Weekly market wrap up

The UAE’s decision to leave OPEC from 1 May 2026 marks a notable shift in the global oil landscape. After almost six decades inside the organisation, the move reflects a preference for greater flexibility, following years of tension around production quotas and a push to expand capacity. The timing is far from straightforward, with global fuel markets already strained by Middle East tensions and disruption around the Strait of Hormuz, while higher fuel prices are feeding through to consumers well beyond the region. In the short term, the exit may have less impact on physical supply than the headline suggests, as barrels still need safe routes to market. The bigger question is what it signals about OPEC’s cohesion. 

Equity markets have been pushing into record territory at the same time oil prices have been doing their best impression of a rollercoaster, which is not the combination textbooks tend to dwell on. The S&P 500 and Nasdaq have both climbed to fresh highs, capping the strongest monthly gains since 2020, even as oil surged above US$120 per barrel amid ongoing geopolitical tensions. It is an unusual pairing on the surface - higher energy costs typically act as a drag on growth and margins - but markets appear comfortable looking through the noise for now. Strong corporate earnings, particularly in the technology sector, have provided enough reassurance to keep money flowing into equities. Investors seem to be placing more weight on earnings momentum than input cost pressures, at least for the time being. 

The Fed stood still this week but still managed to move markets. The US Federal Reserve kept the federal funds rate at 3.50% to 3.75%, but the decision carried more nuance than the headline suggested. The economy is still expanding at a solid pace, while inflation remains elevated, with higher global energy prices pushing price pressures back to the front of the queue. That leaves policymakers in a tricky position. Growth is holding up, but inflation is not yet behaving well enough for anyone to look relaxed. The split beneath the decision also mattered, showing officials are not fully aligned on how much room to leave for future rate cuts. For the wider world, steady US rates still matter through global funding costs, currency movements, and imported inflation. 

Also notable from the Fed this week was what may prove to be Jerome Powell’s final speech as Chair, giving markets one last chance to search every word for hidden meaning. With his term ending on 15 May and Kevin Warsh seen as the likely successor, attention was less on the farewell and more on whether the policy tone might shift. Powell stuck to familiar ground, emphasising inflation risks, data dependence and institutional independence. Markets listen closely because the Fed continues to shape global bond yields, the US dollar and risk appetite.