U.S. Equities Withstand a Renewed U.S./Iranian Clash and Now Await April Jobs Report
May 8, 2026
In the Bizzaro landscape that has surrounded the Hormuz Strait impasse, the biggest clash between the U.S. and Iran in the current cease-fire followed shortly after hopeful words from President Trump that a deal to reopen that critical water passage may be reached soon. The U.S. attack on Iranian drone facilities clearly deals a blow to the possibility of restarting shipping traffic, and Asian and European stock markets suffered declines this Friday. U.S. futures were flashing green, however, just before the U.S. jobs data got released, aided by evidence that investment in AI has continued at a rapid pace.
The other overnight political development overnight, although not a surprise, is that exit polls and partial counts of yesterday’s British local elections depict a severe drumming of Prime Minister Starmer’s Labor Party at the expense of the Reform UK and Green parties.
The U.S. April labor market performed better than expected last month. At 115k, the rise in nonfarm payroll employment exceeded the consensus forecast by around 70%. The average monthly advance in jobs of 150k in March-April versus 2k in January-February demonstrates amazing resilience in the face of uncertainty created by the Middle East war. Second-order inflation fears following the spike in energy prices were not justified thus far at least, since average hourly wages again rose less than predicted with increases of 0.2% on month and 3.6% on year. Labor market participation continued to inch downward, dipping to 61.8% from 61.9% in the prior month and advanced 3.6% year-on-year. The jobless rate printed at 4.3% for the third time in four months and was aligned with analyst expectations, but the broader U-6 measure of un- and under-employment rose to a four-month high of 8.2% in April from 8.0% in March and 7.9% in February.
Right after these data were released, the dollar‘s overnight losses were extended marginally to show losses of 0.4% against the euro and Swiss franc, 0.5% relative to sterling, but just 0.2% versus the yen. The major U.S. equity indices continue to point to gains at the open ranging from 0.3% to 0.8%. Ten-year sovereign debt yields have fallen below Thursday closing levels by two basis points in the U.S. instance, a single bp in France, Italy and Spain, but by a greater six basis points in Canada and Australia.
The price of West Texas Intermediate crude oil of $95.19 per barrel is 0.4% above Thursday’s closing level, and gold and silver prices have risen 0.8% and 1.8%. Bitcoin, in contrast, has dropped under $80,000 and is 0.4% lower than yesterday.
The Bank of Mexico’s interest rate cut announced later yesterday had been expected but was decided by the narrowest of margins, three ayes to two nos. The bank’s statement of explanation concedes “headline inflation expectations for the end of 2026 rose while those for longer terms remained relatively stable at levels above target. Headline inflation forecasts were revised upwards for the second and third quarters of 2026 due to higher levels of non-core inflation anticipated for that period. The Governing Board deemed appropriate to make an additional reference rate cut and thereby conclude the cycle that began in March 2024.” After 25-basis point rate cuts in both March and this month, the overnight interbank rate level sits at 6.5%, down from the peak of 11.25% that had been maintained for a whole year prior to the initial March 2024 reduction. CPI inflation crested at 8.7% in the third quarter of 2022, fell to as low as 3.5% last July, and currently is at 4.5%. The bank’s inflation target is 3%. The statement does not warn of future rate hikes, opining instead that “the monetary policy stance is well-suited to face the challenges posed by the macroeconomic environment, including those associated with an extension and escalation of the Middle Eastern conflict and its repercussions.”
Among other data releases today, Japan’s composite and service sector PMI readings for April of 52.2 and 51.0 were their lowest scores in four and eleven months, respectively. The surveys attested to much higher input costs. Separately, Japanese average cash earnings posted their lowest on-year rise (2.7%) in three months, which translates to a 1.0% increase on an inflation-adjusted basis.
Several countries reported on industrial production in March, prominently Germany where IP unexpectedly fell 0.7% versus February and was just 0.4% above the year-earlier level. Spanish industrial production climbed 2.3% on month and 1.8% on year. In Norway like Germany, production sank 0.7% on month but was 2.8% higher than a year earlier. A 7.3% on-year increase in Finnish IP was the most in 45 months. Austrian, Swedish, and Bulgarian industrial production were 5.8%, 2.1% and 3.0% greater than in March 2025. Turkish industrial output fell 0.8% on month and by 1.1% on year, while IP in Malaysia slid 1.8% on month but rose 3.1% on year.
Swiss consumer confidence recovered three points in April but, at -40, was still the second most depressed reading since August.
Greek consumer price inflation accelerated to a 38-month high of 5.4% in April from 3.9% in March and 2.7% in February. Estonian CPI inflation fell 0.2 percentage points to 3.4% last month. In Mongolia, consumer price inflation shot up to a 31-month high of 10.1% in April from 7.4% in March and 6.5% in February. Hungary‘s 2.1% CPI inflation in April was up from 1.8% in March and a 111-month low of 1.4% in February. Croatian producer price inflation more than doubled to 7.0% in April.
The German seasonally adjusted trade surplus shrank to a 4-month low of EUR 14.3 billion in March.
Copyright 2026, Larry Greenberg. All rights reserved.
Tags: Bank of Mexico, German industrial production, Japanese composite PMI, U.S. labor market statistics
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