Week commencing 4 May 2026

Global markets extend April rally as attention turns to May risks

United States (US) equity markets closed out a strong April, with the S&P 500 and the Nasdaq 100 delivering their best monthly gains since 2020. Solid corporate earnings, particularly from big technology and industrial companies, combined with resilient economic data, helped investors look past the ongoing stalemate in the Middle East and elevated oil prices.

The S&P 500 rose 10.42% for the month, the Nasdaq 100 climbed 15.64%, and the Dow Jones advanced 7.14%, its strongest monthly performance since November 2024. As markets enter the first full week of May, attention shifts to April’s jobs report and the next wave of earnings, as investors assess whether the strong momentum can be sustained.

Closer to home, the ASX 200 gave back its early April gains to finish the month 2.17% higher following an eighth straight losing session on Thursday, its longest losing streak since 2018. A series of earnings downgrades weighed on sentiment, while fuel security concerns linked to Middle East disruptions and the approaching Reserve Bank of Australia (RBA) board meeting next week, where a rate hike is widely expected, added to investor caution.

The week that was: highlights

• US Conference Board consumer confidence for April surprised to the upside, rising to 92.8 and comfortably beating the 89.0 consensus forecast
• US durable goods orders for March rose 0.8% month on month, exceeding the 0.5% consensus and rebounding from February’s decline
• US housing starts for March surged to 1.502 million, beating the 1.40 million forecast and rising from 1.356 million in February
• The Federal Reserve (Fed) left interest rates unchanged at 3.75%, as widely expected
• Initial jobless claims fell sharply to 189,000, well below the 212,000 consensus and the lowest level since 1969
• US first quarter (Q1) advance gross domestic product (GDP) grew 2.0%, below the 2.3% expected
• Core personal consumption expenditures (PCE) inflation rose 0.3% month-on-month (MoM), lifting the year‑on‑year (YoY) rate to 3.2%
• The Bank of Japan (BoJ) kept its policy rate unchanged at 0.75%
• China’s (CN) National Bureau of Statistics manufacturing purchasing managers’ index (PMI) for April remained in expansion at 50.3, slightly above the 50.1 consensus
• China’s NBS non‑manufacturing PMI dipped to 49.4, moving into contraction and missing the 49.9 forecast
• China’s RatingDog manufacturing PMI rose to 52.2, well above the 51.0 consensus
• Euro area economic sentiment eased to 93.0, below the 95.2 forecast
• The European Central Bank (ECB) kept its key policy rates unchanged
• The Bank of England (BoE) held rates steady at 3.75% in an 8 - 1 vote
• Australia’s headline consumer price index (CPI) for March rose 4.6% YoY, sharply up from 3.7% in February but below the 4.8% consensus
• Australia’s (AU) RBA trimmed mean CPI held steady at 3.3% YoY, in line with expectations
• New Zealand (NZ) ANZ business confidence for April fell sharply to -10.6 from 32.5 previously
• West Texas Intermediate (WTI) crude oil surged 12.15% to $105.87
• The US dollar index (DXY) fell 0.35% to 98.16
• Bitcoin slipped 2.63% to $76589
• Gold fell 2% to $4615
• Wall Street’s volatility gauge, the volatility index (VIX), declined to 16.90 from 18.70 the prior week.

Key dates for the week ahead

Australia & New Zealand

• AU – building permits, MoM preliminary March: Monday, 4 May at 11.30am AEST
• AU – RBA interest rate decision: Tuesday, 5 May at 2.30pm AEST
• AU – RBA press conference: Tuesday, 5 May at 3.30pm AEST
• NZ – unemployment rate first quarter (Q1): Wednesday, 6 May at 8.45am AEST
• AU – Ai Group industry index April: Wednesday, 6 May at 9.00am AEST
• NZ – ANZ business confidence April: Thursday, 7 May at 11.00am AEST
• AU – balance of trade March: Thursday, 7 May at 11.30am AEST

