HL commentary as it happens

Euro-zone inflation and US Jolts reports

The oil price is a touch softer today, at $94 per barrel, as rumours of a US/Iran deal continue to circulate. But there are also two other major economic releases today – Eurozone inflation and US Job Opening and Labour Turnover series (JOLTs).

Rising energy prices leave little doubt about the direction of Eurozone inflation in May; the question is how much it has risen by and, in particular, what’s happening to core inflation. Central bankers usually try to look through volatile energy prices when setting interest rates, but once price rises start seeping into the wider economy it’s harder to ignore. Certain members of the ECB board have already suggested that rates should rise even if there is a resolution in the Middle East.

In the US, JOLTs is expected to be broadly flat, a continuation of the ‘low fire low hire’ trend we have seen in recent months.

Bank of England Money and Credit Report today

The Bank of England is due to publish its Money and Credit report for April later today. Economists are predicting a slowdown in both mortgage and consumer lending as economic uncertainty caused the Iran war ripples through the economy. While cutting back on spending at times of crisis is perfectly sensible at a personal level, the slowdown in spending is less good news for the economy, as a whole. UK households are already sitting on significant savings, and the government would prefer that cash got out of wallets and into the real economy.

Oil ticks higher as Middle East risk premium lingers

Oil has found its way back onto the worry list, as hopes for a cleaner US-Iran breakthrough run into fresh uncertainty. The market had started to price in some relief from a possible ceasefire extension and reopening of the Strait of Hormuz, but the risk premium has not disappeared, especially with the route still central to global energy flows. For equity markets, that keeps oil in an awkward spot: high enough to feed inflation and rate worries, but volatile enough to make any improvement in sentiment look fragile.

Housebuilders under pressure as buyer momentum cools

The housebuilding sector has a softer market signal to digest this morning, with Nationwide house price growth slowing to 1.7% in May and prices falling 0.6% month-on-month, the first monthly decline so far this year. The pressure is coming from a familiar place: higher energy prices and market interest rates have knocked confidence and cooled buyer demand, which matters for a sector still trying to rebuild momentum after a tough few years. But this does not look like a broken buyer backdrop just yet, with solid household finances, savings buffers and improving affordability suggesting weakness could prove temporary if energy prices settle and geopolitical tensions ease.

FTSE opens softly as US futures push higher

Global equity markets are heading into the week with a split tone. The FTSE 100 got off to a soft start, while the US is painting a brighter picture, with futures pointing higher. The tug of war for investors remains much the same: strong corporate earnings and AI-led optimism are still doing plenty of heavy lifting, but elevated bond yields, firm oil prices, and uncertainty over the path for interest rates are keeping a lid on the enthusiasm.

Bull run sense check – tech multiples still reasonable

AI infrastructure companies have been a core driver of an incredible first-quarter earnings season for US stocks and can take much of the credit for the strong performance of the leading indices. With forward earnings multiples of the tech-led NASDAQ composite barely above the 10-year average, however, it feels like the bulls could still have further to run yet.

US futures stable after record-close on Wall Street

US stock futures have moved tentatively upwards after both the S&P 500 and NASDAQ touched new high-water marks on Thursday. Softer than expected core inflation (PCE) data for April (0.24% month-on-month) and an encouraging 0.11% in real personal consumption helped add a touch of confidence to market expectations that US base rates will remain stable for the rest of the year. According to CME’s FedWatch, the probability of a quarter-point rise fell from 38.3% to 37.1%.

Brent crude at $92, 20% below the 2026 peak

The FTSE 100 is little moved this morning, failing to catch a breeze from Wall Street’s record close on Thursday. The resumption of airstrikes between the US and Iran weighed on the London index yesterday, but a reported 60-day extension to the fragile ceasefire and a possible agreement to reach an agreement seems to have settled nerves today.

What all that actually means is anybody’s guess, but oil traders are taking an optimistic view that the end could be in sight for disruption in the region, and Brent Crude oil prices have taken another step down to under $92 per barrel, around 20% off the peaks seen earlier in the month.

Oil ticks higher on fresh uncertainty

Oil prices hovering in the low to mid $90’s per barrel show there is still a clear risk premium attached to the conflict, especially while shipping through the Strait and Iran’s nuclear programme remain unresolved sticking points. But the bigger picture is that crude is still on course for a second weekly decline, suggesting investors are not yet pricing in a worst-case disruption. For now, the market looks caught between short-term nerves over renewed hostilities and a lingering hope that both sides still have enough incentive to get energy flows moving.

Equity markets set to move lower at the open

Global equity markets are set for a softer open, with FTSE 100 opening down, and similar pressure showing across US futures and much of Europe. The issue for investors is that markets have started to price in the Middle East conflict being largely contained, which means positive headlines now have less power to lift sentiment, while any setback can quickly take the shine off. Hopes yesterday around the reopening of the Strait of Hormuz offered some relief, but renewed hostilities and fresh uncertainty over key sticking points, including shipping traffic and the nuclear programme, have brought caution back to the fore. That leaves markets in a fragile mood this morning.