MARKET WRAPS
Stocks:
European equities were climbing Wednesday on revived optimism for a resolution to the Middle East conflict.
Trump hailing "great progress" toward a peace agreement with Iran boosted risk appetite and eased oil prices, denting the dollar as a safe haven.
He also announced a temporary pause to a U.S. operation aimed at opening the Strait of Hormuz.
Lower oil prices helped industrials on Europe's blue-chip indexes, while financials rallied. Solid first-quarter earnings are also supporting stocks.
Still, Brent crude prices stayed elevated with the U.S. and Iran appearing no closer to a deal to reopen the Strait, ANZ noted.
SEI said global central banks remained in a precarious position as the Iran war enters its third month.
"Headline inflation is beginning to reflect the impact of higher oil prices, with motorists increasingly feeling 'pain at the pump'."
European Central Bank figures released today showed that eurozone wage growth was set to slow this year , despite the rise in energy prices.
Stocks to Watch
Novo Nordisk opened 7% higher after the Wegovy maker reported surging demand for its new weight-loss pill and lifted its full-year guidance.
BMW's first-quarter results pointed to a good performance in its closely watched auto business, with profitability and cash flow ahead of expectations, Bernstein said. Shares rose 4.6%.
Diageo rose 5% as sales beat analyst expectations despite a lackluster performance in North America.
Economic Insight
Given the Federal Reserve's dual mandate, "we view outright rate hikes as unlikely due to their potentially negative impact on the economy and, ultimately, the labor market," SEI said.
Rate hikes are more conceivable at the ECB , for example, which isn't officially tasked with a dual mandate and is more likely to focus heavily on price stability, SEI added.
"Nevertheless, we expect global central banks to follow the Fed's lead to some degree, as major deviations from the Fed's rate path could destabilize other regions' foreign exchange rates and capital markets."
French manufacturing rebounded strongly at the end of the first quarter.
Pantheon Macroeconomics said that will likely not be enough to trigger an upward revision to zero GDP growth in the first quarter, but it provides a decent start to the next quarter .
U.S. Markets:
Stocks looked set to follow through on Tuesday's strong gains.
The U.S. rally came after robust earnings and guidance from Advanced Micro Devices buoyed sentiment toward companies making the chips and technology powering the AI boom.
Hopes of easing tensions in the Middle East added to the risk-on mood.
Earnings are due from the likes of Uber Technologies and Walt Disney.
Forex:
The euro rose against the dollar on improved risk sentiment and expectations the ECB will raise interest rates next month, ING said.
LSEG data showed the market is pricing an 80% chance of the ECB lifting rates in June .
"Given very elevated inflation expectations--e.g. 3.03% derived from the two-year inflation swap--the euro will need to see the ECB follow through with that hike," ING said.
The dollar fell, reflecting hopes for a U.S.-Iran peace deal and a stronger yen.
Trump's latest comments boosted risk appetite and eased oil prices, denting the dollar as a safe haven and America's position as a net oil exporter.
Meanwhile, there is market chatter that Japanese authorities used currency interventions to bolster the yen earlier Wednesday after taking possible action last week.
Sterling traded flat against the euro.
MUFG Bank said options-market pricing suggests investors aren't overly concerned about the risk of sterling falling if the ruling Labour Party suffers losses in Thursday's U.K. local elections.
Bonds:
Treasury yields declined in opening European trade as investors continued to bet on a resolution in the Middle East war and a reopening of the Strait of Hormuz.
Nomura Asset Management said the 10-year Treasury yield had been trading in a range vulnerable to breakouts in either direction , as elevated crude prices suggest growth and employment concerns are beginning to offset inflation fears.
Eurozone government bond yields fell in early trading, tracking moves in Treasury yields which are driven by lower oil prices.
Yields on 10-year gilts retreated below the 5.0% mark.
Ebury said gilts were under pressure due to concerns about inflation given the prolonged Middle East conflict and political pressures at home.
Yields on 30-year gilts surged to their highest level in 28 years on Tuesday.
Lazard Asset Management expects a renewed steepening of the government bond yield curve , particularly in the eurozone. This would be a logical consequence of ambitious fiscal programs, tight labor markets and uncertain short-term growth prospects, it added.
