10 min read Weekly recap
US stocks continued their record rally for a sixth straight week. The S&P 500 closed at a new high of 7,398.93 on Friday, while the Nasdaq also set a record at 29,234. In contrast, the Dow Jones rose only 12 points to 49,609.16.
The rally was driven by the April jobs report: US nonfarm payrolls increased by 115,000, exceeding the consensus of 60,000, while the unemployment rate remained at 4.3%. This indicates a labor market that is slowing but stable, allowing the Fed to maintain current rates. The USD strengthened initially but retreated by the end of the week.
Brent declined approximately 8% to $98.40, following Tehran’s review of a US peace proposal via Pakistani intermediaries. Despite US Central Command confirming defensive strikes on Iranian forces after attacks on three destroyers in the Strait of Hormuz, President Trump stated the ceasefire remains in place.
Gold rose above $4,720 on Friday, gaining over 2% for the week and partially recovering from a decline of more than 10% since late February.
Earnings reports supported risk appetite. AMD exceeded Q1 estimates and announced a Memorandum of Understanding with Rackspace for AI cloud infrastructure. Apple reached a chip-supply agreement with Intel, boosting Intel shares by nearly 14% on Friday.
Iran ceasefire watch
Geopolitical developments continue to drive macro trends this week. Tehran is expected to formally respond to the latest US peace proposal through Pakistani mediators, with broader negotiations on Iran’s nuclear program anticipated to follow. The proposal focuses on reopening the Strait of Hormuz in exchange for a phased lifting of sanctions, though neither side has publicly indicated a willingness to make the first concession.
The IEA estimates the conflict is removing about 14 million barrels per day of crude and LNG from global supply, nearly one-fifth of seaborne energy trade. Despite last week’s decline, Brent remains well above pre-war levels. JPMorgan warned that supply buffers are eroding, and there are increasing signs of demand destruction as consumers respond to higher prices.
The market impact of developments in Iran remains binary. Progress toward reopening the Strait would likely lower oil prices and boost risk assets, while a breakdown in talks or escalation in the Persian Gulf would have the opposite effect. With CPI, PPI, and retail sales data due this week, oil prices remain the most significant factor influencing the rate outlook.
US CPI (Tuesday)
The April US CPI release at 08:30 ET on Tuesday is the week’s key event. Consensus expects headline CPI to rise 0.6% month-over-month and 3.7% year-over-year, compared to 0.9% and 3.3% in March, indicating a slower monthly pace but a higher annual rate. Core CPI is projected at 0.3% month-over-month and 2.7–2.8% year-over-year, up from 0.2% in March. RBC Economics forecasts core inflation peaking near 3.0% in Q2 as the energy shock spreads to other categories.
This release is important as it provides the first comprehensive indication of whether the oil shock is affecting core goods and services. ISM Manufacturing prices-paid rose to 84.6 in April, a four-year high, while ISM Services prices-paid remained elevated. A higher-than-expected core CPI would reinforce expectations of prolonged higher rates, leading markets to price out nearly all 2026 rate cuts.
Gold has been the most direct cross-asset indicator of this debate, reacting sharply to changes in real-yield expectations. A strong core CPI reading could pressure Gold by supporting the higher-for-longer narrative and strengthening the USD, while a softer result would support Gold and reduce pressure on rate-sensitive sectors.
US PPI & Eurozone Q1 GDP (Wednesday)
April US PPI will be released on Wednesday morning at 08:30 ET, with consensus calling for another strong reading following March’s upside surprise. Producer prices are forecast to rise by about 0.5% month-over-month as energy costs continue to pass through wholesale channels. Headline PPI was 3.4% year-over-year in February before the latest oil price increase. The April data will be particularly important for shaping expectations ahead of the May 28 PCE release, as PPI is a leading indicator for the Fed’s preferred inflation measure.
Eurozone Q1 flash GDP, also released Wednesday morning, is expected to confirm continued slow growth of about 0.2% quarter-over-quarter, consistent with the previous reading. Additional data will include Germany’s industrial production and France’s final CPI. The ECB kept rates at 2% on April 30 and emphasized its flexible policy approach. Recent ECB minutes highlighted increasing concern about secondary effects from the energy shock.
A strong US PPI combined with weak Eurozone GDP would widen the transatlantic policy gap and likely pressure EUR/USD. Conversely, a softer US print and resilient European data would support the pair’s continued rise toward 1.1820 and 1.1920.
