Morning Bid: End in sight?

• A reported one-page U.S.-Iran deal would involve both sides unblocking the Strait of Hormuz, with U.S. expectations for Iranian responses on key points within 48 hours
• S&P 500 companies are on track for 28% year-over-year earnings growth in Q1 2026, the strongest quarterly profit growth since 2021, with estimates rising from 14% a month ago
• Long-dated government bonds faced pressure as U.S. 30-year Treasury yields briefly topped 5% and British gilt yields hit their highest levels since 1998 ahead of Thursday's local elections

Market Summary: End in Sight?

Key Developments:

Global markets rallied sharply on May 6, 2026, following reports of a potential U.S.-Iran peace deal to end the Gulf conflict. According to Axios, a one-page agreement would see both nations unblock the Strait of Hormuz, with Iranian responses expected within 48 hours. This came after President Trump indicated willingness to reopen Gulf shipping routes following the recent 'Project Freedom' initiative.

Market Performance:

• Oil prices plunged, with Brent crude falling to $100 per barrel
• MSCI all-country index reached an all-time high
• Wall Street futures advanced before the opening bell
• European stocks hit two-week highs
• South Korea's KOSPI gained on positive sentiment

AI Sector Momentum:

Technology stocks surged on upgraded AI spending forecasts. Intel jumped 13% on reports of potential processor supply talks with Apple, while AMD soared 16% in extended trading after raising demand forecasts. S&P 500 companies are now expected to post 28% year-over-year earnings growth for Q1 2026—the strongest since 2021—up from 14% estimated a month ago. Full-year 2026 earnings growth forecasts increased to 23% from 17%.

Bond Market Pressure:

U.S. 30-year Treasury yields briefly topped 5% for the eighth time in three years before retreating. UK gilts reached their highest borrowing rates since 1998 ahead of Thursday elections, where poor Labour Party performance could pressure PM Keir Starmer.

Currency Markets:

The yen weakened to 155 per dollar for the fourth time in a week amid speculation of Tokyo intervention, which reportedly occurred last Thursday.

Upcoming Data:

Friday's U.S. employment report expects 62,000 April jobs added, down from March's 178,000.