Why It Matters — Rai Wealth Management

Geopolitics

US–Iran deal close — then Trump moves the goalposts

Why It Matters

US and Iranian negotiators reportedly agreed a 60-day memorandum of understanding to extend the ceasefire and begin nuclear talks.
Trump then publicly added new demands — full surrender of enriched uranium, no nuclear weapons, and free Hormuz navigation — which Tehran rejected.
Israel crossed Lebanon’s Litani River and Hezbollah fired rockets at northern Israel, threatening to widen the conflict further.
India welcomed the ceasefire signals; as a country that imports over 80% of its oil, any reopening of Hormuz would directly lower fuel bills for hundreds of millions of people.
China’s yuan strengthened to a three-year high against the dollar earlier in the week as Asian markets reacted positively to deal hopes.

Global Equities

Stocks rise again — but India bucks the trend

Why It Matters

The S&P 500 (the main US stock index) closed Friday at 7,580 — up roughly 1.4% on the week and at its highest level since February.
The FTSE 100 (London’s top 100 companies) ended the week at 10,434, gaining around 0.6% for May overall despite still sitting 4.4% below pre-war levels.
Japan’s Nikkei 225 surged 2.5% on Friday alone to 66,330, with AI optimism and ceasefire hopes combining to drive Asian sentiment.
India’s Sensex fell 408 points over the five sessions ending 29 May, hit by a sharp single-day selloff linked to global index rebalancing and foreign investor outflows.
China’s Shanghai Composite fell 0.73% on Friday to close at 4,069, ending a mixed week as domestic consumption data disappointed.

Inflation & Rates

US inflation softer than feared — but rate cuts still distant

Why It Matters

The US PCE (Personal Consumption Expenditures) inflation index — the Fed’s preferred measure of price rises — came in softer than expected, easing fears of a major inflation spike from energy.
US GDP (total economic output) for Q1 2026 was revised downward, pointing to slower growth and giving the Fed (the US central bank) less reason to hike rates further.
Markets now expect the Fed to hold rates unchanged well into 2027, meaning borrowing costs for mortgages and loans will stay high for longer.
UK gilt yields (the interest rate the UK government pays to borrow money) fell to around 4.8% — their lowest since mid-April — as softer UK inflation and weak economic activity reduced expectations of a Bank of England rate hike.
The Bank of England is holding its rate at 3.75%; if energy prices fall further, a cut later this year becomes more likely, which would ease pressure on UK homeowners.

Currencies

Dollar slides on deal hopes; rupee and yen in focus

Why It Matters

The US dollar index fell sharply on Thursday after the ceasefire report, dropping close to 98.85 — a multi-year low — before recovering slightly on Trump’s demands.
A weaker dollar is generally good news for the world: it makes oil cheaper for countries that buy it in dollars, including India and China.
The Japanese yen weakened toward 159 per dollar, near the level where Japan’s government has previously intervened to support its currency.
The Indian rupee firmed modestly against the dollar this week as oil prices fell, improving India’s trade balance outlook.
The Australian dollar was the best-performing major currency of 2026 so far, up over 7% against the dollar — a sign that commodity exporters are benefiting from tight supply globally.

Commodities

Oil falls sharply in May; gold bounces on fresh uncertainty

Why It Matters

WTI crude oil (the main US benchmark) fell below $88 per barrel on Friday — ending May down 16.2%, its biggest monthly fall since early in the conflict.
The drop was driven by hopes that a US–Iran deal could eventually reopen the Strait of Hormuz, reducing the fear premium baked into oil prices.
Gold rose back to around $4,580 per ounce on Friday after Trump’s demands stalled the deal — investors returned to safe havens (assets people buy when they are worried) when uncertainty resurfaced.
India and China both stand to benefit significantly if oil falls further — cheaper crude cuts import bills, reduces fuel costs, and lowers inflation for ordinary households in both countries.
Analysts warn that even if a deal is signed, reopening Hormuz will be slow — mines need clearing, damaged infrastructure rebuilt, and tanker queues cleared before supply flows freely.