China & Japan

• CN – RatingDog services PMI April: Wednesday, 6 May at 11.45am AEST
• JP – BoJ monetary policy meeting minutes: Thursday, 7 May at 9.50am AEST
• CN – balance of trade April: Saturday, 9 May at 1.00pm AEST
• CN – exports YoY April: Saturday, 9 May at 1.00pm AEST
• CN – imports YoY April: Saturday, 9 May at 1.00pm AEST

United States

• US – ISM services PMI April: Wednesday, 6 May at 12.00am AEST
• US – JOLTS job openings March: Wednesday, 6 May at 12.00am AEST
• US – ADP employment change April: Wednesday, 6 May at 10.15pm AEST
• US – initial jobless claims, week ending 2 May: Thursday, 7 May at 10.30pm AEST
• US – non‑farm payrolls April: Friday, 8 May at 10.30pm AEST
• US – Michigan consumer sentiment, preliminary May: Saturday, 9 May at 12.00am AEST

Europe & United Kingdom

• EA – retail sales, MoM March: Thursday, 7 May at 7.00pm AEST
• UK – Halifax house price index, MoM April: Friday, 8 May at 4.00pm AEST

Key events for the week ahead

AU: RBA interest rate decision

Date: Tuesday, 5 May at 2.30pm AEST

At its March meeting, the RBA raised its official cash rate by 25 basis points (bp) to 4.10% in a tight 5 - 4 decision. This marked the second consecutive hike after February and reflected the board’s concern that inflation could remain above the 2% - 3% target band for longer than previously expected due to capacity pressures and sharply higher fuel prices stemming from the Middle East conflict.

Since the March board meeting, domestic data have presented a mixed picture. Headline CPI in March jumped to 4.6% YoY from 3.7%, largely driven by a 32.8% surge in petrol prices, while the trimmed mean measure remained steady. Meanwhile, the labour market has remained resilient, with unemployment holding around 4.3%.

On the softer side of the ledger, household spending and house‑price growth have shown some moderation. Consumer and business confidence remain weak, and petrol prices have fallen back towards pre‑conflict levels.

This reversal in petrol prices, one of the biggest contributors to March’s CPI rise, alongside softer indicators, now offers the RBA a narrow pathway to an unexpected pause next week.

Such a pause would give the RBA more time to assess upcoming data, including consumer and business confidence, household spending, employment and the April inflation report, ahead of the 16 June Board meeting. It would also allow time to gauge developments in the Middle East stalemate and assess any tightening in the Federal Government’s budget, due on 12 May.

Putting it together, while a pause cannot be ruled out, the probability remains tilted towards the RBA raising rates by 25 bp next week to 4.35%. This would mark the RBA’s third hike this year, fully unwinding last year’s 75 bp of rate cuts.

Ahead of the meeting, Australian interest rate markets are pricing around 18 bp of tightening for next week and a cumulative 64 bp of hikes through 2026.

RBA cash rate chart

US: Non‑farm payrolls

Date: Friday, 8 May at 10.30pm AEST

For March, US non‑farm payrolls rose 178,000, rebounding from February’s revised -133000 contraction and well above the 60,000 consensus. The unemployment rate edged lower to 4.3%, while average hourly earnings rose 0.2% MoM, taking the annual pace down to 3.5%, the slowest since May 2021.

Consensus expectations for April point to a more moderate gain of 63,000 jobs, with the unemployment rate expected to hold steady. Markets are now pricing the Fed on hold for the remainder of 2026, a sharp contrast to the 60 bp of cuts priced at the end of February.

US unemployment rate chart

US Q1 2026 earnings season

US Q1 2026 earnings season continues next week with key reports from popular names including Palantir, AMD, Coca‑Cola, Shopify, Uber, Snap, ARM Holdings, Coinbase, Airbnb, McDonald’s and Disney, among others.