Market Report.
📈 Markets in the US set new highs fueled by the performance of big tech.
🤖 Tech giants’ earnings reports demonstrated massive capital allocation toward artificial intelligence development, with Thursday’s economic data revealing inflation-adjusted GDP increased annualized 2% first quarter, indicating AI investment contributing meaningfully to economic growth despite geopolitical headwinds.
🚀 Artificial intelligence emerging as primary growth driver replacing traditional economic engines. AI investment appears offsetting traditional economic weakness from geopolitical disruptions, with tech sector capital spending generating GDP growth despite consumer headwinds
⚠️ Consumer purchasing power erosion from elevated fuel prices could reverse spending momentum, potentially triggering economic slowdown despite first-quarter growth acceleration.
⚖️ AI-driven growth and consumer spending represent competing economic narratives, with technology investment providing growth support while consumer vulnerability to inflation and geopolitical disruptions threatens expansion sustainability.
🏦 Central banks on alert:
🌍 European Central Bank and Bank of England released monetary policy decisions yesterday amid rising inflation and growth fears, with both institutions maintaining cautious approach despite stagflation concerns, keeping ECB rates at 2% and BOE rates at 3.75% currently.
📉 March data shows Iran conflict already weighing on euro zone and U.K. economies, sparking “stagflation” fears combining slow growth, high inflation and rising unemployment, indicating geopolitical disruptions creating complex policy dilemmas for central banks balancing competing economic objectives.
📊 Euro zone inflation stands at 3% April and U.K. inflation at 3.3% March, both exceeding respective 2% targets, yet economists expect policymakers “looking through noise” around inflation spikes and maintaining rates on hold longer.
🧠 Oxford Economics Chief Germany Economist Oliver Rakau noted energy prices not far above ECB forecast assumptions and negotiation attempts sustaining bias toward assuming short conflict, indicating central bank inflation forecasts potentially underestimating geopolitical conflict duration and energy price persistence.
📅 ECB expects rate hikes June and July if data shows rising inflation expectations, resilient labor market, contained economic damage and accelerating core inflation, indicating June meeting identified as likely action point with potential 25-basis-point increase to 2.25% key rate.
💱 Currency markets remained tense yesterday as Japanese officials escalated their rhetoric over the yen’s weakness, though no direct currency intervention ultimately occurred. Tokyo delivered its most forceful verbal intervention in months.
🇯🇵 Japan’s Finance Minister Katayama said, “We are getting closer to taking a decisive step in the FX market,” signaling that authorities are prepared to act if volatility or depreciation intensifies further.
📣 Mimura confirmed close coordination with the United States under a September foreign‑exchange agreement. He escalated further, saying, “This is my final warning before action,” marking the strongest rhetoric of the session.
📉 The USDJPY fell by more than 3% in just a few hours, dropping by over 500 pips.
📞 Prime Minister Takaichi held phone talks with Iran’s president in a separate diplomatic channel, likely tied to energy security concerns.
💸 Policymakers’ concern over rising living costs and currency weakness indicates desperation managing inflation pressures while supporting export competitiveness amid geopolitical uncertainty.
📊 Tokyo core CPI rose 1.5% year-over-year in April hitting four-year low, staying below Bank of Japan’s 2% target third consecutive month, slowing from 1.7% March gain and beating 1.8% median forecast, primarily due fuel and education subsidies offsetting raw material cost increases.
⛽ Japan: Subsidy effectiveness temporarily suppresses energy inflation.
📉 Index excluding fresh food and fuel rose 1.9% April after 2.3% March gain, closely watched by BOJ as better trend inflation gauge, indicating underlying price pressures moderating despite Middle East conflict.
🏛️ BOJ raised rates multiple times after exiting decade-long stimulus program in 2024, including December increase to 0.75% short-term policy rate, reflecting confidence Japan durably hitting 2% inflation target, though subsequent geopolitical developments undermined rate hike trajectory.
🌍 U.S.-Israeli war with Iran complicated BOJ rate decisions by adding inflationary pressure through rising fuel costs, heavily impacting economy reliant on Middle East oil imports, creating external shock beyond central bank control potentially requiring coordinated policy responses.
🇩🇪 Germany: Data show a weak labor market.
📑 Based on official data released yesterday by Germany’s Federal Employment Agency, Chair Andrea Nahles warned that “a trend reversal in the labour market is not yet in sight. The spring upturn is also weak in April.” Seasonally adjusted unemployment edged up by 20,000 to 3.006 million, nudging above the politically sensitive 3‑million mark, leaving the seasonally adjusted rate unchanged at 6.4% (vs. an expected 6.3%).
🏭 The labour market shows no spring rebound, manufacturing continues to shed jobs amid high energy costs and weak global demand, and structural headwinds (elevated energy prices exacerbated by Middle East tensions, Chinese competition, geopolitical uncertainty and slowing export momentum) have prompted the government to cut its 2026 growth forecast to about +0.5%. Unemployment above 3 million has not been a major headline for roughly 12 years, making the upward trend since 2022 politically sensitive even though the rate remains far below the 2005 peak.
🌊 This development fits the short-term timeline in Kirill Dmitriev’s “7 waves” forecast, as Germany remains highly exposed to energy and industrial-supply vulnerabilities.
