Report by Renta 4
European markets opened lower (Eurostoxx futures down 0.7%, S&P futures down 0.2%, Nasdaq futures down 0.5%) whilst Brent futures rose again, albeit moderately, by 0.7%.
As for the conflict, there is still no agreement and the two sides continue to exchange threats, with Trump warning that the ceasefire with Iran is in a very fragile state, and the Iranian government stating that it is prepared for any scenario. At this stage, it is clear that the positions of the US and Iran remain far apart, with the former demanding the reopening of the Strait of Hormuz and the dismantling of Iran’s nuclear programme, and the latter demanding the withdrawal of US military presence as a precondition to any agreement. Furthermore, we reiterate that, if the CIA report is accurate (Iran could withstand the US naval blockade for at least another three or four months), Trump would be in a greater hurry than Iran to reach an agreement, especially given that petrol prices are at their highest since 2022 and the US ‘driving season’ is now beginning – a period of peak demand that could put further upward pressure on prices, complicating Trump’s position ahead of the mid-term elections (3 November). Last night, Trump announced the temporary suspension of the federal fuel tax until prices stabilise, an announcement that follows US Energy Secretary Chris Wright’s indication that the government was considering freezing the tax.
In fact, Saudi Aramco believes that if traffic through the Strait of Hormuz remains disrupted for a few more weeks, the oil market will not normalise until 2027, which in turn poses an upside risk to inflation expectations, which could become unanchored, forcing central banks to adopt a more ‘hawkish’ stance.
In Asia, it is worth noting the 3% fall in the Kospi index, amid the possibility that the South Korean government may introduce a tax on the AI sector (it would seek to tax “excess tax revenue” rather than impose a direct tax), a proposal that is still under discussion and which aims to distribute such revenue as dividends among citizens. Furthermore, we must not lose sight of the strike called for 21 May by Samsung’s largest trade union coalition, which could bring global memory chip production to a standstill just as demand for AI is at its highest.
Looking ahead to today, the main focus at the macro level will be the US CPI for April, which is expected to show a slight rise due to the energy component (3.7% year-on-year overall compared to 3.3% previously, with core inflation stable at 2.7% compared to 2.6% previously); attention should also be paid to the ZEW survey of financial analysts and institutional investors in Germany and the Eurozone, which is likely to continue deteriorating in May amid the uncertainty caused by the conflict in the Middle East.
On the corporate front, we will continue to see Q1 2026 results, with highlights including Vodafone in the UK, Bayer in Germany, and ACS and CIE Automotive in Spain. As for the earnings season, by last Friday 89% of S&P 500 companies had reported, of which 84% have beaten EPS estimates (versus 78% 5-year average and 75% 10-year average); should this percentage hold, it would be the highest since Q2 2021 (87%). EPS has exceeded estimates by 18.2% (compared to a 5-year average of 7.3% and a 10-year average of 7.1%). In terms of revenue, 80% of companies have beaten forecasts (versus 70% 5-year average and 67% 10-year average) by 1.7% (versus 2% 5-year average and 1.5% 10-year average). This week, only 11 S&P companies are scheduled to report their results.
