction sector.

• Factory orders increased 1.5% in March after rising 0.3% in February.

• Demand for electronic products surged, largely reflecting continued investment in AI infrastructure and technology-related capital expenditure.

Consumer Sentiment and Inflation Concerns:

• The University of Michigan consumer sentiment index fell sharply to 48.2 in early May.

• This represented the lowest reading ever recorded for the survey.

• Roughly one-third of survey respondents cited rising petrol prices as a major concern.

• Approximately 30% of respondents specifically referenced tariffs and trade-related costs as factors negatively affecting confidence.

Europe

Stock Market Performance:

• The STOXX Europe 600 Index ended a volatile trading week with modest gains in local currency terms.

• Investor sentiment improved early in the week due to easing Middle East geopolitical tensions and generally positive corporate earnings results.

• Market sentiment weakened later in the week after U.S. President Donald Trump threatened significantly higher tariffs on the European Union unless EU tariffs on U.S. goods were reduced to zero.

• Germany’s DAX rose 0.19% during the week.

• Italy’s FTSE MIB gained 2.16%.

• France’s CAC 40 Index finished broadly unchanged.

• The London Stock Exchange was closed on May 4 for Easter Monday.

• The UK’s FTSE 100 Index declined 1.26% over the week.

Monetary Policy and Inflation:

• Comments from Joachim Nagel, president of the Deutsche Bundesbank, suggested that the European Central Bank may raise interest rates again at its June meeting.

• Nagel stated that policymakers must remain prepared to act unless inflation shows substantial and sustained improvement.

• Eurozone producer price inflation accelerated sharply during March.

• Producer prices rose 3.4% month on month and 2.1% year over year.

• The monthly increase represented the largest rise since August 2022.

• Higher energy prices accounted for most of the inflationary increase.

Germany Economic Developments:

• German factory orders surged 5.0% during March.

• The increase significantly exceeded forecasts for 1.0% growth and followed February’s 1.4% increase.

• Growth was broad-based across sectors including electrical equipment, data processing technology, and mechanical engineering.

• German construction activity weakened sharply during April.

• The S&P Global Germany Construction PMI fell to 42.1, marking the weakest reading since March of the previous year.

UK and Spain Economic Data:

• Spain’s industrial production increased 1.8% year over year during March after declining 0.9% in February.

• The improvement marked the first expansion in Spanish industrial activity since November.

• Consumer goods production was the primary driver of growth.

• The S&P Global UK Composite PMI rose to 52.6 in April from 50.3 in March.

• Readings above 50 indicated continued economic expansion.

• The increase reflected stronger manufacturing output alongside improving services sector activity.

Japan

Stock Market Performance:

• Japanese equity markets were closed from Monday through Wednesday due to the Golden Week holiday period.

• In the shortened trading week, the Nikkei 225 Index surged 5.38%.

• The Nikkei reached a new record high on Thursday.

• The broader TOPIX Index advanced 2.70%.

• Technology and semiconductor shares led gains across the market.

• Investor enthusiasm surrounding AI demand and semiconductor growth continued to support Japanese equities.

• Optimism surrounding a possible U.S.-Iran diplomatic breakthrough also improved market sentiment by easing geopolitical concerns.

Bond Market and Energy Costs:

• Falling oil prices helped reduce concerns surrounding energy import costs and supply disruptions.

• Japan remains heavily dependent on crude oil imports from the Middle East.

• The yield on the 10-year Japanese government bond eased from 2.50% to 2.48%.

• Bond yields declined alongside broader falls in global government bond yields.

Currency Markets:

• The Japanese yen experienced heightened volatility during the holiday period.

• Markets speculated that Japanese authorities may have intervened in foreign exchange markets to support the currency.

• Despite volatility, the yen finished the week broadly unchanged against the U.S. dollar.

• Policymakers continued monitoring yen weakness closely because of its impact on imported inflation and household purchasing power.

Wages and Monetary Policy:

• Inflation-adjusted wages increased 1.0% year over year during March.

• The figure was below consensus expectations of 1.8% and lower than February’s 2.0% increase.

• Despite the slowdown, this marked the first occasion since 2021 that real wages increased for three consecutive months.

• The data suggested nominal wage growth was increasingly outpacing inflation.