🧩 Kirill Dmitriev (CEO of the Russian Direct Investment Fund and Russian Presidential Special Envoy for investment and economic cooperation) recently outlined a predictive framework he calls the “Sequence of the 7 waves of the EU/UK crisis tsunami.”
📘 This is not a formal academic economic theory but a concise, timeline-based forecast of cascading economic, supply-chain, and socio-political crises in the EU and UK. He posted it on X yesterday. Framing it as an escalating “tsunami” triggered by energy shortages (linked in context to Western sanctions on Russia and the Iranian conflict disrupting global oil/gas flows, including potential Strait of Hormuz issues).
📰 Russian media outlets (TASS) immediately reported on this as Dmitriev’s latest warning, noting it builds on his earlier comments about Europe’s energy vulnerabilities and “wrong and ideological decisions” limiting growth.
🌍 Here are the waves explained:
✈️ May 2026 marked the first shocks, with jet fuel (aviation kerosene) shortages emerging in Europe that exposed fragilities across oil, gas and broader fuel systems while simultaneous fertilizer scarcities disrupted agricultural inputs — developments tracked.
🌾 Between June and August 2026 those pressures cascaded into acute food supply crises and widespread disruption of industrial production and manufacturing, compounding logistical bottlenecks and market stress.
🔥 From September to December 2026 the compound shocks precipitated a full‑scale economic crisis alongside escalating social unrest and political instability across multiple countries, undermining confidence in institutions.
🔄 By 2027 the cumulative impact prompted an “Awakening & Reset,” driving major EU/UK policy and structural reforms aimed at shoring up energy security, supply‑chain resilience, and agricultural stability.
⏳ End of the ceasefire?
⚔️ Will they try again to use war to bring Iran to its knees? Over the past two months, Trump has repeatedly stated that the war was over and that Iran had been militarily defeated. Just this week, Trump said that Iran “had to call” if it wanted to negotiate, but at the same time, plans are once again being drawn up to continue attacking Iran in order to “persuade it to return to the negotiating table”.
📝 Iran’s new supreme leader Mojtaba Khamenei issued rare written statement Thursday vowing not surrendering country’s nuclear or missile technologies, signaling Tehran maintaining firm negotiating position and refusing capitulating to U.S. pressure despite sustained blockade and military threats.
🛡️ Khamenei stated Islamic Republic would “guard” advanced technologies like borders and “secure Persian Gulf region,” explicitly referencing controlling Strait of Hormuz against U.S. exploitation, indicating Iran committed maintaining strategic waterway control regardless blockade consequences or military action threats.
📢 This statement probably comes from Iran to try to stop two narratives: The first is that Mojtaba Khamenei is dead or in a coma, as reported since the beginning of the conflict by US and Israeli media. Second, that a hard-line military group is now in charge in Iran.
🪖 President Trump scheduled to receive briefing Thursday from CENTCOM Commander Admiral Brad Cooper on new potential military action plans against Iran, with Joint Chiefs Chairman General Dan Caine also expected attending, signaling serious consideration resuming major combat operations.
💣 Trump is considering military action either breaking negotiation logjam or delivering final blow before war ending, indicating administration weighing escalation options despite ongoing blockade strategy, suggesting frustration with diplomatic progress and willingness pursuing kinetic solutions.
🎯 CENTCOM prepared “short and powerful” strike wave plan on Iran including likely infrastructure targets, designed breaking negotiating deadlock with hope Iran returns negotiating table showing nuclear issue flexibility.
🚢 Trump told Axios Wednesday viewing naval blockade as “somewhat more effective than bombing,” indicating current preference for economic pressure over kinetic operations, though sources indicate willingness considering military action if Iran refuses capitulating to blockade pressure.
⚠️ U.S. military planners considering possibility Iran retaliating against U.S. regional forces for blockade, indicating war planners anticipating escalatory cycle where military action triggers Iranian response requiring further American military response, potentially spiraling conflict.
🇮🇱 Israel’s defense minister said the war with Iran will continue, warning that Israel “may soon be forced to return to operating in Iran to ensure the regime cannot threaten us for years to come.”
🚨 He added that Israel remains in confrontation with Hezbollah, saying the group threatens residents in northern Israel and has declared the destruction of the state as one of its objectives, underscoring the risk of broader regional escalation.
Market View.
📈 US futures have reached fresh highs despite ongoing global tensions.
🚀 E‑mini S&P 500 futures have moved above 7,250, while Nasdaq 100 futures have surpassed 27,600.
💵 The US dollar index (DXY) also experienced a sharp pullback, supporting the rally in equities. The dollar declined from the 99 level to around 98, helping currency pairs such as EUR/USD recover above 1.1700, with the pair approaching 1.1750 in recent hours.
🇪🇺 In Europe, yesterday’s session also delivered a notable rebound. DAX 40 futures climbed back above 24,400, while Euro Stoxx 50 futures moved beyond 5,850 in recent trading.
🛢️ Oil prices retreated after reaching the upper boundary of the well‑defined trading range. Brent crude pulled back after approaching the $115 per barrel ceiling and is now trading near $112.
🥇 Gold futures briefly rose above $4,650 per ounce, before easing back to around $4,600.
₿ Meanwhile, Bitcoin continues to trade in a volatile, zigzag pattern since Monday’s highs and is currently hovering near $77,000.