Cisco & Alibaba earnings (Wednesday)
Cisco will report fiscal Q3 results before the market opens on Wednesday, and it is the only Dow Jones component reporting earnings this week. Consensus expects earnings growth above 8% on double-digit revenue growth, driven by AI infrastructure and networking. CSCO closed Friday at $96.57, about 7.9% above its 12-month average price target of $89.54, with technical resistance near $95 and implied volatility for May 15 options near 60%. Strong guidance from Cisco, particularly on AI hyperscaler orders, could provide the Dow Jones with a much-needed boost after it has underperformed the broader market.
Alibaba will release its full-year fiscal results on the same day, providing insight into Chinese cloud and AI spending. The timing coincides with the Trump–Xi summit in Beijing, making any commentary on US export controls and rare-earth dependencies especially significant.
UK Q1 GDP (Thursday)
The Office for National Statistics will release its first estimate of UK Q1 GDP on Thursday at 02:00 ET, along with the March monthly figure. Consensus expects quarter-over-quarter growth of about 0.5%, consistent with the three-month estimate to February, which showed services up 0.5% and production up 1.2%, offsetting a 2.0% decline in construction.
The BoE maintained the Bank Rate at 3.75% on April 30 with an 8–1 vote, and Governor Bailey took a hawkish stance on inflation during the press conference. UK CPI was 3.0% in February and is expected to peak near 4% later this year. Vanguard, RSM, and Goldman have all revised their 2026 rate-cut expectations, and markets now anticipate the BoE will hold rates for the rest of the year.
A stronger-than-expected GDP result would reinforce the stagflation-lite narrative of persistent inflation and moderate growth, supporting GBP/USD, which has stabilized around 1.35 after rebounding from 1.32 in April. A weaker result, especially if it highlights consumer weakness before energy bill increases, could push GBP/USD back toward the 1.36 Fair Value Gap.
US retail sales (Thursday)
The Census Bureau will release April US retail sales on Thursday at 08:30 ET. March retail sales rose 1.7% month-over-month, the strongest increase in over three years, largely due to a record 15.5% jump in gasoline-station receipts as fuel prices exceeded $4 per gallon. Excluding energy, underlying retail momentum was steady but unremarkable. April is expected to show a normalisation, with consensus around +0.4% month-over-month and the control group, which contributes to GDP, at +0.3%.
This data provides the clearest indication this week of whether US consumers are beginning to limit spending in response to the energy shock. Real-time indicators are mixed: NRS same-store sales rose 3.9% year over year in April, up from 2.9% in March, while consumer confidence has declined.
A strong control-group result alongside a high CPI would reinforce the soft-landing narrative amid persistent inflation, which has driven the S&P 500 to new highs and could push the index toward 7,670. A significant miss, particularly if revisions reduce the March gains, would be the first sign of weakness in consumer spending and could prompt a shift away from high-valuation stocks that have led the rally.
Trump–Xi summit & Powell handover (Thursday–Friday)
The main geopolitical event this week is President Trump’s visit to Beijing on Thursday and Friday, marking the first US presidential state visit to China since November 2017. The summit, delayed twice, is widely viewed as a diplomatic stalemate: both countries aim to maintain the October 2025 tariff truce, which reduced US duties on Chinese imports from 57% to 47%, but neither is prepared to make significant concessions on Taiwan, technology controls, or rare earths. Expected outcomes include Chinese commitments to purchase Boeing aircraft and US agricultural products, as well as a bilateral “Board of Trade” framework for managing non-sensitive disputes.
The conflict in Iran complicates the summit. China maintains formal commercial ties with Iran through a 25-year strategic partnership established in 2021, and Beijing has reportedly encouraged Tehran to reopen the Strait of Hormuz. Any visible Chinese involvement in resolving the Iran issue would be the summit’s most market-moving outcome, while a breakdown over Taiwan or AI export controls would present the greatest downside risk.
Friday marks Powell’s final day as Fed Chair. The Senate is expected to vote on Kevin Warsh’s confirmation during the week of May 11. Warsh has indicated a more dovish stance than Powell, viewing productivity-driven growth as non-inflationary. Markets will begin to price in his policy approach starting Monday, with USD/JPY serving as the primary indicator of policy divergence. The pair is trading around 157 after Japanese FX intervention moved it down from 160. If Warsh is perceived as more likely to cut rates than Powell, USD/JPY could move toward 152.40.
Bottom line
This week will shape the macroeconomic outlook for the second half of 2026. The US CPI is the central focus, but President Trump’s visit to Beijing and Powell’s transition to Washington carry significant political weight. With the S&P 500 and Nasdaq at record highs and market positioning stretched, the risk-reward profile is asymmetric. Positive inflation data and tangible outcomes from the summit could extend the rally, while any negative surprises could impact a market with little margin for error.
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