In contrast, construction remained a key growth driver, with activity accelerating to 24.0% from 21.8% in February. The services sector also strengthened, expanding by 7.8% year-on-year, up from 7.0% in the prior month.

On a monthly basis, overall economic activity advanced by 11.6% in March, following a 4.6% increase in February. Over the first quarter of the year (January–March), Armenia’s economic activity was 7.1% higher than in the same period a year earlier.

Investors now face a pivotal week of economic releases and central bank decisions. The Bank of England is widely expected to keep interest rates on hold. This follows last week’s UK inflation report, which showed CPI rising 3.3% year-on-year in March, driven largely by a sharp increase in motor fuel prices. In response, markets have shifted from pricing in a single rate hike this year to expecting at least two, with a possible third.

Political uncertainty is adding to the backdrop ahead of the 7 May local elections. Pressure is intensifying on Prime Minister Keir Starmer over his controversial decision to appoint Peter Mandelson as UK Ambassador to the United States.

Brent crude traded above $108 per barrel after US-Iran negotiations stalled, following US President Donald Trump’s decision to cancel a delegation’s trip to Pakistan for talks. According to reports, Iran has proposed reopening the Strait of Hormuz in an effort to de-escalate tensions.

Investors are also bracing for a data-heavy week, with flash estimates of Eurozone inflation and GDP in focus. In Germany, consumer sentiment fell to a three-year low in May 2026, weighed down by Middle East tensions, weaker income expectations, and rising energy costs, further clouding prospects for an economic recovery.

Media reports indicated that Iran has floated a proposal to reopen the Strait and temporarily suspend nuclear talks, though no concrete steps have yet been taken. Investor focus is now turning to upcoming policy decisions from the Federal Reserve, European Central Bank, Bank of Japan, Bank of Canada and Bank of England. The new earnings season is also getting under way, with results due from Barclays, Lloyds Banking Group and NatWest Group, as well as AstraZeneca, GSK and Unilever.

Against this backdrop, the European Central Bank is widely expected to leave interest rates unchanged at its meeting on Thursday, opting for a wait-and-see stance amid shifting macroeconomic and geopolitical conditions. Market pricing still points to two quarter-point rate increases in 2026, with the possibility of a third by year-end.

On the geopolitical front, reports suggest that Iran has submitted a new proposal to the United States aimed at reopening the Strait of Hormuz. This follows US President Donald Trump’s announcement over the weekend that he had canceled a planned trip by US envoys to Pakistan for talks with Iran.

Investor sentiment has also weakened due to a decline in the relative appeal of Indian debt for foreign investors. Elevated currency hedging costs have compressed returns, making Indian securities less attractive compared with other markets.

At the same time, recent reports suggest a potential shift in the geopolitical backdrop. Iran has proposed a phased plan that would prioritize a ceasefire while deferring nuclear negotiations. The proposal has reportedly been conveyed to Washington through intermediaries, though the U.S. response remains unclear.

Looking ahead, traders expect the benchmark 10-year G-Sec yield to remain in a range of 6.85%–7.02% in the near term, reflecting persistent uncertainty stemming from global risk sentiment and cross-border capital flows.

Despite the market turbulence, Bitcoin has remained notably resilient, rising more than 16% so far this month and on track for its first double-digit monthly gain since May 2025. The move has been supported in part by a sharp rebound in inflows to US-listed spot Bitcoin ETFs, which have totaled roughly $2.5 billion in April, putting the month on pace to more than double March’s figure. This turnaround comes after four straight months of net outflows, before institutional demand began to recover in March.

The deeper negative level suggests that consumers remain cautious, potentially curbing spending intentions and weighing on domestic demand. While the index was already firmly in pessimistic territory in April 2026, the May 2025 figure highlights that confidence had been weaker earlier and has struggled to recover meaningfully since. Investors and policymakers will be watching upcoming releases closely for signs of stabilization or further declines in consumer morale, given its importance for the trajectory of the German economy.

