Take Two: Markets reach fresh highs on peace hopes; and Eurozone business activity contracts

What do you need to know?

Global stock markets rallied last week amid investor optimism over a peace deal between the US and Iran, as well as strong corporate earnings from technology firms. Hopes of an end to the Middle East conflict prompted oil prices to retreat, easing inflation fears. Meanwhile strong demand for artificial-intelligence related stocks helped the MSCI World Index, the S&P 500, the tech-heavy Nasdaq and Japan’s Nikkei 225 reach fresh highs. The MSCI World Index and S&P 500 were each up 2% in the week to Thursday’s close while the Nasdaq rose 4% and the Nikkei gained 6%.*

*In US dollar terms. Source: FactSet, data as of 7 May 2026 

Around the world

Eurozone business activity contracted for the first time in almost a year and a half, amid high energy prices due to the Iran war. The composite Purchasing Managers’ Index fell to 48.8 in April - a reading below 50 indicates contraction - from 50.7 in March, a 17-month low. A sharp decline in services offset higher manufacturing production as companies increased stock levels amid geopolitical uncertainty. Elsewhere, the US composite PMI rose to 51.7 in April from 50.3 the previous month, as services and manufacturing activity improved. China’s composite PMI rose to 53.1 from 51.5, while Japan’s composite PMI slipped to 52.2 from 53.0.

Figure in focus: 200 billion

Almost 200 billion cubic metres of natural gas could be made available annually if countries better tackle methane emissions and gas flaring, according to the International Energy Agency. Methane emissions from the energy sector neared record highs in 2025 despite international commitments to reduce levels in line with climate targets. However, tackling methane could help countries increase energy security. Efforts to cut methane from oil and gas operations globally could deliver nearly 100 billion cubic metres of gas to markets each year, while eliminating non-emergency gas flaring could unlock a further 100 bcm, the IEA said.

Chart of the week

The energy supply shock from the Middle East conflict seems to have had a moderate impact on China, partly because of China’s transition to non-fossil fuel energy consumption, which now accounts for 22% of its total. The energy transition effort is expected to intensify, with Beijing aiming to achieve peak carbon emissions by 2030 and carbon neutrality by 2060. Crucially, China’s 15th Five‑Year Plan, covering 2026-2030, targets lifting the share of non‑fossil fuels in the country’s total energy consumption to 25% by 2030, 30% by 2035, and 80% by 2060.

Words of wisdom

Megatsunami: An extremely large wave created by rocks, ice or other materials falling into the water below, that can occur following earthquakes and landslides. New scientific research has found a link between megatsunamis and climate change, after analysing a 2025 megatsunami in Alaska. Climate change was responsible for a large glacier moving and exposing a large mass of rock, which fell into a fjord creating an almost 500-metre high wave – the second tallest wave ever recorded. The risks of megatsunamis are increasing as glaciers continue to retreat at rapid rates, the scientists warned, but satellite and sensor data could help to predict them. 

What’s coming up?

China updates markets with its latest inflation data on Monday. The US follows with its own inflation figures on Tuesday, while the Eurozone publishes its ZEW Economic Sentiment Index. Wednesday sees the Eurozone issue a second estimate of its first quarter GDP growth rate while the UK publishes a preliminary estimate of its own Q1 GDP growth on Thursday. On Friday, the US reports industrial and manufacturing production figures.