Markets Today: UK PMI beats as input costs soar, DXY advances & Gold grinds lower. US PMI & Middle East tensions in focus

• The US Dollar is poised for its first weekly gain in a month, buoyed by safe-haven bids amid escalating geopolitical risk and the resulting energy shock.
• European equities opened cautiously lower, with the STOXX 600 dipping 0.2%, although strong corporate earnings from Nestle and L'Oreal provided some sectorial support.
• UK PMI data showed resilience, beating expectations, but record input costs for service providers signal that inflationary pressures are becoming "sticky"
• US PMI and Middle East tension in focus later in the day.

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Market sentiment remains rather undecided despite the rally in US indexes yesterday. The US Dollar is attracting a haven bid while Gold continues to grind lower, suggesting market participants remain somewhat cautious.

The Greenback is on track for its first weekly gain in a month this Thursday as geopolitical risk premia return to the forefront. A deepening standoff between Iran and the US, coupled with a distinct lack of progress on the diplomatic front, has pushed oil prices back above the psychological $100 a barrel mark, weighing heavily on broader market sentiment.

At this stage, the two sides remain fundamentally at odds over key sticking points, including the current blockades, nuclear concerns, and control of the Strait. With the waterway effectively remaining under threat, the resulting energy shock continues to ripple through global markets, posing a significant headwind for global economic growth.

The US Dollar Index (DXY), which measures the Greenback against a basket of six major peers, edged higher to trade around the 98.60 mark. This puts the index on track for a weekly gain of 0.4%, marking its first positive weekly performance in a month.

While the Dollar served as the primary safe-haven beneficiary when the conflict first erupted in March, optimism surrounding a potential ceasefire and peace deal earlier this month saw a rotation back into risk-sensitive currencies.

However, that relief rally appears to be fizzling out.

Major Currencies Under Pressure

• EUR/USD: The Euro remained largely flat at $1.17, having earlier hit its softest levels since mid-April. The single currency is bracing for a 0.5% weekly decline, snapping a three-week winning streak.
• GBP/USD: Cable slipped 0.1% to trade at $1.3484. Sterling bulls seemed unfazed by data indicating that the US-Israeli conflict with Iran is already weighing on UK consumer sentiment, particularly as households scale back on fuel expenditure.
• USD/JPY: The Yen weakened slightly to 159.56, hovering dangerously close to the 160.00 handle, a level many participants view as the "line in the sand" for potential BoJ intervention.

Meanwhile, interest rate markets are currently pricing in a modest 25% probability of a Fed cut before year-end, contrasting sharply with the ECB, where traders are factoring in two potential hikes for 2026.

Currency Power Balance

European equities edged lower during Thursday’s session as market participants balanced a fresh wave of corporate earnings against a backdrop of geopolitical uncertainty.

The pan-European STOXX 600 dipped 0.2% to trade at 612.98 by 07:18 GMT, reflecting a general sense of caution permeating the floors. Major regional indices followed suit; Germany's DAX shed 0.2%, while the FTSE 100 underperformed with a 0.5% decline.

Sector Performance and Earnings Drivers

The session saw a clear divide in sector performance, largely dictated by commodity moves and individual corporate updates:

• Energy (.SXEP): Was a notable outlier, climbing 0.6% as crude prices maintained their upward trajectory.
• Telecommunications (.SXKP): Showed resilience, leading the gainers with a 1.2% advance.
• Banking (.SX7E): Faced the brunt of the selling pressure, languishing at the bottom of the pile with a 1.1% drop.

On the corporate front, consumer staples provided some fireworks. Nestle (NESN.S) saw its shares surge 6% after the food giant reaffirmed its full-year organic growth guidance of 3%-4%. Similarly, L'Oreal (OREP.PA) shares jumped 8% following a robust first-quarter update, which revealed sales growth of 6.7%—its strongest quarterly performance in two years.

Despite these pockets of strength in the consumer space, the broader market remains tethered to the "risk-off" sentiment driven by the ongoing energy shock and geopolitical stalemates.

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The S&P Global UK Composite PMI staged a significant recovery in April 2026, jumping to 52.0 from 50.3 in March. The reading comfortably cleared market expectations of 49.8, signaling renewed traction across the British private sector despite a challenging macroeconomic backdrop.

The uptick was broad-based, with both Manufacturing (51.8) and Services (52.0) returning to expansionary territory. This performance highlights a notable degree of resilience to the ongoing energy shock and soaring power prices stemming from the conflict in Iran.

New Orders Steady, but Outlook Remains Clouded

While aggregate new business remained stable, the underlying data reveals a more nuanced picture:

• Manufacturing: Growth in new orders was largely driven by clients "frontloading", placing orders early to hedge against anticipated supply chain disruptions and war-driven volatility.
• Services: New business saw a marginal reduction, as high costs began to bite into demand.

Labor Market Struggles and Inflationary Heat

Despite the headline growth, two major headwinds persist for the UK economy:

1. Employment Contraction: Headcounts fell for the 19th consecutive month. Firms frequently cited the burden of higher National Insurance contributions as a primary driver for the continued hiring freeze.
2. Record Input Costs: Service providers faced the sharpest rise in input costs on record. This surge pushed aggregate charge inflation to its highest level since June 2022, suggesting that inflationary pressures are becoming increasingly "sticky" as firms pass higher energy and labor costs onto consumers.

With input costs for service providers hitting record highs, how much longer do you think the BoE can justify staying on the sidelines before tackling this renewed inflationary surge?

Diplomatic prospects in the Middle East remain murky. While the White House is pushing for a return to the table, with President Trump suggesting talks could restart tomorrow—Tehran has yet to provide any official confirmation. The U.S. desire for a swift resolution is a positive, but the continued closure of the Strait of Hormuz remains a major red flag for global trade.

Market Implications

The current backdrop continues to favor the US Dollar and commodity currencies, though the latter's strength depends on whether equities can remain resilient despite the geopolitical noise.

Macro Watch: S&P Global PMIs

Today’s focus shifts to the S&P Global PMIs. While usually secondary to the ISM, these figures offer a crucial comparison to European performance. Markets are anticipating an improvement in both the manufacturing and services sectors over March’s figures.

Key Question: Will the U.S. data show enough strength to justify the Dollar's recent climb, or will inflationary input costs start to flash warning lights for the Fed?

Gold prices are facing increased selling pressure on the H4 chart as the safe-haven metal struggles to maintain its footing. The precious metal is currently trading within a descending channel, characterized by lower highs and lower lows, indicating a clear shift in short-term momentum.

Key Technical Levels

• Resistance: Immediate resistance sits at the 4739 mark (100-day MA), followed by the psychological 4776 level (200-day MA).
• Support: Price is currently testing a key horizontal support level at 4700. A sustained break below this could open the door for a move toward the 4600 handle.

Momentum Indicators

The RSI is currently hovering near 35, approaching oversold territory but still showing room for further downside. With the price trading below both major MAs and the RSI reflecting bearish dominance, the path of least resistance remains to the downside unless we see a fundamental catalyst shift the geopolitical narrative.

Gold H4 Chart, April 23, 2026

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