Financial Markets Daily Report 26 May 2026

• The STOXX Europe 600 Index has risen by 3.00% as investors react positively to hopes for increased geopolitical stability. • Investors are shifting focus toward European dividend stocks to secure consistent income and create a hedge against economic uncertainty.

• The European Union has seen a significant increase in state aid as member nations shift toward more aggressive subsidy strategies. • This policy shift is primarily driven by the need to compete with China's state-backed industrial model and the United States' Inflation Reduction Act.

• European shares reached their highest levels in over two months on Monday, with the Pan-European Stoxx 600 trading near record highs last seen in late February. • The market surge was driven by reports that the United States and Iran are negotiating a deal to end their conflict and secure the Strait of Hormuz.

• European consumer discretionary earnings plummeted by over 12% in Q1 2026, marking the worst performance of the current earnings season according to MSCI Europe data. • The decline highlights the sector's extreme vulnerability to geopolitical instability, specifically noting how economic slowdowns in hubs like Dubai directly impact luxury markets in Paris and Milan.

• The European Central Bank (ECB) is monitoring forward-looking indicators, including surveys and a wage tracker, to assess price stability within the euro area. • ECB officials noted a slight upward revision in wage growth, though they stated it is currently too early to make a definitive judgment on the trend.

• The Nikkei stock index closed above the 65,000 mark for the first time on Monday, reaching a historic milestone. • This surge was primarily driven by investor optimism that the United States and Iran are nearing an agreement to end their ongoing conflict.

• Asian equity markets rallied on Monday, driven by falling oil prices and easing geopolitical tensions in the Middle East. • Taiwan’s Taiex hit a record high of 43,495.92, surging nearly 3%, while India’s Nifty 50 and China’s CSI 300 rose by 1.09% and 0.91% respectively.

• South Korea's Kospi index reached a record high, advancing 2.44% to 8,039.25 during early trading. • The surge was driven by improved risk sentiment across Asian equities, bolstered by ongoing diplomatic talks between the U.S. and Iran.

• Asian stock markets rose following renewed hopes for peace negotiations involving Iran. • Japan's Nikkei index reached a historic milestone, surpassing the 65,000 mark for the first time.

• Japan's Nikkei 225 index surged over 2.8% to surpass the 65,000 mark for the first time in history. • The record rally was driven by strong technology sector earnings and growing optimism surrounding U.S.-Iran peace negotiations.

• Japan's Nikkei benchmark index surged 2.75% to reach a historic all-time high of 65,081.96, crossing the 65,000 mark for the first time. • The rally occurred amid thin holiday trading across Asia, with the broader Topix index also rising 0.65% while Australia's S&P/ASX 200 remained largely unchanged.