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UK Shares Start Week in Green as IMF Lifts UK Growth Outlook, Politics in Focus

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London's FTSE 100 closed 1.26% higher on Monday as the International ​Monetary Fund increased its 2026 growth forecast for the UK to 1% from 0.8%, while investors also monitored political developments surrounding Prime Minister Keir Starmer.

"In the UK, Labour's decision to let [Mayor of Greater Manchester] Andy Burnham seek a return to parliament sharpens the leadership crisis facing Prime Minister Keir Starmer after heavy local election losses, which have already prompted intensified calls for him to resign," Danske Bank said.

"The risk is that a new, further left, prime minister pursues policies that further add to business costs, eroding profit margins and putting upward pressure on inflation," according to Berenberg. "Were a new prime minister to water down or abandon fiscal tightening at the same time, the [Bank of England] would have to set higher interest rates to prevent excess demand and inflation. The resulting combination of higher interest rates and lower profits would result in an inadequate rate of return for companies to invest and hurt the UK's long-term growth prospects."

Meanwhile, the UK government and the Gulf Cooperation Council are reportedly nearing a free trade agreement after years of talks, according to London's Financial Times. In an emailed statement to, a UK government spokesperson said negotiations are continuing and remain a priority for the government.

In corporate news, mining major Anglo American (AAL.L) dropped 1.36% after agreeing to sell its Australian steelmaking coal mines to Dhilmar for up to $3.88 billion in cash.

Pharmaceutical giant GSK (GSK.L) gained 0.75% as Japan's health regulator expanded the eligible age range for its respiratory syncytial virus vaccine, Arexvy, to include at-risk patients aged 18 to 49.

Investors will also look ahead this week to UK unemployment data for March on Tuesday, April inflation figures on Wednesday, S&P Global PMI data for May on Thursday, and retail sales numbers on Friday.

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Tadawul Shares Start Week Lower as Russia-Ukraine Geopolitical Tensions Flare

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Asia Markets

US Equity Indexes Drop as Uncertainty Over Hormuz Reopening Timeline Boosts Treasury Yields

US equity indexes slumped as continuing uncertainty over the reopening timeline for the Strait of Hormuz following the China summit spooked investors, sending government bond yields and crude oil futures sharply higher.The Nasdaq Composite dropped 1.4% to 26,225.14, with the S&P 500 down 1.2% to 7,408.5 and the Dow Jones Industrial Average seen lower by 1% to 49,526.1 at the close on Friday.A summit between US President Donald Trump and his Chinese counterpart, Xi Jinping, ended with mixed messages over the reopening of Hormuz, the Wall Street Journal reported. The waterway is the choke point to about a fifth of global crude oil flows, and the impact of its full or partial closure was evident in consumer and wholesale price inflation."The market could be pinning too much hope on the US-China talks yielding some positive results on Iran," ING Bank said in a note. "Some hope that China could exert pressure on Iran to reach a deal with the US, to end the war, and lead to a resumption of energy flows through the Strait of Hormuz."A lack of trust is the biggest obstacle in negotiations to end the war with the US, and Tehran would be open to diplomatic help, particularly from China, to help ease tensions, Iran's foreign minister, Abbas Araghchi, was cited as saying in an Associated Press report. Contradictory messages have "made us reluctant about the real intentions of Americans," he added.Expectations that Hormuz will quickly return to normal maritime traffic levels in June are based on "magical thinking" and underestimate the political and operational barriers to restoring flows, RBC Capital Markets strategists said in a note. The analysts said that oil market disruptions could persist well into the summer demand season.US Treasury yields surged, with the 10-year up 13.8 basis points to 4.60%, the highest in about a year. The two-year advanced 8.9 basis points to 4.08%, the strongest level since February 2025.West Texas Intermediate crude oil futures surged 4.5% to $105.73, and Brent crude futures jumped 3.5% to $109.44.In precious metals, gold futures dropped 3.1% to $4,540.9, and silver futures sank 11% to $76.28 as the impact of higher crude prices has begun to show up in the inflation data. The probability of a 25 basis-point increase in interest rates in December surged to 39% on Friday from 14% a week ago, according to the CME FedWatch tool late Friday. The comparisons for September were 17% from 12%, and, for October, the data showed 27% versus 22%.In economic news, industrial production rebounded by 0.7% in April, above expectations for a 0.3% increase in a Bloomberg-compiled survey, and following an upwardly revised 0.3% decline in March.In company news, DexCom (DXCM) said Friday it has set new long-term financial goals, including organic revenue growth of more than 10% a year through 2030. Shares jumped 6.6%, the top gainer on the S&P 500 and the Nasdaq.

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US Equity Indexes Mixed This Week as Hormuz Reopening Timeline Uncertainty Boosts Inflation Concerns

US equity indexes traded mixed this week as concerns over the reopening timeline for the Strait of Hormuz boosted crude oil and heightened inflationary concerns, undermining investor sentiment from the tech trade.* The S&P 500 closed at 7,408.50 on Friday versus 7,398.93 a week ago. The Nasdaq Composite stood at about 26,225.15, compared with 26,247.08 a week earlier. The Dow Jones Industrial Average ended at 49,526.17, versus 49,609.16 at the end of last week.* Energy, consumer defensive, and technology led the gainers this week.* "The market could be pinning too much hope on the US-China talks yielding some positive results on Iran," ING Bank said in a note. "Some hope that China could exert pressure on Iran to reach a deal with the US, to end the war, and lead to a resumption of energy flows through the Strait of Hormuz."* Expectations that Hormuz will quickly return to normal maritime traffic levels in June are based on "magical thinking" and underestimate the political and operational barriers to restoring flows, RBC Capital Markets strategists said in a note.* Consumer and wholesale price inflation data were hotter than expected this week, complicating the path for interest rate cuts.* Lower monthly inflation prints after the oil shock fades, and a labor market softening, will likely be needed for Fed rate cuts this year, Goldman Sachs said in a note. It expects energy cost passthrough likely to keep core personal consumption expenditures inflation closer to 3% than 2% all year.* On Friday, US Treasury yields surged, with the 10-year up 14.2 basis points to 4.6%, the highest in about a year. The two-year soared 8.7 basis points to 4.08%, the strongest level since February 2025.* The probability of a 25 basis-point increase in interest rates in December surged to 39% on Friday from 14% a week ago, according to the CME FedWatch tool. The comparisons for September were 17% from 12%, and, for October, the data showed 27% versus 22%.

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