The disruption has affected roughly one-fifth of global LNG supply. However, softer demand from Asia has helped relieve some pressure on European buyers by reducing competition for available cargoes. National Gas also indicated that domestic gas inventories are likely to be sufficient to cover summer demand and could even support some exports to continental Europe.

On the domestic front, upcoming March inflation data have revived concerns about stubborn price pressures after February’s reading overshot the Reserve Bank of Australia’s 2–3% target band. Losses moderated later in the session, however, after data from key trading partner China showed strong growth in industrial profits for March and the first quarter.

Sector-wise, energy minerals led the declines, followed by communications, logistics, and industrial services. Notable underperformers included Origin Energy (-5.0%), Wisetech Global (-3.2%), Endeavor Group (-2.6%), and Ampol (-1.1%).

The conflict with Iran has now entered its ninth week, triggering what the IEA has described as the largest energy supply shock on record, amplifying inflationary pressures and darkening the global growth outlook.

At the same time, reports indicated that Iran had submitted a new proposal to the US aimed at reopening the Strait of Hormuz and easing tensions. The proposal, reportedly conveyed through Pakistani mediators, calls for extending the ceasefire to allow progress toward a lasting settlement, while deferring nuclear talks until the US blockade of the strait is lifted.

Income expectations dropped sharply to –24.4 (from –6.3 in April), while economic expectations deteriorated to –13.7 (from –6.9), approaching levels last seen at the onset of the Ukraine war in 2022. Consumers are increasingly worried that Germany’s fragile economic recovery could suffer a significant setback if the conflict continues and policy responses fail to gain traction.

At the same time, willingness to buy fell to a two-year low of –14.4 (from –10.9), underscoring weak consumption. Although the propensity to save edged down to 16.1 (from 18.5), it remained comparatively high, signaling ongoing caution among consumers.

The figures show that both the current and previous readings are measured on a year-over-year basis, comparing each month’s change with the corresponding month of the prior year. The moderation from February to March suggests a slight tightening in credit dynamics, which may reflect evolving financial conditions and borrowing behavior in the Norwegian economy.

While the deceleration is modest, the trend will be closely watched by market participants and policymakers, as sustained changes in credit growth can signal shifts in economic momentum and financial stability risks. For now, the data point to a measured cooling rather than an abrupt contraction in Norwegian credit activity.

Additional upward pressure came from a sulfur shortage tied to disruptions in the Strait of Hormuz, which has increased processing costs for nickel intermediates and tightened supply conditions beyond the mining stage. Market sentiment was further supported by broad-based gains in base metals, with SHFE nickel and related contracts rising amid a weaker dollar and improved risk appetite.

Indonesian stainless steel producers paused their offers ahead of anticipated price increases, signaling the pass-through of higher input costs. Looking ahead, expectations of continued supply discipline in Indonesia are reinforcing the view that tight market conditions are likely to persist in the near term.

The expansion was driven largely by electronics, where output surged 30% (up from 23.4% in February), supported by robust gains in semiconductors, infocomms, and consumer electronics.

Production also rebounded in several key clusters: precision engineering grew 14% after a 5.5% contraction; transport engineering expanded 2% following a 3.2% decline; and general manufacturing industries rose 7.6% after a 4.9% drop.

Biomedical manufacturing continued to contract, but at a slower pace, with output falling 14.3% compared with a 25.9% decline in February.

By contrast, the chemicals cluster saw a deeper contraction, with output down 16% versus a 4.8% decline in the previous month, weighed down primarily by weaker petroleum and petrochemicals production.

On a seasonally adjusted month-on-month basis, overall manufacturing output increased 4.7% in March, reversing a downwardly revised 1.2% fall in February and recording its strongest monthly gain since October 2025.

For the first quarter of 2026 as a whole, manufacturing output was 7.9% higher than in the same period a year earlier.