Markets fuelled by earnings and easing tensions

Global markets delivered another strong week, with US equities once again taking centre stage as major indices climbed to fresh record highs.

Weekly market updates are provided by Zurich Ireland.

Investor confidence was boosted by a combination of resilient economic data, healthy corporate earnings, and growing optimism surrounding developments in the Middle East.

The dominant story of the week came from reports of a potential breakthrough between the US and Iran. A proposed 14-point framework is believed to include the easing of US sanctions, restrictions on Iranian nuclear enrichment, and the reopening of shipping routes through the Strait of Hormuz.

While negotiations remain ongoing, financial markets responded positively to the prospect of reduced geopolitical tensions and greater stability in global energy markets.

Interestingly, investors appear far less focused on day-to-day oil price swings than they were earlier this year. Instead, attention has firmly shifted back toward the strength of the global economy and the resilience of corporate earnings.

In the US, economic data continued to support the positive mood. April nonfarm payrolls showed the economy added 115,000 jobs, significantly ahead of expectations for 62,000. Meanwhile, unemployment held steady at 4.3%, remaining below its peak earlier this year.

The figures reinforced the view that the US economy continues to grow at a stable pace despite higher interest rates and lingering uncertainty.

Corporate earnings season has been another major driver of market momentum. Across sectors, particularly in technology and AI, companies have continued to outperform expectations. With almost 90% of S&P 500 companies having reported results, an impressive 84% delivered earnings above forecasts, comfortably exceeding the long-term average beat rate.

European equities also ended the week in positive territory, although trading was more volatile. Early optimism linked to easing geopolitical concerns and strong earnings was later tempered by renewed tariff threats from US President Trump toward the European Union. At the same time,
eurozone producer price inflation (PPI) accelerated, up 3.4% month on month in March, the biggest monthly increase since August 2022.

In Japan, equities advanced during a shortened trading week following the Golden Week holidays. Investor sentiment remained supported by continued enthusiasm surrounding AI-related demand, alongside hopes that improving US-Iran relations could help reduce broader geopolitical risks.

Equities

Global stocks finished up 1.8% in euro terms and 1.8% in local terms last week. Year-to-date global markets are up by 7.6% in euro terms and up by 7.9% in local terms. The US market, the largest in the world, finished up at 2.1% in euro terms and at 2.2% in local terms.

Fixed Income & FX

The US 10-year yield finished at 4.4% last week. The German equivalent finished at 3.0%. The Irish 10-year bond yield finished at 3.2%. The Euro/US Dollar exchange rate finished at 1.18, whilst Euro/GBP finished at 0.87.

Commodities

Oil finished the week at $95 per barrel and is up 65.6% year-to date in euro terms. Gold finished the week at $4,715 per troy ounce and is up 8.8% year-to-date in euro terms. Copper finished the week at $13,515 per tonne and is up 8.2% year-to-date in euro terms.

The week ahead

Tuesday 12 th May
US CPI data is released.

Wednesday 13 th May
Eurozone GDP and unemployment data goes to print.

Thursday 14 th May
US retail sales data is published.