Daily Market Outlook, May 6, 2026 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute — Risk-On Returns, But Oil Risk Still Has a Floor

Risk appetite has reasserted itself after President Trump signalled “great progress” toward a potential agreement with Iran and paused Operation Freedom, the US initiative supporting safe passage through the Strait of Hormuz. The shift in tone was enough to add fuel to a rally already being driven by AI and technology optimism. MSCI Asia rose 2.3% to a record high, while South Korea’s Kospi surged more than 6% to its own peak. Samsung jumped 15%, taking its market value to around $1tn and making it only the second Asian company to reach that threshold. With Japanese equities closed for Golden Week and Treasury cash trading absent, the tone from Asia is nonetheless clear: for markets, it is back to risk-on — at least for now.

Oil has given back some of its geopolitical premium, with Brent slipping around $2/bbl from Tuesday’s close to trade near $108/bbl. However, the move lower looks more like headline relief than a full repricing of supply risk. Safe passage for energy cargo through the Strait is still not functioning normally, and the US blockade remains in place for vessels travelling to or from Iranian ports. That limits the scope for a deeper near-term fall in crude, particularly as inventory signals are tightening. The API reported an 8.1mn barrel draw in crude stocks for the week ending 1 May, sharply larger than the prior week’s 1.8mn draw, while overnight commentary from API and S&P Global Energy pointed to an accelerating pace of inventory depletion.

FX markets were dominated by the Yen, which strengthened abruptly in early London trade. USD/JPY fell from 157.82 to 155.04 in less than twenty minutes shortly after 5am London time, before retracing back above 156. The move has left traders debating whether this was a follow-through from last week’s official intervention or simply intervention risk doing the work for Tokyo. With Japan on holiday, there has been no Finance Ministry comment, but the message to markets is clear enough: the authorities remain highly sensitive to disorderly Yen weakness. The broader Dollar tone was softer across G10, helped by the improved risk backdrop, while China’s April RatingDog PMIs added to the constructive Asian session, with services rising to 52.6 and the composite index up to 53.1.

The UK remains the outlier pressure point, with gilts again generating “highest yield since 1998” headlines, this time at the 30-year maturity. The headwinds are stacking up: the inflationary impulse from the energy shock is not fading, the BoE is expected to downgrade growth, higher inflation and debt-service costs are eroding fiscal headroom, and political uncertainty is elevated in local and devolved election week. Governor Bailey’s FT warning that private credit remains “untested in a severe or prolonged downturn” adds to the broader financial-stability caution, while recent BoE communications have looked less forceful than the ECB’s on inflation urgency. APF loss headlines and a limited shift in the government’s T-bill consultation response also offer little comfort on the supply side. The question for UK markets is therefore close to turning reflexive. Until now, investors have focused on what inflation, growth, fiscal policy and BoE signalling mean for gilt yields. If yields continue rising, the more relevant question may become what gilt yields force policymakers to do next. A sustained rise in long-end borrowing costs could pressure the government toward tighter fiscal choices on sustainability grounds, while persistent inflation risk could push the BoE into a more hawkish stance than weak growth alone would justify. For now, global markets are enjoying a relief rally; UK fixed income is not.

Overnight Headlines

• Trump Suspends Hormuz Operation, Claims Progress On Iran Deal

• US Sec Of State Rubio Says Offensive Stage Of Iran War Is 'Over'

• Iran Sets Up New Mechanism To Manage Hormuz Vessel Transit

• Traders Ramp Up Bets Warsh’s Fed Could Hike Rates Before Cutting

• ECB Doesn’t See Enough Yet To Warrant Rate Hike, Villeroy Says

• China’s Surprise Services Upswing Shows Firms Absorb Price Shock

• Saudi Arabia Cuts Oil Prices For June From Record-High Premium

• AMD Gives Upbeat Forecast After AI Data Center Demand Surges

• Alphabet Raises Almost $17B From Its Euro, Canadian Megabond Deal

• Super Micro Jumps On Outlook Signaling Costs Under Control

• Apple To Let Users Choose Rival Ai Models Across Its Ios 27 Features

• Meta Plans Advanced ‘Agentic’ Ai Assistant For Consumers

• Anthropic Commits To Spending $200Bln On Google’s Cloud And Chips

• Samsung Hits $1 Trillion Valuation, Joining TSMC In Elite Club

• US SEC Proposes Allowing Public Companies To Opt Out Of Qtrly Earnings

FX Options Expiries For 10am New York Cut 

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

• EUR/USD: 1.1675 (EU1.62b), 1.1550 (EU1.49b), 1.1775 (EU675.2m)

• USD/JPY: 158.00 ($1.06b), 159.15 ($953.2m), 156.00 ($560m)

• AUD/USD: 0.7020 (AUD320.9m), 0.7120 (AUD315.7m)

• USD/CNY: 6.8500 ($815.9m), 6.7500 ($600m)

• USD/CAD: 1.3340 ($401m), 1.4000 ($330m)

• USD/BRL: 4.9940 ($400.5m)

• GBP/USD: 1.3500 (GBP378.4m)

• NZD/USD: 0.5425 (NZD825m), 0.5950 (NZD764.7m), 0.5770 (NZD700m)

CFTC Positions as of May 1, 2026: 

• Equity fund speculators reduced their net short position in the S&P 500 CME by 5,811 contracts, totaling 396,442. Meanwhile, equity fund managers decreased their net long position by 21,368 contracts to 999,182. 

• Speculators also adjusted their positions in Treasury futures: they cut the net short position in 5-year futures by 11,345 contracts (1,521,405 total), increased the net short position in 10-year futures by 48,166 contracts (839,137 total), trimmed the 2-year net short position by 34,090 contracts (1,709,263 total), and reduced the UltraBond net short position by 6,002 contracts (294,285 total). In contrast, they raised the net short position in Treasury bonds by 29,869 contracts (113,655 total). 

• Bitcoin's net long position stands at 2,392 contracts. The Swiss franc shows a net short position of -35,221 contracts, the British pound -60,639 contracts, the euro has a net long position of 35,712 contracts, and the Japanese yen has a net short position of -102,059 contracts.

Technical & Trade Views

SP500

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 7200 Target 7340

• Below 7150 Target 7100

DXY

• Daily VWAP Bullish

• Weekly VWAP Bearish

• Above 98.85 Target 99.50

• Below 98.50 Target 96.12

EURUSD 

• Daily VWAP Bearish

• Weekly VWAP Bullish

• Above 1.1785 Target 1.18.50

• Below 1.1750 Target 1.1590

GBPUSD 

• Daily VWAP Bearish

• Weekly VWAP Bullish

• Above 1.3445 Target 1.38.85

• Below 1.34 Target 1.3320

USDJPY 

• Daily VWAP Bearish

• Weekly VWAP Bearish

• Above 160 Target 161

• Below 159 Target 152

XAUUSD

• Daily VWAP Bullish

• Weekly VWAP Bearish

• Above 4600 Target 5000

• Below 42700 Target 3600

BTCUSD 

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 82.5k Target 80k

• Below 81k Target 85.9k