Report by Renta 4
European markets open higher (Eurostoxx futures up 0.9%, S&P futures up 0.3%, Nasdaq futures up 0.4%) following a session with little movement on Wall Street and gains in Asia, amid comments from US Secretary of State Marco Rubio regarding “positive signs for reaching an agreement with Iran”, which could be announced as early as today, with the spokesperson for the Iranian Ministry of Foreign Affairs, Esmail Baqai, admitting that they are “examining” a new US proposal. We shall see what happens with the red lines drawn by both sides (the future of the nuclear programme, the fate of enriched uranium reserves, the situation in the Strait of Hormuz). Yesterday, there were reports of talks between Iran and Oman to establish a permanent toll system formalising their control over maritime traffic through the Strait of Hormuz, which runs counter to the freedom of navigation championed by the US.
We return, therefore, to a market that is reacting positively to an “imminent” peace agreement, when just a day earlier everything pointed to rising tensions in a fragile truce, with positions that seemed far apart and both countries ready to resume hostilities. Contradictory news continues to drive volatility in oil prices (Brent up 2% today at $105/bbl after falling 2% yesterday), as Trump has threatened to resume hostilities should no agreement be reached, although the US Senate has for the first time given the green light to a resolution limiting Trump’s authority to make military decisions against Iran without express authorisation from Congress. The proposal, tabled by Democratic Senator Tim Kaine, managed to pass thanks to the support of several Republicans who broke ranks with their party’s official line, although the text still faces further legislative hurdles and could ultimately be vetoed by the White House.
Meanwhile, the European Commission published its spring economic forecasts in which, despite factoring in the energy shock resulting from the US-Iran war, the estimated impact on economic growth is moderate, revising global GDP for 2026 by just 0.3 percentage points to 2.8% and leaving the 2027 forecast unchanged at 3.2%. The forecasts show that the countries most affected are those most dependent on energy: the Eurozone is projected at 0.9% for 2026 and 1.2% for 2027 (a downward revision of 0.3 percentage points and 0.2 percentage points respectively compared to the autumn 2025 estimates). Within the Eurozone there are also significant differences, with Germany and Italy being the hardest hit and Spain showing greater resilience (up 0.1 pp in 2026 to 2.4% and down 0.1 pp in 2027 to 1.9%). Elsewhere in the world, the upward revision in the US for 2026 stands out, up 0.3 pp to 2.2%, alongside the greater impact on emerging economies and the UK, down 0.5 pp in 2026 in both cases.
As regards inflation, the forecast has been revised sharply upwards, by 1.1 pp for 2026 in the Eurozone and 0.3 pp for 2027, to 3% and 2.3% respectively.
In summary, the report highlights that the expected slowdown in economic growth stems from higher energy costs, supply chain pressures, higher financing costs and geopolitical uncertainty, with private consumption set to continue acting as a driver of growth, albeit at a slower pace due to both lower purchasing power and an increase in the savings rate.
These forecasts come after yesterday’s release of the preliminary May PMIs, which once again highlighted the difference between the US and Europe. Whilst in the US, both manufacturing and services remain in expansionary territory, in Europe, the services PMI showed a significant deterioration, with France leading the declines (services PMI 42.9). These figures come against a backdrop of continued pressure on industrial prices, which has not yet been passed on to final prices, and serve as a signal supporting a tightening of the ECB’s monetary policy.
On the macroeconomic front, this morning in Japan, the April CPI surprised by moderating compared to the previous month and, contrary to the expected acceleration, showed growth of 1.4% year-on-year in the headline rate (1.6% compared to 1.5% previously) and 1.9% year-on-year in the core rate (2.2% compared to 2.4% previously), despite which the market maintains its forecast that the Bank of Japan will raise rates by 50 basis points this year. Key data points to watch today include: 1) in Germany, the May IFO business climate index (previous: 84.4) along with its current assessment (previous: 85.4) and expectations (previous: 83.3) components, and 2) in the US, the University of Michigan final consumer confidence index for May (preliminary: 48.2 and previous: 49.8).
