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HL commentary as it happens
Thursday 7th May
Global markets lean into Middle East optimism
Global markets are still pricing the glass as half full, with yesterday delivering another strong rally despite little tangible progress towards a lasting resolution in the Middle East. The FTSE 100 jumped more than 2%, helped by miners, banks and real estate names, with the 10-year Gilt yield retreating to below 5% as a lower oil price eased some inflationary fears. Futures point to a more measured open today for UK stock markets, with investors turning their attention to local elections, where expectations of a bruising result for Labour look firmly baked in. A poor showing would pile more pressure on Starmer, leaving investors to weigh whether political pressure starts to translate into a different fiscal direction for the UK.
Broad earnings strength drives US records
US futures point to a more muted open today, but the real story is in last night’s close, with the S&P 500 and Nasdaq both hitting fresh records as raw earnings power and hopes of Middle East de-escalation proved a powerful cocktail for equity markets. Profit growth this earnings season is running above 20% at the S&P 500 level for the 80% of companies having already reported. Strength has been broad, from the obvious AI-linked areas like energy, materials and industrials, through to consumer names, utilities and healthcare, which gives this rally a firmer foundation than one built on a handful of obvious AI names alone.
Wednesday 6th May
Gilt yields retreat from multi-decade highs
Closer to home, UK borrowing costs remain elevated, though they have retreated from highs of 5.07% for 10 year borrowing and 5.78% on 30 year gilts yesterday. The UK is not alone in dealing with disruption from the Middle East but is particularly vulnerable to higher energy costs. The UK is a net energy importer and already faces some of the highest electricity and gas costs in developed markets. Additionally, the Labour government faces a stern test tomorrow in local elections and voters also go to the polls to elect new Welsh and Scottish Parliaments. Expectations of a bloodbath for Labour, elected with a landslide majority only two years ago, are well-set. This might heap yet more pressure on Starmer, and markets will then be watching carefully for what kind of leader might replace him, and what that means for fiscal stability, taxation, spending, and economic growth.
Brent crude hovering around $108 as Project Freedom paused
Brent crude hit its highest closing price of 2026 on Monday at $114.4 a barrel, before pulling back to around $108 this morning. A meaningful, lasting resolution to hostilities would bring oil prices down and allow refined products and byproducts, such as the precursors for fertilisers, helium required for semi-conductor manufacture, Liquefied Natural Gas (LNG) – would be able to flow again. Equity markets have remained remarkably resilient during this period, as investors continue to look through the supply disruption and inflationary impacts of the war.
FTSE 100 rises 1.4% at open, as S&P, MSCI World Index and MSCI Asia Pacific indices reach record highs
The FTSE 100 is up strongly this morning, after record closes in the US yesterday and and Asian markets overnight.
Trump announced “Project Freedom” on Sunday, a plan to guide ships through the blocked Strait of Hormuz. The risks became apparent almost immediately, with US and Iranian forces exchanging fire in the contested waterway and Iranian missiles intercepted over the UAE for the first time in weeks. Trump then paused Project Freedom on Tuesday evening, citing progress on a deal. Whether that progress is real or tactical is, as ever, unclear.
Tuesday 5th May
US stock futures edge up
US stock futures have edged up this morning. A robust first-quarter earnings season so far has seen the major Wall Street indices deliver double-digit returns over the last month, with, according to FactSet, the S&P 500 on course for its strongest quarterly earnings growth in over four years. Sector-wise, communications technology leads the way with blended earnings rising 53.2%.
Oil prices hover at four-year highs
Sky-high oil prices continue to be a drag on sentiment as exchanges of fire between the US and Iran cast doubt on the durability of the month-long ceasefire. Brent Crude oil is steady at around $114 per barrel, after a rise of around 6% on Monday took prices to within touching distance of a four-year high.
FTSE 100 futures flat
The FTSE 100 looks set for a sluggish return from the long weekend. This follows a tepid start to the week for European and US markets amidst a tense standoff in the Persian Gulf, and the resurgence of worries on tariffs levied by the US on its trading partners.
Friday 1st May
Gold caught between two opposing forces
Gold is caught between two powerful forces. A weaker dollar is giving it support, but the prospect of higher-for-longer interest rates is stopping the rally from really catching fire. Bullion is holding above $4,600 an ounce after reports of Japanese currency intervention knocked the dollar, but the bigger backdrop is still the Middle East, where fading hopes of a US-Iran peace deal and a closed Strait of Hormuz are keeping energy supply fears firmly in play. If tensions stay high, gold’s safe-haven appeal may stay intact, but the rate story means this is not quite the one-way trade it might usually be in a geopolitical shock.
Global markets trade higher on earnings optimism
Global markets are in one of those strange phases where the news looks messy, but the tape looks almost bulletproof. The FTSE 100 opens slightly down after a strong session yesterday, while US futures are pointing to more of the same after the S&P 500 and Nasdaq hit record highs last night, with Wall Street also coming off its strongest monthly gains since 2020. The message from investors is clear: this earnings cycle matters more right now than the Middle East stalemate, higher oil prices, or the inflation risk that comes with them. An AI super investment cycle is, of course, playing a major part, but this isn’t just another tech-led earnings rally, with beats coming through across healthcare, industrials, consumer staples and beyond. If oil stays in the $100 a barrel range for an extended period, the broader economic costs will eventually be harder to ignore, but for now, earnings are the bigger fish, and markets are happy to keep swimming with the current.
Thursday 30th April
MPC cites war in Iran, and likely impact on inflation and growth
Our house view is that the rate is held whilst the conflict is active, and the Strait of Hormuz restricted. However, we recognise that there’s significant continued uncertainty and that volatility in the gilt market is expected to continue. We think, unlike in 2022, the weaker jobs market constrains the likelihood of wage inflation. But the Bank of England is unlikely to cut base rate until later in the cycle. We additionally think a domestic recession is unlikely, though note that the outlook for UK growth is anaemic, and recently downgraded by the IMF, which will impact consumer confidence.
Bank of England holds rates at 3.75%, voted by a majority of 8–1
The Bank of England’s decision to hold rates today at 3.75% is very much as the market expected. Only the Bank’s economist Huw Pill voted to raise rates, against 8 other members who voted to hold. The Bank has also released scenario analysis related to the war in Iran, and the effect on inflation and economic growth. Their most likely scenario recognises that the conflict has impacted prices and would continue to do so, but that for now it was sufficient to monitor markets rather than act on rates. Gilt yields have fallen on the news. Markets were concerned that the vote would be more divided, and that the forward guidance starker.