Lazard also said that while the Middle East war and the associated energy price shock put pressure on bond markets in the first quarter, the resulting increase in yields has made the starting position for bond investors more attractive than it has been in decades .
Energy:
Oil prices fell after the U.S. and Iran pulled back from a potential escalation over attacks in the Strait of Hormuz, easing the danger of further destruction of oil supply in the region.
The U.S. said Iranian attacks on oil facilities in the United Arab Emirates didn't constitute a breach of a cease-fire.
"This eased concerns that the attacks would impact more oil supply from the UAE," ANZ said.
However, ANZ added prices remained elevated as the two sides appeared no closer to a deal to reopen the Strait.
Metals:
Gold prices rose after Trump walked back an effort to guide commercial ships through the Strait of Hormuz, easing the risk of an immediate escalation in the U.S.-Iran conflict.
"For gold, the next driver will be the outlook for interest rates , with U.S. Treasury borrowing plans and key economic data likely to shape expectations for Fed policy," ING said.
EMEA HEADLINES
Novo Nordisk Shares Jump as Weight-Loss-Pill Sales Blow Past Expectations
Shares in Novo Nordisk jumped after the Wegovy maker reported surging demand for its new weight-loss pill and lifted its full-year guidance.
The Danish drugmaker said total prescriptions for the Wegovy pill reached around 1.3 million in the first quarter and generated sales of 2.26 billion Danish kroner, equivalent to $353.6 million, more than double analysts' expectations. Prescriptions have now passed 2 million, the company said.
Equinor Gets Earnings Boost From Record Production, Higher Prices
Equinor said record production and higher oil prices delivered a rise in first-quarter earnings, helping the Norwegian energy major to maintain the pace of its quarterly share buyback.
The company on Wednesday said adjusted operating income-its preferred measure-rose 13% to $9.77 billion from the same period a year prior. This compares with the $9.0 billion analysts had expected according to a company-compiled consensus. Adjusted net income more than doubled to $3.695 billion.
Deutsche Lufthansa Expects Strong Travel Demand Despite Iran War, Posts Narrowed Loss
Deutsche Lufthansa said it expects a strong travel summer despite the Iran war, and posted a narrowed loss in the first quarter.
The German carrier group said Wednesday that its adjusted earnings before interest and taxes-its preferred measure of profitability-came at a 612 million euros ($715.7 million) loss, compared with the 722 million euro loss it reported a year ago.
Chip Maker Infineon Lifts Guidance as AI Boom Gains Strength
Infineon Technologies raised its sales and margin forecasts for the fiscal year as artificial intelligence continues to fuel demand for semiconductors.
The German chip maker said revenue for the year to the end of September should grow significantly from the 14.66 billion euros ($17.14 billion) it reported for fiscal 2025, compared with a prior forecast of a moderate increase. Meanwhile, its segment result margin-a closely watched profitability metric-is expected to climb to around 20% from 17.5% last year, compared with previous guidance of a margin in a high-teens percentage range.
Leonardo Posts Strong Growth in Orders, Revenue as Europe Rearms
Leonardo said it continues to see strong growth in new orders and revenue in the first quarter as Europe rearms, and backed its 2026 guidance.
The Italian aerospace and defense group on Wednesday reported 9 billion euros ($10.53 billion) in orders for the three months through March, up 30.7% on year, driven by its defense electronics business.
Pandora Reiterates Guidance After Quarterly Revenue Growth
Denmark's Pandora reported growth for the first quarter that came in line with its expectations and confirmed its targets for the full year.
The jeweler booked revenue of 7.11 billion Danish kroner ($1.11 billion) for the first three months of the year, 2% higher organically than in the same period of 2025. The result compares with analysts' forecasts of 7.03 billion kroner, according to a poll of estimates provided by the company.
Daimler Truck Maintains Guidance After Strong Start to Year in U.S.
Daimler Truck backed its guidance as first-quarter order growth was fueled by a strong recovery in the U.S., which the company expects will continue to boost its performance in the quarters ahead.
The German truck and bus maker said incoming orders at its North America trucks business grew by 86% on year while order intake at Mercedes-Benz Trucks was up 33%. Overall global order intake rose 50%.
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05-06-26 0513ET