• The trend strengthened expectations that the Bank of Japan may continue gradually normalising monetary policy.

China

Stock Market Performance:

• Chinese equities advanced during the holiday-shortened trading week following the May 1–5 market closure.

• The CSI 300 Index rose 1.34%.

• The Shanghai Composite Index gained 1.65% in local currency terms.

• Hong Kong equities also strengthened, with the Hang Seng Index rising 2.39%.

• Technology and consumer-related shares led gains in Hong Kong markets.

• Investor confidence improved due to signs of resilient domestic demand and hopes for stability in U.S.-China trade relations.

Services Sector and Domestic Demand:

• China’s services sector expanded at a faster-than-expected pace during April.

• The RatingDog China General Services PMI increased to 52.6 from 52.1 in March.

• The composite PMI output index rose to 53.1 from 51.5.

• According to S&P Global, stronger domestic demand and improving new business growth drove the expansion.

• Export orders declined for a second consecutive month.

• The data suggested that domestic economic activity remained relatively resilient despite external trade pressures and tariff uncertainty.

Trade Relations and Diplomatic Developments:

• Preparations intensified ahead of the planned May 14–15 meeting between Donald Trump and President Xi Jinping in Beijing.

• U.S. and Chinese officials reportedly discussed extending the existing trade truce.

• Negotiations also covered potential agreements relating to agricultural purchases, AI safeguards, and supply chain resilience.

• Markets interpreted the talks as a signal that both countries remain focused on avoiding renewed tariff escalation.

• Continued discussions regarding semiconductors and rare earth supply chains supported broader Asian market sentiment.

• Officials from both countries cautioned that the probability of a major breakthrough remained limited.

Consumer Spending and Travel Trends:

• China’s Ministry of Culture and Tourism reported that domestic trips during the May Day holiday increased 3.6% year over year.

• Total domestic tourism spending rose 2.9% to RMB 185.5 billion.

• Spending per trip declined modestly to RMB 571 from RMB 574.1 a year earlier.

• The divergence between higher travel volumes and weaker spending per trip suggested consumers remained cautious regarding discretionary expenditure.

Other Key Markets

Romania:

• Romanian financial markets experienced volatility following Parliament’s decision to remove Prime Minister Ilie Bolojan’s government.

• Investors initially sold the Romanian leu, pushing the currency to record lows against the euro.

• Concerns centred on fiscal discipline, political stability, and continued access to European Union funding.

• Despite initial weakness, Romanian equities rebounded strongly later in the week.

• Large banks and energy companies led the market recovery.

• Government bond yields declined from pre-crisis levels as investors anticipated broader economic policy continuity despite political disruption.

• Romania’s Finance Ministry reported that the first-quarter budget deficit was better than expected.

• The figures suggested that fiscal consolidation efforts had begun improving before the government collapse.

• Authorities launched a new retail bond programme offering tax-free yields to domestic savers.

• The programme signalled continued access to domestic funding sources.

• Romania’s central bank reported a decline in foreign exchange reserves.

• Falling reserves highlighted growing pressure on policymakers if weakness in the leu continues.

Colombia:

• Banco de la República surprised investors by keeping its policy interest rate unchanged at 11.25%.

• Markets had expected additional monetary tightening due to persistent inflation pressures.

• Central bank officials maintained a hawkish stance following the decision.

• Policymakers highlighted risks linked to exchange rates, regulated prices, wage growth, and fiscal conditions.

• Inflation stood at 5.6% during March, while core inflation measured 5.8%.

• Updated central bank forecasts projected inflation would remain above the 3% target throughout 2026.

• Investors subsequently reduced expectations for near-term interest rate cuts.

• Political uncertainty increased ahead of Colombia’s May 31 presidential election.

• Investor concerns intensified following reports of pressure on fiscal institutions and weaker-than-expected tax revenues.

• Markets reassessed fiscal credibility and medium-term economic policy stability amid the evolving political backdrop.

PLEASE NOTE:

This content is for informational purposes only and should not be construed as investment advice or a specific recommendation to act on any investment. It is importnat to assess your own circumstances before making investment decisions. The views expressed are as of the date indicated and whilst we believe the information is from reliable sources, we do not guarantee it’s accuracy. Past performance is not indicative of future results, and all investments carry market risks, including the potential loss of the principal.