Stable Market Minute - 11th May 2026: Peace Proposal Pending

Iran rejects Trump's peace terms, the S&P and NASDAQ hit record highs, and a packed data week puts UK GDP and US inflation in the spotlight.

Key takeaways

• Iran has rejected Trump's peace terms; geopolitical risk remains elevated, keeping Brent crude supported.
• S&P 500 and NASDAQ hit record highs, driven by semiconductor stocks and a strong US jobs print — risk appetite in the US is resilient.
• The FTSE 100 dropped nearly 3%, largely due to HSBC's earnings miss and MFS lending crisis exposure.
• Starmer is holding on despite heavy local election losses — political continuity is providing modest support for sterling.
• Chinese PPI jumped from 0.5% to 2.8%, flagging rising production costs that could feed through to import prices.
• Thursday's UK Q1 GDP print is the domestic data event of the week — the market expects 0.6% growth versus 0.1% in Q4 2024.

Iran Rejects Trump's Peace Proposal

Trump has branded Iran's latest response to his peace proposal as unacceptable. The back-and-forth is keeping geopolitical risk elevated, and markets are watching closely for any sign of a breakthrough — or a breakdown. For now, Brent crude is up and gold is down, suggesting traders are cautiously positioning rather than pricing in a full-blown escalation.

UK Political Uncertainty — But Starmer Stays Put

Keir Starmer suffered a historic defeat in Wales alongside a punishing set of local election results, prompting widespread calls for him to stand aside. He has so far held firm. From a markets perspective, that stubbornness may actually be welcome. Given the number of prime ministers the UK has cycled through in the past four to five years — and the volatility each transition brought — keeping a leader in post, even an embattled one, offers a degree of certainty that sterling and gilts markets tend to prefer.

US Equities Shrug Off Geopolitical Noise

The S&P 500 and NASDAQ both closed at record highs on Friday. Semiconductor stocks led the charge, and a stronger-than-expected US jobs number provided additional fuel. Markets appear willing to look past geopolitical uncertainty for now, with risk appetite holding up across US equities despite the noise elsewhere.

FTSE Falls Nearly 3% on HSBC Earnings Miss

The FTSE 100 fell close to 3% last week, weighed down primarily by HSBC's earnings miss and the bank's exposure to the MFS lending crisis. That single stock drag had an outsized effect on the index, a reminder of how heavily the FTSE is influenced by its largest financial constituents. UK-focused finance teams should note the contrast with Wall Street's record run — the divergence in sentiment between the two markets is widening.

FX Snapshot: GBP/USD at 1.36, EUR/USD Just Under 1.18

Sterling is trading against the dollar at 1.36, with EUR/USD sitting just below 1.18 and the GBP/EUR cross at approximately 1.1550. These are relatively stable levels, consistent with a market that is cautious but not panicked. Treasurers managing cross-currency exposures should watch Thursday's UK GDP print closely — any miss could put renewed pressure on sterling.

Chinese PPI Surges — A Cost Warning for Importers

Chinese producer price index data released this morning came in significantly above expectations. The market had anticipated a modest rise; the actual figure jumped from 0.5% the previous month to 2.8%. China consumes roughly 16 million barrels of oil per day to power its manufacturing base, so elevated energy costs are feeding directly into production costs. For UK and European businesses sourcing goods from China, this is an early signal that import price pressures may not yet have peaked.

Data Week Ahead: US CPI, UK GDP, and More

It is a busy week for economic data. Today brings US consumer inflation figures, with markets expecting a modest increase. Wednesday sees the US producer price index, excluding food and energy. Thursday is the key day: UK Q1 GDP figures are due, with the market looking for a significant jump — around 0.6% growth compared with just 0.1% in Q4 last year. US retail sales also land on Thursday. The overarching focus, however, is likely to remain on any fresh response from Washington regarding the Iran peace process.