Market News

Iran is claiming a figure of 15 vessels transiting through the Strait of Hormuz in the past 24 hours, with those ships said to have obtained permission from Tehran to cross the waterway. Of the 15 vessels, the Iran navy is saying that it includes 4 oil tankers.

Now, the issue here is that these may all still be "shadow fleets". So, it is tough to ascertain which oil tankers these are and where their destinations will be. The same can be said for all the other vessels. As mentioned before, Iran may claim one thing but the reality i.e. actual shipping data tends to differ from that. We have seen that before in recent weeks.

So, why exactly is Iran doing this?

In part, it is perhaps to play to the optics in managing US expectations as we look…

It doesn't feel like much of anything is being resolved at the moment in the Middle East. All the conditions for a deal have been laid out on the table for two weeks now but it seems like both the US and Iran still cannot meet in the middle. Iran chief negotiator Ghalibaf is out saying that:

"The naval blockade and escalation of war crimes in Lebanon by the genocidal Zionist regime are clear evidence of US noncompliance with the ceasefire. Every choice has a price, and the bill comes due. It will all fall into place."

He continues to harp on the violation to the initial ceasefire agreement, which is fair as these are two things that the US and Iran need to agree to before nuclear discussions begin. This is all going to be painted into a…

• Manufacturing PMI 51.6 vs 51.4 prelim
• Prior 52.2

Euro area manufacturing activity slows down in May as the stockpiling surge from April begins to fade. The headline manufacturing index is a two-month low with the output index dropping to a four-month low in May. That comes as demand conditions take a hit amid rising price pressures in general.

New orders rose at the fastest pace in four years during April, largely thanks to stockpiling, and that partially reversed in May. The volume of new orders stagnated on the month, partly driven by a fresh decrease in new export orders.

Besides that, just note that the headline index is also exacerbated by the suppliers' delivery times component. The report highlights that: "With the respective index…

• Inflation expectations 1-year ahead at 4.0% vs 4.0% prior
• 3-year ahead at 2.9% vs 3.0% prior
• 5-year ahead 2.4% vs 2.4% prior
• Full report here

The survey showed that consumers perceived inflation over the previous 12 months at 4.0%, up from 3.5% in March. However, expectations for inflation over the next year remained unchanged at 4.0%.

Longer-term inflation expectations were stable to slightly lower. Expectations for inflation three years ahead declined to 2.9% from 3.0%, while five-year inflation expectations held steady at 2.4%, suggesting that consumers continue to believe inflation will gradually move closer to the ECB’s target over time.

Inflation uncertainty remained elevated, and lower-income households continued to report slightly…

• Prior 53.7

Key findings:

• UK manufacturing recovery continues in May despite rising price and supply chain pressures
• Input price inflation at near four-year high
• Supply chains remain under pressure

Comment:

Rob Dobson, Director at S&P Global Market Intelligence

“May saw the UK manufacturing upturn gather pace, as growth of production and business optimism both rose to three-month highs.

"The sustainability of the upturn remains in doubt, however. The recent upturn in new order intakes that is driving the expansion in output is heavily reliant on both manufacturers and their clients front-loading purchases to mitigate expected war-related price increases and supply chain disruption. This bounce will fade once customers have built up…

• Prior 52.8

The April growth, as expected, was short-lived as we see an unwinding to the frontrunning of stock in May. While the revised figures are better than initial estimates, it still points to a marginal contraction in business activity. Of note, there were fresh declines in production, new orders, purchasing volumes and stocks as the tailwinds from client stockpiling dissipated.

Meanwhile, accelerated increases in both input costs and output charges pointed to intensifying inflationary pressures across France's industrial sector.

Looking at the details, demand conditions were dealt a major setback with the sub-index for new orders wiping out all of the gains made in April. Supply chain pressures were also more intense as vendor…

• Prior was 51.4

Key findings:

• Manufacturing sector stalls amid waning demand and soaring costs
• New orders fall for first time in 2026 so far, weighing on output growth
• Job cuts deepen as cost pressures reach highest since June 2022

Comment:

Phil Smith, Economics Associate Director at S&P Global Market Intelligence:

"The upturn in the manufacturing sector stalled in May, confirming the warning signs from recent PMI surveys that growth – being driven by the frontloading of orders – was likely to fade.

"The true underlying health of demand appears to be showing itself, with new orders falling for the first time this year amid still-elevated levels of uncertainty and soaring prices.

"Cost pressures have continued to ratchet up across the…

• Prior 52.1

Key findings:

• Renewed growth in new orders supports stronger increase in manufacturing output
• Stockpiling efforts support fresh pick-up in order books
• Delivery delays worsen and inflation intensifies

Comment:

Eleanor Dennison, Economist at S&P Global Market Intelligence, said:

"Faced with even more disruption to supply chains and greater cost pressures brought on by war in the Middle East, manufacturers in Italy are acting to mitigate any risk of production stoppages. Despite accelerated purchasing activity, efforts to build buffer stocks were unsuccessful amid greater instances of delivery delays.

"This new improvement in demand seen across the sector is likely to be unsustainable when the boost from stockpiling inevitably fades.…

• GDP +0.7% vs +0.6% q/q expected
• Prior +0.1%; revised to +0.2%
• GDP (adjusted for sporting events) +0.4% q/q
• Prior +0.5%

Looking at the details, it is the industrial sector that helped to bring up growth in the first quarter of 2026. The sector grew strongly (+1.3%) with manufacturing (+1.5%) in particular being a key component to growth conditions. That said, it was not all good in the industrial sector as chemical and pharmaceutical declined strongly during the quarter (-3.4%).

As for the services sector, overall conditions remain relatively subdued. The sector posted mild growth (+0.2%) on the quarter amid positive contributions from transport (+1.9%) and financial services (+1.3%). However, that is largely offset by a decline in the retail…

• May manufacturing PMI 51.2 vs 52.0 expected
• Prior 51.7

April was defined by firms rushing orders to stock up, so naturally May is showing some of that unwinding as new orders placed with manufacturers declined. The standout details from the report though are that supply chain delays are intensifying as product shortages were reported, and also input prices rising further to a greater degree.

The former sees a further deterioration in vendor times, which was the greatest seen in four years, as the Middle East conflict continues to weigh. The report points out that: "Panellists noted that delays on maritime routes were considerable, product shortages widespread and prices for inputs, especially for oil and oil-derivatives were rising…

• Prior 54.5

More to come..