MARKET WRAPS
European stocks were largely gaining Thursday, on track to build on ground gained during Wednesday's session, as investor optimism for a negotiated peace deal in the Middle East continued.
Approaching midday and after cautious early trading , the FTSE 100 was down while the CAC 40 and the DAX were in positive territory. The pan-European Stoxx 600 index was steady.
The moves come as the U.S. and Iran are working on a memorandum of understanding which would outline the framework for talks to end the war, The Wall Street Journal reported.
Earlier, Saudi Arabian state-owned news site Al Arabiya, citing unnamed sources that talks to establish a framework for opening the strait were continuing.
President Trump said on Wednesday that the U.S. has had "good talks" with Iranian negotiators. That said, key issues remain unresolved and the president threatened to resume bombing if Iran fails to reach an agreement.
Brent crude, meanwhile, fell under $100 a barrel , and U.S. crude-oil inventories fell for a second consecutive week. The dollar, and bonds on both sides of the Atlantic, slipped.
Macquarie Group said it believes that the U.S. has forged a larger economic and political advantage against Iran and that if the standoff between the two countries doesn't conclude in the next few days, it remains likely to end in the second quarter or early third quarter.
Beyond geopolitics, German manufacturing orders rose sharply in March, with orders rising 5.0%.
The governor of the the French central bank said the European Central Bank can't commit to delivering a rise in its key rate at its June meeting.
Elsewhere, Sweden's central bank held its key policy rate at 1.75%.
Expected later is March eurozone retail trade data.
U.S. Markets:
Investor confidence showed no signs of abating as stock futures Thursday were in the green before the opening bell on what is set to be a heavy day of earnings.
Forex:
The dollar fell against a basket of currencies amidst hopes for peace in the Middle East.
The euro rose against the dollar. ING said it expects the currency to break above $1.1800 if a deal between the U.S. Iran is reached.
Sterling rose against the dollar and against the euro, but it could fall if Thursday's U.K. local elections lead to renewed fiscal sustainability fears, Commerzbank said.
Bitcoin eased slightly but remained above $80,000 after reaching a three-month high Wednesday on hopes for a U.S.-Iran peace deal.
Bonds:
Yields on eurozone and U.K. government bonds fell due to prospects of a resolution to the Iran war.
Focus for gilts is also on U.K. politics, and the result of local elections.
Yields on long-dated gilts remained fairly elevated compared to their U.S. and eurozone equivalents as markets priced in political risk on U.K. bonds, RBC said.
"Market's default assumption has long been that a change of Prime Minister would also lead to a change of Chancellor and with it a (further) loosening of fiscal policy."
Treasury yields turned lower on hopes for an agreement to reopen the critical Strait of Hormuz.
The Treasury reiterated that it anticipates maintaining nominal coupon and floating rate auction sizes for at least the next several quarters.
Friday's payrolls data for April could be the next key input for Treasurys.
"Given the forward guidance, we now only expect the Treasury to increase auction sizes in May 2027 and continue to look for the increases to be limited to the two- to 10-year sectors," TD Securities said .
Eurozone rates are still tied to oil prices in an almost linear fashion, with the front end most sensitive, according to ING.
"With broader risk markets still well-supported and equity markets in the U.S. even marching on to new all-time highs, it appears that euro long-end rates can still gloss over some of the deteriorating macro data of late."
Spain and France will conduct government bond auctions on Thursday , offering up to a combined 20.25 billion euros, while Estonia is expected to launch a new 10-year bond.
"Iran excitement looks set to remain the main driver of risk sentiment and eurozone government bonds," Commerzbank said.
Energy:
Oil prices fell further as optimism for a peace deal that would end the Iran war and gradually reopen the Strait of Hormuz gained momentum in early European trade. Brent crude fell below $100 a barrel. Brent crude is down more than 10% for the week.
Metals:
Gold prices pushed above $4,750 as a decline in oil prices encouraged the outlook for precious metals.
New York gold futures gained 1.4% on optimism for an agreement between the U.S. and Iran to resume peace talks.
EMEA HEADLINES
Shell's Earnings Surge, But Warns of Lower Production Due to Middle East Conflict
Shell said its first-quarter earnings more than doubled, helped by oil trading and higher prices, but the energy major warned of lower production due to the conflict in the Middle East, and lowered its buyback from the previous quarter.
