7 May 2026
If you are covering the latest news in financial markets, please see the following comment from Lindsay James, investment strategist at Quilter:
“Markets opened lower today following a positive day yesterday which saw a glass half full approach in response to comments from the US administration that the ceasefire remained intact and that a deal was still progressing. The US stock market reached fresh highs and oil prices fell sharply, reducing immediate inflation concerns. However, these comments could also be interpreted as a way for the US to regain the narrative following its sudden U-turn on efforts to support commercial shipping to exit the Gulf, announced just a day earlier, which triggered an immediate military response from Iran and brought the operation to a swift end. With trust in short supply and Iran holding significant leverage in its control of the Strait of Hormuz, it seems relatively unlikely that a swift and lasting agreement will be reached anytime soon, potentially setting markets up for disappointment.
“Many companies are already warning of rising costs from a range of sources, with food inflation likely to come back into focus in coming weeks. While fertiliser for the current UK growing season was purchased before the conflict, farmers are trying to hold off on paying prices that have in some cases doubled for future planting cycles. With food inflation already running at 3.7%, fertiliser costs have the potential to see this increase by several percentage points in future quarters. Combined with the impact of higher energy and transport costs, those on the lowest incomes will be impacted the hardest, making the challenge facing the Bank of England even tougher. While a swift resolution to what is fundamentally a supply problem would stave off some of this effect, the longer this continues, the deeper the problems we shall face.
“The results of local elections today are also likely to ring the starting bell on a Labour leadership challenge with Wes Streeting, Andy Burnham and Angela Rayner all vying for control. Markets have not welcomed the prospect of a political lurch to the left at a time when UK government finances are already under pressure from external forces, growth is relatively weak and businesses have already been asked to shoulder more of the tax burden. The rigid approach to fiscal rules by the Chancellor has generally staved off even higher bond yields, though there remains room for improvement in their design and application. The suggestion from Andy Burnham that the bond market would play less of a role in future decision making is concerning and, as we have previously seen, a policy that is unlikely to outlast a lettuce.”
