The latest progress towards a resolution of the crisis in Iran has reopened the buying taps on financial markets. I cannot say they had been turned off, but let us say they had been confined to a few very specific segments, generally linked to artificial intelligence. Yesterday, the rebound spread almost everywhere, following a fairly rational mechanism, as I shall now try to explain.

Unless you have spent the past two months on a work-experience placement on the moon, everyone knows that the Gordian knot in the conflict primarily pitting the United States against Iran is the Strait of Hormuz. The blockage of this strategic passage has pushed up the price of a number of commodities, from oil to fertilisers, via a whole range of black-gold derivatives. The prospect of a reopening, even a gradual one (remember, markets are forward-looking), has driven oil prices quite sharply lower. This easing has reduced medium-term inflation forecasts. By extension, expectations for central-bank policy rates are no longer quite so hawkish. Sovereign bond yields duly fell quite sharply: the debt costs of the United States, Germany, France and other countries have calmed down. This overall mechanism improves the economic outlook: rates that are rising less than expected point to a lower cost of money. That is good for investment.

In this context, risk assets jumped, beyond the artificial-intelligence microcosm that had driven stock-market gains and earnings growth recently. So-called cyclical stocks, which are highly sensitive to the smallest decimal point of economic growth, were at the forefront. The biggest beneficiaries were sectors with a twin engine. LVMH (+5.1%), for example, which is both cyclical and penalised by the tourism disruption caused by expensive jet fuel or constrained travel among the wealthy populations of Gulf countries. Or Safran (+9%), which is both cyclical and exposed to the good health of air-transport players. Naturally, the energy sector was on its knees. Equinor fell 9%, Repsol 4.5%, TotalEnergies 3.2%… These companies, so useful in recent weeks for generating performance in Europe, seem already to have lived their best life in 2026 (+32% on average since 1 January, even including yesterday's fall).

In short, a fairly logical mechanism, based on a return to normal in the Persian Gulf region. Or rather on a higher probability of a return to normal in the Persian Gulf region. It has to hold, of course, and investors will also have to deal with the short-term macroeconomic after-sales service (oil remains perched at high levels and there will inevitably be damage in the statistics in the weeks ahead). But investors are increasingly inclined to move on and to keep rubbing up eagerly against the cornucopia promised by artificial intelligence, while shopping around in the rest of the market and taking advantage of the current tailwind.

The White House has made a series of optimistic statements on Iran in recent hours. Apparently, Donald Trump has softened his stance to secure a way out of the crisis, without forcing Iran to run the gauntlet. The US president probably needs a situation that is more or less under control before meeting his Chinese counterpart Xi Jinping next week in Beijing, to tackle a few contentious subjects: Taiwan, AI, China's relations with Iran and Russia, and other such delights. Before that, US Treasury Secretary Scott Bessent will have travelled to Japan, where the yen's slide is not to the liking of the US authorities.

On the markets, the session of Thursday 7 May is still congested with corporate earnings, especially in Europe. Last night, Wall Street welcomed the results from Fortinet and DoorDash, less so those from ARM. AI continues to send investors into a frenzy, as shown by yesterday's surges on Wall Street of 24% for Super Micro Computer and 18% for AMD, and this morning's 18% jump in SoftBank in Japan. Exposure is required at any price. On the macro agenda, weekly US jobless claims will serve as the appetiser before tomorrow's monthly employment figures.

In Asia-Pacific, the rebound is very positive in Japan after a string of public holidays: the Nikkei 225 is surging 6%, propelled by its semiconductor stocks. South Korea and Hong Kong are up more than 1%, Taiwan more than 2%. Australia is gaining 0.8% and India continues to move in small steps, adding 0.2%. European markets are expected to open around flat after the previous day's surge, but investors continue to look upwards.

Today's economic highlights: 

See the full calendar here.

  • GBP / USD: US$1.36
  • Gold: US$4,703.46
  • Crude Oil (BRENT): US$101.81
  • United States 10 years: 4.35%
  • BITCOIN: US$81,055.9

In corporate news:

  • Intertek is likely to reject EQT's sweetened £10 billion takeover offer, citing undervaluation despite the improved bid.
  • Siemens Healthineers reported lower net profit and revenue for the first half.
  • Argenx posted higher first-quarter profit and net sales.
  • AMS-Osram widened its first-quarter losses.
  • Tenaris warned that the Middle East conflict will weigh on its second-quarter sales.
  • Rheinmetall is reportedly considering a EUR12 billion deal to take over Germany's frigate programme.
  • Roche is strengthening its position with the acquisition of US-based PathAI in a deal that could reach USD1 billion.
  • Essity's board is considering the sale or spin-off of its toilet paper and paper towel operations
  • Carlsberg issued hybrid securities with a principal amount of EUR1.8 billion.
  • Sky is seeking up to EUR1.9 billion in damages from Telecom Italia and DAZN over the Italian football broadcasting agreement.
  • Eli Lilly's blockbuster diabetes treatment Mounjaro has overtaken Merck & Co's Keytruda to become the world's best-selling drug.
  • Snap and Perplexity are ending their AI partnership, according to the Wall Street Journal.

See more news from UK listed companies here

Analyst Recommendations:

  • Hsbc Holdings Plc: Huatai Research maintains its buy recommendation and raises the target price from HKD 166.07 to HKD 169.13.
  • Compass Group Plc: Citi maintains its buy recommendation and raises the target price from USD 40.62 to USD 40.78.
  • Relx Plc: Morgan Stanley downgrades to market weight from overweight and reduces the target price from GBX 3320 to GBX 2970.
  • Diageo Plc: HSBC maintains its hold recommendation and raises the target price from GBP 17 to GBP 18.
  • Raspberry Pi Holdings Plc: Deutsche Bank maintains its hold recommendation and raises the target price from GBX 300 to GBX 550.
  • Vestas Wind Systems A/S: Jyske Bank upgrades to buy from hold and raises the target price from DKK 210 to DKK 220.
  • Kongsberg Maritime Asa: SEB Bank maintains its buy recommendation and reduces the target price from NOK 83 to NOK 77.
  • Edp Renováveis, S.a.: Oddo BHF maintains its neutral recommendation and raises the target price from EUR 12.90 to EUR 13.90.
  • Continental Ag: Berenberg maintains its hold recommendation and raises the target price from EUR 69 to EUR 74.
  • Ubs Group Ag: RBC Capital maintains its outperform rating and raises the target price from CHF 37 to CHF 38.