Report by Renta 4
Flat opening on European markets (Eurostoxx futures down 0.2%, S&P futures up 0.3%, Nasdaq futures up 0.5%) and further gains in Asia (Japan’s Nikkei up 1%, South Korea’s Kospi up 4%) against the same backdrop of doubts over the Middle East deal and the AI boom.
Brent is up 2% this morning at $93/bbl against the backdrop of a US-Iran deal still awaiting signature and several tit-for-tat attacks over the weekend. The US attacked military targets in southern Iran in response to Iran’s downing of an American drone over international waters, whilst the IRGC (Islamic Revolutionary Guard Corps) launched attacks this morning against a US base and Kuwait reports being under fire from missiles and drones. Meanwhile, Israel is pressing ahead with its offensive against Hezbollah in Lebanon, complicating the Lebanese flank of the agreement that Iran is demanding be included.
Trump’s meeting with his team last Friday ended without any announcement, with the US returning the draft to Iran with amendments. Although negotiations continue, friction and the difficulty of reaching agreement also persist on three key issues: the full opening of the Strait of Hormuz, the handover or destruction of enriched uranium, and the end of the nuclear programme. We reiterate once again that, even with the signing of the agreement, full normalisation will take months (early 2027?).
Added to all this is the news (not officially confirmed) that Iranian President Pezeshkian has reportedly tendered his resignation to the Supreme Leader Mojtaba Khamenei, claiming that the IRGC has taken effective control of large parts of the government and that he and other senior officials have been excluded from vital decisions. If the resignation is genuine, it would confirm that it is not the civilian government but the IRGC itself that is negotiating with the United States, which would raise the question of whether the signing of an agreement would have any operational validity.
Looking ahead to the week beginning today, market attention will focus on leading economic indicators for May in the United States and China (ISMs, PMIs), European inflation and the US labour market. Thus, the key indicators will be the final May PMIs globally and the US ISMs, the preliminary Eurozone CPI data and, in particular, the official US employment report for May, due to be published on Friday.
Europe: the week begins with the final manufacturing PMIs for May in the major economies, which are expected to continue to show the weakness seen in the preliminary data. The preliminary estimate of the April CPI for the Eurozone will also be published, covering the 1-year (4% and previous) and 3-year (3% previous) periods, a key indicator for the ECB.
On Tuesday, the most significant data will be the release of the preliminary May CPI figures for the Eurozone: headline (3.3% year-on-year compared to 3% previously) and core (2.4% year-on-year compared to 2.2% previously).
On Wednesday, the second batch of final May PMIs will be published, covering the services and composite sectors for the major European economies, with figures expected to be weak in France, Spain and the UK and more stable in Germany and Italy. In addition, we will see the Eurozone Producer Price Index (PPI) (4.4% year-on-year compared to 2.1% previously).
On Thursday, attention will focus on Eurozone retail sales for April, both month-on-month (0.3% compared to 0.1% previously) and year-on-year (0.6% compared to 1.2% previously). Finally, on Friday, the final Q1 2026 GDP figures will be released (0.1% quarter-on-quarter compared to 0.1% previously, 0.8% year-on-year compared to 0.8% previously), with a breakdown by component: public spending, investment and private consumption, as well as industrial production in France.
On the corporate front, we highlight the publication of Inditex’s Q1 2026 results (Wednesday) and Inmobiliaria Colonial and Nextil’s Investor Day (Thursday). With the earnings season now over, S&P 500 Q2 2026 EPS estimates have been revised upwards by 2.5% over the last two months to USD 80.8 per share, despite this typically being a quarter in which estimates are usually revised downwards. This is the largest upward revision since Q3 2021 (3.8%), with increases in 5 of the index’s 11 sectors, led by Energy (59.2%) and with Healthcare at the other end of the scale, where Q2 2026 EPS is expected to be 15.2% lower. For the year as a whole, full-year EPS for the S&P 500 is estimated at $337.5 per share, representing an increase of 5.3% compared to 31 March.
