The latest economic news and market highlights from the UK and abroad.
This week's headlines:
- Possible peace deal on the horizon? – Markets reacted positively to another potential peace deal between Iran and the US. However, by Friday morning, this looked less certain after further military action in the region.
- Trump tariffs on Europe – Trump has threatened “much higher” tariffs unless the European Union fails to drop its levies on the US to zero by 4th July. A trade deal was agreed last year, but there’s been difficulty in getting governments to enact it.
- UK borrowing costs rise – UK long-term borrowing costs have reached the highest level since 1998. Yields on 30-year gilts hit their highest point as the oil crisis added fears that the economy faces a prolonged period of inflation.
- Renters Rights Act comes into force – Landlords have had notice of the changes for a while, and capital gains tax receipts from last year show many may have sold up in advance. But this will have an impact on the rental property market as Landlords can no longer evict without fault, can’t accept bids above the advertised price, and can only request annual rent increases. All making buy-to-let a less desirable proposition.
- Shell profits surge – Rising oil prices saw Shell report profits of $6.92bn for the first quarter of the year, up from $5.58bn in the same period last year. Norwegian oil company Equinor also reported its highest quarterly profits in three years
What this means for financial advisers and clients
Markets are looking for any sign of an end to the Iran conflict and the oil crisis. There was hope this week that the US and Iran could strike a deal. Trump had pulled back from an operation to guide ships through the Strait of Hormuz. But on Friday morning it seemed less likely.
Last week we saw the Bank of England hold rates, but gilt yields suggest an interest rate rise might be on the cards in the future. Potentially, between two to three 0.25% increases by the end of the year.
The longer this goes on, the more likely it is that there’ll be long term inflation.
Bond traders seem pessimistic. But equity markets overall seem more positive. With stock markets continuing to climb globally, are there signs of a disconnect? And who’s right?
Chart of the week - Oil, Equities Part Ways
Oil, Equities Part Ways US stocks only headed up, disregarding developments in Iran
Source: Bloomberg
Why’s this worth sharing?
At the start of the conflict in Iran, the oil price and US stock market seemed to be uncorrelated – As one fell, the other rose.
But it seems now that despite oil prices increasing, the stock market is now going up as well. The S&P 500 hit an all-time high on Wednesday before falling back on Thursday.
Last week saw a flurry of positive results from big tech companies, which could be driving optimism.
But with government bonds having a more dramatic take than equities, it shows why diversification is necessary.
The Markets
UK – The FTSE 100 fell back a bit over, potentially connected to the local elections this year putting pressure on Keir Starmer, but the FTSE 250 has been growing over the last week.
US – The S&P 500 has continued to grow over the week, reaching record highs on Wednesday.
Oil – Oil has fallen back from last week, but changes keep happening based around sentiment and it’s still choppy.
Emerging markets – There’s been a big upward change in emerging markets this week. Samsung and chip giant TSMC have driven part of this growth, both companies that are closely connected to AI growth and development.
Japan – The Nikkei closed at a record high on Thursday with its largest single-day point gain. This may have been driven by the market reopening after a long public holiday, hopes for the end of the conflict in Iran and buying technology stocks connected with AI.
| | Weekly Change | YtD Change |
|---|---|---|
| FTSE 100 | -0.78% | 4.81% |
| FTSE 250 | 1.63% | 3.17% |
| S&P 500 | 1.53% | 6.05% |
| NASDAQ | 3.03% | 11.87% |
| FTSE Developed Europe Ex-UK | 1.51% | 3.92% |
| FTSE Emerging Markets | 4.85% | 11.08% |
| FTSE Japan | 3.40% | 13.08% |
| Brent Crude | -5.18% | 25.20% |
| Gold Spot | 1.73% | 7.98% |
| UK 10yr Gilt yield | -1bps | +49bps |
| US 10yr Treasury yield | +2bps | +24bps |
Source: Morningstar, exchangerates.org.uk, investing.com and finance.yahoo.com. GBP returns as at close of business on Thursday 7th May 2026.
Want to know more?
If you’d like to explore these themes further, our investment team has set out their latest thinking in our article, “Uncertainty in markets, certainty in what we’re doing”, which you can read here: Uncertainty in markets, certainty in what we’re doing.
Catch the recording of our Q1 Let’s Talk Markets webinar, where the team discussed recent market developments, key drivers behind portfolio performance, and the outlook for the months ahead.
This article is for financial professionals only. Any information contained within is of a general nature and should not be construed as a form of personal recommendation or financial advice. Nor is the information to be considered an offer or solicitation to deal in any financial instrument or to engage in any investment service or activity. Parmenion accepts no duty of care or liability for loss arising from any person acting, or refraining from acting, as a result of any information contained within this article. All investment carries risk. The value of investments, and the income from them, can go down as well as up and investors may get back less than they put in. Past performance is not a reliable indicator of future returns.
