Global markets closed the week ending 1st May 2026 with a cautiously constructive tone, driven by a confluence of strong Q1 corporate earnings, particularly from U.S. mega-cap technology and a partial oil price pullback following Iran’s submission of a fresh peace proposal to Pakistani mediators. Equities posted modest weekly gains after April’s sharp V-shaped recovery, with the S&P 500 recording its best monthly performance since November 2020 (+13.5%). Inflation remains elevated (core PCE ~3.2%, services > 3.5%), leading the Federal Reserve to hold rates in April with a hawkish stance, marked by four dissenters and Jerome Powell’s final press conference as Chair.
Key Themes
- Earnings over geopolitics: S&P 500 returned +13.5% in April; best month since November 2020 which was driven by Q1 EPS growth tracking >14%, the sixth consecutive quarter of double-digit earnings growth. Five Magnificent Seven companies reported: Alphabet and Amazon stood out on AI cloud monetisation; Meta fell on higher-than-expected capex guidance.
- Fed: Hawkish hold, leadership transition: The Federal Open Market Committee kept rates unchanged at 3.5%–3.75% in an 8–4 vote, showing the most disagreement since 1992, with several members pushing against an easing stance. Jerome Powell will remain on the Board, while Kevin Warsh’s nomination has advanced. Markets now see almost no chance of rate cuts in 2026.
- Oil: Volatile but elevated: WTI ended the week at ~$101.9/bbl and Brent at ~$108/bbl. Iran submitted a fresh peace proposal on 1 May, causing an intraday drop of ~3%, but Trump signalled dissatisfaction. The May 1 War Powers Resolution deadline passed with the administration arguing the original ceasefire ‘terminated’ hostilities. Hormuz remains closed.
- UAE exits OPEC: The UAE formally left OPEC and OPEC+ effective 1 May. This was the most significant departure since Qatar in 2019, removing the cartel’s third-largest producer. Abu Dhabi National Oil Company has production capacity of ~4.85 million barrels per day. Its exit raises concerns about weaker coordination within OPEC and is likely to increase long-term volatility in oil prices.
- BoJ hawkish hold: JPY strengthens: BoJ held at 0.75% in a 6-3 vote; three members called for an immediate hike to 1%. Inflation forecasts revised up sharply to 2.8% for FY2026. JPY strengthened ~1.5% WoW on suspected official intervention after breaching the 160/USD threshold.
- Gold retreats despite persistent risk: Gold fell 2.0% WoW to $4,614/oz as rising US real yields compressed the non-yielding metal, a counterintuitive outcome in an elevated geopolitical environment that reflects the dominance of rate dynamics over safe-haven demand.