The British energy giant's adjusted earnings-a closely watched metric that strips out certain commodity price adjustments and one-time charges-rose to $6.915 billion from the $3.26 billion it reported in the prior quarter. Analysts had expected $6.36 billion, according to estimates compiled by Vara Research.
UniCredit Strikes Deal to Sell Part of Russia Business to U.A.E. Investor
Italy's UniCredit said it reached a preliminary agreement to sell part of its Russian subsidiary to a private investor in the United Arab Emirates for an undisclosed sum.
The bank said Thursday that the deal will result in a profit hit of between 3 billion and 3.3 billion euros ($3.52 billion-$3.88 billion) and a benefit to its capital position. The deal won't affect its shareholder-distribution plans or its long-term profit ambitions, it said.
Shipping Giant Maersk Maintains Guidance Despite Rising Costs From Middle East Conflict
A.P. Moller-Maersk maintained its full-year guidance as demand for container shipping remains strong, but cautioned that the Middle East conflict will increase costs due to service disruptions and higher fuel prices.
The Danish shipping giant said the conflict weighed on demand growth in the region toward the end of the quarter, but the impact is yet to show up in its financials as it works to recover the higher costs.
Roche to Buy PathAI for Up to $1.05 Billion to Bolster AI Diagnostics Tools
Roche Holding said it agreed to buy PathAI for up to $1.05 billion in a deal that seeks to bolster the artificial-intelligence offerings of its diagnostics division.
The Swiss pharmaceutical group said Thursday that the acquisition of U.S.-based PathAI would build on a partnership between the two companies formed in 2021 and take in-house an AI platform that aims to facilitate diagnostic workflows and help accelerate clinical-therapy development.
Rheinmetall Posts Rise in Sales, Expects Higher Growth
Rheinmetall reported a rise in first-quarter sales and said it expects stronger growth in the next reporting period.
Germany's biggest arms manufacturer on Thursday posted sales of 1.94 billion euros ($2.28 billion) in the three months through March, up 8% on year, but below a consensus estimate of 2.27 billion euros compiled by Vara Research.
GLOBAL NEWS
Jet-Fuel Prices Are Spiking and Trump's Advisers Are Worried
Former New Hampshire Gov. Chris Sununu delivered a warning to Treasury Secretary Scott Bessent during a recent visit to Washington: Already-high airfares will surge if the war in Iran doesn't end soon.
Sununu, a Republican who represents some of the biggest airlines as the president of the industry group Airlines for America, has for weeks sounded the alarm to Trump administration officials about the economic fallout from high jet-fuel prices. The war, Sununu has argued, must come to a close soon, or things will get worse.
OPEC Had a Stranglehold on Oil. No More.
The end of the U.S.'s global oil dominance was sealed in 1949 when Venezuela, with the world's largest reserves, asked to have a chat with Middle East exporters Iran, Iraq, Kuwait and Saudi Arabia.
A decade later, those five nations formed the Organization of Petroleum Export Countries, with one stated purpose: "to secure the best price available from the major oil corporations."
Traders point to suspicious activity in the oil market on Wednesday
Trading volume in U.S. crude-oil futures suddenly spiked early Wednesday in the hour before a media report sent prices tumbling - the latest in a pattern of suspicious activity in the market for oil futures that has emerged since the start of the conflict in Iran.
At around 4:50 a.m. Eastern time, Axios published a report, citing U.S. officials, that the White House believed the U.S. and Iran were nearing a deal on a one-page memorandum to end the fighting and set a framework for future talks toward a nuclear deal.
Putin's Strongman Image Is Fading as Ukraine Brings War Home to Russia
Ever since coming to power more than a quarter-century ago, Russian President Vladimir Putin built a new state religion around May 9, the anniversary of the Soviet victory over Nazi Germany and the holiest day in the Russian calendar.
On Saturday, Putin will for the first time preside over a Victory Day parade held as his war on Ukraine has exceeded the length of the Soviet Union's war on the Nazis.
U.S. and China Pursue Guardrails to Stop AI Rivalry From Spiraling Into Crisis
Washington and Beijing are weighing the launch of official discussions about artificial intelligence, said people familiar with the matter, as their AI competition threatens to become the arms race of the digital era.
(MORE TO FOLLOW) Dow Jones Newswires
05-07-26 0512ET
