UK and European equities were mixed as trading was thinned by the May Day holiday across much of the continent. London softened, with investors balancing resilient domestic data against renewed inflation concerns from elevated energy prices and the Bank of England’s cautious policy backdrop. The broader tone remained defensive rather than disorderly, with markets continuing to assess whether higher oil costs will weigh on margins, consumer confidence and rate expectations.

US equities opened firmer, extending the positive tone from April as corporate earnings continued to provide support. Apple led sentiment after stronger-than-expected results, while other large companies also helped reinforce confidence that profit momentum remains intact. Investors nevertheless remained alert to the macro risk posed by oil, with energy prices still central to the inflation and interest-rate outlook.

Asia-Pacific trading was subdued, with several regional markets affected by holiday closures. Japan provided a modestly positive lead, while the wider regional backdrop remained shaped by the same global themes: elevated energy prices, resilient risk appetite, and caution around inflation pressures in fuel-importing economies.

Oil remained a key market driver, with crude prices still elevated as investors focused on the continued disruption around the Strait of Hormuz and the absence of a clear diplomatic breakthrough. The market has eased from its latest peak, but the underlying risk premium remains significant, keeping energy costs at the centre of the inflation debate and corporate margin outlook.

Gold remained under pressure over the week as higher oil prices reinforced expectations that central banks may need to keep policy tighter for longer. The metal continues to draw some support from geopolitical uncertainty, but the near-term balance has been challenged by firmer real-yield expectations and resilient equity markets.

NatWest reported a stronger first-quarter performance, but the update was framed by a more cautious macroeconomic assessment. The bank recognised additional impairment charges linked to a weaker growth and inflation outlook, with management pointing to geopolitical risk as a material factor in its economic assumptions. The results were nevertheless viewed as resilient, supported by income guidance near the upper end of expectations.

Diageo was among the notable UK corporate movers after the US signalled the removal of tariffs on Scotch whisky. The development was taken positively by investors, as tariff relief improves the outlook for a strategically important export category and offers some offset to wider consumer and input-cost pressures affecting the beverages sector.