Daily Market Outlook, May 7, 2026
Daily Market Outlook, May 7, 2026
Patrick Munnelly, Partner: Market Strategy, Tickmill Group
Munnelly’s Macro Minute — Records, Relief and Labour-Market Caveats
Global equities pushed further into record territory as optimism around a potential US-Iran agreement extended the risk rally. The MSCI All Country World Index rose 0.3%, while MSCI Asia gained 1.9% to a fresh high, helped by a strong rebound in Japan’s Nikkei 225, which also touched an intraday record. South Korea’s rise is becoming a structural market story as much as a cyclical one, with its equity market now overtaking Canada to become the seventh-largest globally by value, underlining its role as a key destination for tech and AI-linked capital. The move followed another record close on Wall Street, where sentiment remains supported by earnings resilience: more than 80% of S&P 500 companies have beaten expectations this season.
The geopolitical relief trade remains centred on oil and the Strait of Hormuz. Brent held near $102/bbl, preserving most of the prior session’s losses, as markets priced a better chance that a US-Iran deal could allow energy transit through the Strait to resume. The important distinction is that prices have stabilised rather than collapsed: the market is discounting improved odds, not confirmed resolution. That leaves crude vulnerable to headline risk in both directions, particularly with inventories already tightening and any renewed obstruction to flows likely to quickly rebuild risk premium.
FX was quieter after Wednesday’s sharp Yen move, with USD/JPY steady around 156.30 in Asian hours. The absence of follow-through does not remove intervention risk; if anything, it leaves markets more alert to the authorities’ reaction function after the prior surge was widely linked to speculation of official action. Elsewhere, buoyant sentiment spilt into Asia’s dollar bond market, where four issuers including the Hong Kong government launched US dollar notes. Regional spreads have compressed to fresh lows, reflecting a broader search for risk exposure as investors mark down geopolitical tail risks.
US labour data offered some reassurance, but not enough to declare a clear turn. ADP employment rose to 109k in April from 61k, a better signal ahead of Friday’s payrolls report, where consensus sits around 65k, and enough to offset some of the softness in March JOLTS. Still, the composition remains narrow. Education and healthcare accounted for more than half of April’s private-sector gain, and year-to-date, healthcare has contributed 223k of the 247k jobs that ADP estimates have been created. That leaves most other sectors close to static, while ISM employment surveys continue to suggest headcount reduction. The unemployment rate is expected to remain at 4.3%, but weaker immigration and lower participation complicate the signal; labour-market resilience may be more mechanical than cyclical.
The week ahead keeps the focus on whether the macro data can validate record asset prices. In the US, April CPI is the key release, with headline inflation likely to jump to around 3.8% y/y from 3.3% on higher gasoline prices, followed by PPI, import/export prices and retail sales. In the UK, markets will digest the KPMG/REC jobs report, local election fallout, Q1 GDP — where the BoE expects 0.5% q/q — and speeches from Mann and Pill. In the euro area, the second estimate of Q1 GDP, final member-state CPI prints and the ECB Bulletin will round out the data flow. For now, equities are trading the Iran-relief and earnings-resilience story; the test is whether inflation and labour data allow that optimism to hold.
Overnight Headlines
Iran Reviewing US Proposal, Key Demands Remain Unaddressed
Iran Expected To Respond To US Proposal On Thursday
Trump Tells PBS That Iran War Has 'A Very Good Chance Of Ending'
France Says Maritime Group Ready To Escort Ships in Hormuz
UK Const. Activity Tumbles, Iran War Pushes Up Costs, RICS Survey
US Treasury Secretary To Discuss Weak Yen In Japan Next Week
BOJ Minutes, Debated Need For Rate Hike If Energy Shock Persists
Japan Has All Fronts In Sight In Response To Yen Speculation
Japan’s Nikkei Hits Intraday Record High On US-Iran Deal Hopes
Anthropic Strikes SpaceX Data Center Deal As It Plows Ahead On AI Coding
Eli Lilly Sells $9 Billion of Bonds To Fund Acquisitions
Arm Warns Of Phone Market Weakness, With AI Helping Offset Slump
WBD Logs $2.92 Billion Loss Tied To Netflix Termination Fee
JPMorgan Creates New Index Tracking 6,400 Private Companies
BP License To Work With Iranian, Russian Partners Extended by US
FX Options Expiries For 10am New York Cut
(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)
EUR/USD: 1.1500 (EU2.01b), 1.1600 (EU1.87b), 1.1850 (EU1.75b)
USD/JPY: 156.00 ($1.48b), 158.00 ($1.37b), 159.50 ($903.4m)
AUD/USD: 0.7250 (AUD2.21b), 0.7200 (AUD1.95b), 0.7050 (AUD1.34b)
USD/CNY: 6.8500 ($3.43b), 6.7500 ($1.63b), 6.8000 ($1.18b)
USD/CAD: 1.3725 ($572.2m), 1.3700 ($420m), 1.2725 ($340m)
USD/BRL: 5.1000 ($1.29b), 4.9500 ($500m), 5.0000 ($370m)
GBP/USD: 1.3475 (GBP990.8m), 1.3350 (GBP400.6m), 1.3520 (GBP330m)
USD/KRW: 1460.00 ($608m), 1450.00 ($575m), 1400.00 ($375m)
EUR/GBP: 0.8700 (EU659.1m), 0.8800 (EU347.7m)
USD/MXN: 18.10 ($451.5m), 17.70 ($408.5m), 17.50 ($328.3m)
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 7270 Target 7430
Below 7190 Target 7100
DXY
Daily VWAP Bearish
Weekly VWAP Bearish
Above 98.85 Target 99.50
Below 98.50 Target 96.12
EURUSD
Daily VWAP Bullish
Weekly VWAP Bullish
Above 1.1785 Target 1.18.50
Below 1.1750 Target 1.1590
GBPUSD
Daily VWAP Bullish
Weekly VWAP Bullish
Above 1.3445 Target 1.3885
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 86k
Below 80.5k Target 78k
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Past performance is not indicative of future results.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!