A Buoyed Appetite for Risk in World Financial Markets
May 6, 2026
President Trump paused the confrontational program of militarily escorting ships through the Strait of Hormuz in opposition to the Iranian-imposed blockade. He claimed progress toward a peace deal from revised details that Iran reportedly offered. The U.S. blockade will continue until a deal is finalized. Once trade is again going through the Strait without military interference, the two sides are to hammer out a deal that would disassemble Iran’s enriched uranium program, hand over its stockpile of weapons-grade uranium over 10-15 years and allow UN inspections to ensure that Iran is meeting its side of the bargain. The U.S., in turn, would gradually lift economic sanctions against Iran and unfreeze Iranian financial assets.
Given the erratic history of these talks, what is presumably being offered is just talk. Nothing yet is final, but it’s been enough to ignite significant financial market movements, and some better-than-expected economic data releases have also helped brighten the mood.
The dollar has given up some ground acquired from previous safe haven-seeking capital inflows. Overnight losses have averaged 0.6% but include drops of 2.0% against the South Korean won, 1.4% relative to the kiwi, 1.1% versus the Japanese yen and 0.9% vis-a-vis the Australian dollar. Silver and gold prices have rallied 5.9% and 3.1%. Bitcoin’s price has strengthened 1.8%.
West Texas Intermediate crude oil plunged as low as $89 per barrel, but the current net slide is by a lesser 7.7% to $94.5.
Share prices on major European equity exchanges show gains ranging from 2.2% in Italy to 3.3% in France. The wide-swinging South Korean Kospi leaped 6.5% to lead Asia’s rebound that included 1.2% advance in China, Hong Kong and India. U.S. stock futures are up, too.
Ten-year sovereign debt yields have declined by 12 basis points in U.K. and Italy, 10 bps in France and Spain, and 7 bps in Germany. The ten-year U.S. Treasury yield’s slide amounts to seven basis points.
The ADP estimates that private sector jobs in the United States grew by 109 thousand last month, roughly four-fifths as much as in the whole first quarter and also exceeding what analysts had been expecting.
Purchasing manager surveys reported today were by and large not as bad as feared. Euroland’s composite PMI at 48.8 was less south of the 50 neutral level than first estimated but still its weakest reading in 17 months. Within the euro area, the composite PMIs ranged from Ireland’s 8-month low of 51.4 to France’s 14-month low of 47.6 in April. Like Ireland, Italy’s score of 50.5 indicated a positive activity trend after a sub-50 level in March. Euroland’s service sector PMI was revised upward by 0.2 points but was at 47.6 was still the lowest reading since early 2021.
The British composite and service sector purchasing manager indices in April of 52.6 and 52.7 each represented 2-month highs.
The Russian composite and service PMI’s of 49.1 and 49.7 point to a mild and slowing rate of contraction than in March. As an energy producer, Russia is one of the few places to benefit from elevated oil prices.
China’s composite PMI increased 1.6 index points to a 2-month high of 53.1. India’s composite and service sector PMI readings climbed to a robust 2-month high of 58.2 and 5-month high of 58.8.
Sweden’s composite and service sector indices were not as elevated as in March but, at 53.8 and 52.5, still well above the 50 threshold.
Battered Lebanon saw its private sector PMI rise 0.8 points to a 2-month high of 48.2 in April. Singapore’s PMI punched in at a lofty 57.9, and South Africa’s rose 0.8 points to a 44-month high of 51.6.
French industrial production recorded the largest monthly advance in March since mid-2025, +1.0%, and a 0.9% increase from a year earlier.
In Hungary, industrial production jumped 3.1% on month and 6.7% on year. the rise from March 2025 was the largest in 42 months.
Estonian industrial production was 2.5% greater than in February.
Reported price data continue to attest to the spreading peril from an energy supply disruption.
- Euroland’s producer price index shot up 3.4% between February and March, the steepest monthly rise in 43 months as energy soared 11.1% and other PPI components climbed 1.4%. The year-on-year PPI comparison swung from -3.0% in February to +2.1% in March.
- Czech consumer price inflation of 2.5% in April was the most since last October.
- Thailand’s 1.9% rate of CPI inflation in April followed -0.1% in March.
- Producer price inflation in Kazakhstan accelerated to 11.1% in April from 7.5% in March and 3.9% at the end of 2025.
- Things are different in Switzerland, where consumer price inflation last month of -0.1% was its lowest in six years.
The National Bank of Georgia raised its policy interest rate by 25 basis points to 2.25% today. That was the first increase since a 50-basis point hike to 11.0% in March of 2022, right after Russia invaded nearby Ukraine. A release statement proclaims that the decision ” is aimed at keeping inflation expectations firmly anchored at the target. The moderate tightening of monetary policy, in turn, reduces the risks of second-round effects and aims to ensure that, once the supply-side shock dissipates, inflation converges swiftly to the 3 percent target.” CPI inflation last month of 5.9% was virtually double that objective.
At the Central Bank of Azerbaijan, by contrast, the policy interest rate was left unchanged at 6.5% after the latest review. “May projections, annual inflation is expected to reach 5.9% in 2026 and 4.5% in 2027. The projections suggest that inflation is expected to be driven primarily by supply-side factors.”
And finally in Poland where consumer price inflation of 2.1% in the first two months of 2026 accelerated subsequently to a 10-month high of 3.2%, the key interest rate at the Narodowy Bank was left unchanged at 3.75% after a second straight monthly policy review. The rate had been cut seven times during the final eight months of 2025 by a total of 175 basis points. One additional 25-bp cut was done this past March.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: April 2026 composite purchasing manager surveys, Central Bank of Azerbaijan, Euroland PPI, National Bank of Georgia, National Bank of Poland
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