China’s Persuasion In US-Iran Negotiations Bolsters Peace Hopes, Sends Stocks to Another Record: May 6, 2026

Equities Rally as China Pushes for Iran-US Peace China’s push for the US and Iran to strike deal, declining oil prices and a strong ADP Jobs report triggered a broad equity rally today while oil prices and bond yields fell.

Investors are chasing stocks higher on news that China is attempting to have Washington and Tehran agree to a deal that would reopen the Strait of Hormuz. Optimism strengthened further on an Axios report stating that the White House and Iran are nearing an agreement on a one-page memo that would end the war, and that sparked risk-on sentiments on Wall Street, sending yields and the greenback plunging, WTI crude well beneath $100 per barrel and equities to fresh record highs. The equity advance is broad with almost every sector and subcategory participating minus energy and utilities. A robust April ADP-jobs publication additionally bolstered animal spirits, as it provided evidence that hiring momentum hasn’t been derailed by the Middle East conflict, considering that payrolls grew at their fastest pace in 15 months. Also, sustained auction sizes from the Treasury Department across the next few quarters supported fixed-income buying throughout the complex, with maturities sinking around 6 to 8 basis points on the curve. Elsewhere, non-energy commodities, cryptocurrencies and prediction markets are catching bids.  

Businesses Accelerate Pace of Hiring

Private sector employers grew their payrolls by the fastest pace since January of 2025, lifting confidence that labor conditions remain healthy and can continue to power consumer spending. The 109k April additions exceeded the median estimate of 99k and almost doubled March’s 61k. Industry performance was broad based with most categories boosting jobs, as education/health services, trade/transportation/utilities and construction segments added 61k, 25k and 10k, while financial activities, leisure/hospitality information, natural resources/mining and manufacturing lifted headcounts by less than 10k. Conversely, professional/business services and other services reduced rosters by 8k and 1k. Additionally, small, medium and large firms expanded by 65k, 2k and 42k. Paychecks were pretty steady, with the year-over-year (y/y) change in median wages rising 4.4% and 6.6% for job stayers and changers, a 0.1% month over month (m/m) deceleration on the former but unchanged on the latter. 

Are We Out of The Woods? 

Stocks have consistently rallied since March 30 as any hint of an agreement between Tehran and Washington has been celebrated strongly, with the S&P 500 now over 1,000 points ahead of its year-to-date low of 6,317. Improving earnings expectations from the tech industry, thanks to AI, have also fueled speculative enthusiasm on Wall Street, but despite all the optimism, the Strait of Hormuz still isn’t open. Furthermore, there were violent attacks across the critical waterway occurring just last Monday, as both sides grappled over control of the pivotal passage. It appears to me that the best-case scenarios have been priced in, as the S&P 500 is already up 7% this year, and we’re still early in the second quarter. The robust gains occur as oil prices and interest rates remain elevated, with energy costs expected to sustain higher-than-normal levels even if a truce is reached, while 2026 cuts have essentially been removed from the conversation. Finally, chasing this rally likely bodes poorly for future returns in light of lofty valuations and noteworthy risks that could spark volatility in the coming days.

International Roundup

Gate Prices Jump Higher than Expected In Europe

Factory gate prices in the euro area climbed 2.1% y/y and 3.4% m/m over month, a stark reversal from February’s annual and monthly declines of 3% and 0.6%, according to the Producer Price Index. Economists anticipated that wholesale prices would be only 1.8% higher than in the year-ago period. Energy, with an 11.1% m/m inflation rate, had the strongest price pressures with the US-Iran war causing oil costs to soar. Other categories that became more expensive and the extent of their changes included the following:

• Intermediate goods, 0.7%
• Non-durable consumer goods, 0.3%
• Capital goods, 0.2%
• Durable goods, 0.2%

Lithuania, Spain and Italy, with PPI m/m increases of 6.9% 6.5% and 5.9%, experienced the strongest price pressures. The largest decreases were in Estonia, Finland and Bulgaria where stickers sank 12.3%, 5.3% and 2.5%.

South Korea Inflation Picks Up

South Korea price pressure as depicted by the Consumer Price Index strengthened during April and matched the economist consensus estimates for m/m and y/y results. Prices were up 0.5% m/m and 2.6% y/y compared to the 0.2% and 2.2% ascents in March. The yearly print was the highest in 21 months with the country experiencing higher energy costs as illustrated by transport costs climbing 3.4% and 9.7% m/m and y/y. When excluding food and energy, the index revealed gains of 0.3% and 2.2% following March’s 0.1% and 2.2% northward changes.

In addition to transport, categories with the most significant increases and the extent of their m/m changes were as follows:

• Recreation and culture, 1.5%
• Miscellaneous goods and services, 0.7%
• Restaurants and hotels, 0.4%
• Education, 0.3%

The food and non-alcoholic beverages category and the alcoholic beverages and tobacco group experienced price declines of 0.8% and 0.4%.

In April, the Bank of Korea decided to hold its key interest rate, marketing the seventh consecutive meeting without any changes to the benchmark. Policymakers, however, embraced a more hawkish view of inflation and today’s CPI points to an increased likelihood of the organization tightening its monetary policy.

Hong Kong Sees Retail Sales Growth

Hong Kong retail sales in March were 12.8% higher than in the year-ago period after climbing 19.3% y/y in February, according to the Census and Statistics Department. An upcoming expiration of tax concessions for cars drove an 80% surge in sales of motor vehicles and parts. The other durable consumer goods not elsewhere classified category was the second strongest with a 30.1% jump. The jewelry, watches and clocks, and valuable gifts category was also impressive. It posted a 27.2% ascent. Additionally, the other consumer goods not elsewhere classified group was up 18.1%.

Canada PMI Climbs into Expansion

The Canada Ivey Purchasing Managers Index climbed from 49.7 in March to 57.7 in April, exceeding the contraction-expansion level of 50. The employment category jumped from 51.1 to 54.7 and inventories went from 49.4 to 56.5. Price pressures were heavy though with the category printing 76.6, up by 0.9 points.