Blog week ending, 1st May 2026
Markets:
- Equity investors shrugged off oil shock concerns this week, refocusing on US technology stocks. The local market trended lower, whilst global equity market delivered mixed results.
- US equity funds recorded their largest weekly net inflow in four weeks, driven by upbeat earnings results and optimism around A.I. related investment deals.
- UK 10-year government bond yields rose to 5%, approaching levels last seen in 2008, signalling heightened inflation concerns and expectations of rate rises. German bond yields also moved higher, reaching their highest level since 2011.
- In local stock news, Origin Energy shares fell after production and quarterly revenue declined at Australia Pacific LNG, alongside a downgrade to earnings guidance at major asset Octopus Energy.
- Atlas Arteria shares surged more than 13% following a $7 billion takeover bid from IFM Investors. IFM, which already owns a 34% stake in the company, cited concerns around Atlas’s corporate strategy and underperformance relative to peers as key drivers of the offer.
- The UAE confirmed it will exit OPEC+ effective 1 May, ending 59 years of membership in a significant blow to the cartel and to Saudi-led influence within the group.
- Oil prices surged after US President Trump rejected Iran’s latest proposal and instructed advisers to prepare for an extended US naval blockade..
Economics:
- Australian annual inflation jumped to 4.6% in March, up from 3.7% in February and the highest reading since September 2023. The outcome was slightly below forecasts. Goods inflation accelerated, driven by a sharp rise in automotive fuel prices, whilst inflation eased across alcohol and tobacco, housing, and recreation.
- National Australia Bank downgraded its Australian economic growth forecasts and lifted their inflation outlook, expecting inflation to peak near 5% in the June quarter.
- The US economy expanded at an annualised 2% in the March quarter, rebounding from 0.5% in the previous quarter but falling short of market expectations for 2.3% growth. Government spending rebounded strongly, whilst private domestic investment surged, led by equipment spending.
- The US Federal Reserve kept interest rates unchanged at 3.5-3.75% for a third consecutive meeting, as widely expected. The decision was split 8-4, the first time since October 1992 that four policymakers had dissented.
- US inflation rose 0.3% in March, following on from February’s 0.4% increase. On an annual basis, inflation lifted to 3.2%, remaining well above the Federal Reserve’s target.
- US manufacturing activity improved in April, surpassing market expectations and marking the strongest improvement in factory business conditions since May 2022. Production growth hit four-year highs and new orders rose strongly, whilst prices charged by manufactures jumped to their highest level in nearly four years.
- A key US consumer sentiment index was revised higher in April, though it remains at its weakest level on record, reflecting the significant impact of the Iran conflict on consumer morale.
- US house price growth continued to slow, with a key index rising just 0.9% year-on-year in February, down from 1.2% in January and below market forecasts. This marked the slowest pace of annual growth since July 2023.
- Key Eurozone data disappointed, with annual inflation rising to 3%, energy costs surging to 10.9%, and economic growth slowing to just 0.8% in the March quarter.
- The European Central Bank kept interest rates unchanged at its April meeting as policymakers adopted a cautious stance amid rising inflation and geopolitical uncertainty.
- The Bank of England voted 8-1 to keep interest rates unchanged at 3.75%, with one member calling for an increase and several others indicating openness to future rate increases.
- The Bank of Japan left interest rates unchanged at 0.75% at its April meeting, , as expected, keeping borrowing costs at their highest level since September 1995. The decision was split 6-3. The Bank also cut its growth forecasts to 0.5%, from 1%, and sharply raised its inflation forecasts from 1.9% to 2.8%.
- Chinese exports grew almost 15% year-on-year in the March quarter, the fastest pace since early 2022, supporting industrial profitability. Exporters are raising prices across a range of consumer goods as higher oil prices drive up costs.
- China’s industrial profits surged 15.8% year-on-year in the March quarter, with manufacturing and mining leading gains. State-owned enterprises showed a firmer recovery, though private firms remained the key driver of growth.
- Chinese government spending increased 2.6% year-on-year, sharply accelerating from the 1% rise in 2025, as authorities stepped up efforts to support economic growth.
Politics:
- Negotiations between the US and Iran made little progress this week, with President Trump cancelling envoy travel and saying negotiations would instead continue by phone. Iran’s military leadership warned it would be forced to escalate tensions if the US maintains its blockade of Iranian ports.
- Iran later submitted a new proposal via Pakistani mediators, offering to reopen the Strait of Hormuz and end the war in exchange for the US lifting its blockade, with nuclear negotiations deferred to a later stage. The US rejected the proposal whilst Iran’s Revolutionary Guard stated it has no intention of reopening the Strait.
- China’s embassy in Washington criticised the US for abusing sanctions and ‘weaponising’ trade, as Washington looks to penalise China over its oil trade with Iran. Rhetoric between the two countries has intensified ahead of a scheduled leaders’ meeting in the coming weeks.
- The US Department of Justice dropped its investigation into Federal Reserve Chair Jerome Powell, increasing the likelihood that President Trump’s nominee, Kevin Warsh, will be confirmed by the Senate before Powell’s term ends on 15 May. Warsh was subsequently approved by a Senate committee, while Powell is expected to remain on the Fed Board for the time being.
Written by Christopher Lioutas
Chairman – Harbourside Investment Management
