Geopolitics drove financial markets in the week ending May 30. Reports that the United States and Iran had reached a 60-day memorandum of understanding — extending a ceasefire and opening formal nuclear negotiations — rippled quickly through asset prices. Oil retreated, risk appetite recovered, and Wall Street closed at record highs. The geopolitical premium that had weighed on portfolios for much of the spring was, at least tentatively, being priced out.

Equities

The S&P 500 gained 0.9% on the week to close at a record 7,580, bringing its May return to 5%. The Nasdaq Composite rose 0.5% to 26,973 — also a new high — with the index up 8% for the month, as technology and semiconductor stocks remained the primary engine, lifted by AI-related enthusiasm and easing supply-chain concerns. In Europe, the STOXX 600 edged up 0.1% in local currency terms, with the Euro Stoxx 50 adding around 0.5%. Asia outperformed: Japan's Nikkei 225 surged 4.7% to 66,329, its sharpest weekly advance in over a year, as lower energy import costs raised the earnings outlook for an economy heavily exposed to oil prices. Hong Kong's Hang Seng settled cautiously higher near 25,099 after a volatile mid-week session.

Rates & Credit

Sovereign bond markets took the equity rally in stride, treating the ceasefire as a disinflationary signal rather than a reason to sell duration. Germany's 10-year Bund yield fell to around 2.93%, its lowest since mid-April, as softer energy prices fed into eurozone inflation expectations. The OAT-Bund spread was stable. US 10-year Treasury yields held in a narrow range, with investors reluctant to move decisively ahead of the June payrolls print and the Federal Reserve's June 17 meeting. Credit spreads tightened modestly across both investment-grade and high-yield markets.

Foreign Exchange

The dollar softened broadly. EUR/USD ranged between 1.15 and 1.17, ending the week roughly 1.75% stronger as lower energy costs reduced the terms-of-trade drag on the eurozone. The week's most dramatic move was in USD/JPY, which climbed above 160 before Japanese authorities intervened, pushing the pair lower by around five big figures. The episode highlighted the enduring tension between wide US–Japan rate differentials and Tokyo's tolerance for yen weakness. GBP/USD traded around 1.35. The Mexican peso and Brazilian real both advanced, benefiting from the softer dollar and a more constructive commodity backdrop.

Commodities & Gold

Energy markets reacted sharply to the Iran news. Brent crude fell to approximately $91 per barrel — well below the $103–115 range seen at the height of the conflict — as the probability of a reopened Strait of Hormuz rose. WTI settled near $88.50. Gold climbed to around $4,580 per troy ounce: some ceasefire risk was priced out, but residual uncertainty around the negotiations and a softer dollar kept safe-haven demand alive. Copper traded steadily, with the improvement in geopolitical risk offset by cautious signals on Chinese industrial activity.

The Week Ahead

The first week of June delivers a sequence of US data that will calibrate expectations for the Federal Reserve's June 17 decision. ISM Manufacturing PMI is due Monday, followed by ISM Services later in the week; the prices-paid components will draw scrutiny after months of elevated energy costs. The highlight is Friday's non-farm payrolls report, where consensus pencils in around 96,000 new jobs — a step down from April's 115,000. In Europe, flash eurozone CPI on Tuesday feeds directly into the ECB's June 11 meeting, at which markets are pricing a near-certainty of a further rate increase. On the geopolitical front, any signals from Washington or Tehran on the nuclear negotiations' pace will remain a key overlay for oil and broader risk sentiment.