Markets caught between peace hopes and rising tensions

Summary

Moving Markets Podcast – May 19, 2026

Episode: Markets caught between peace hopes and rising tensions
Host: Bernadette (Julius Baer)
Guests: Mike Rauber (Markets Analyst), Carsten Menke (Head of Next Generation Research)

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Episode Overview

This episode explores the delicate balance financial markets are trying to maintain amid renewed hopes for geopolitical peace and ongoing tensions, particularly related to the Middle East. The show features a daily rundown of key market developments in Europe, the US, and Asia, with Mike Rauber delivering the latest updates. The latter half focuses on India’s sharp increase in gold and silver import duties, with Carsten Menke analyzing drivers, implications, and broader commodity trends.

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Key Discussion Points & Insights

1. European Markets: Navigating Between Optimism and Uncertainty

• Theme: Investors are weighing the possibility of a peace deal against escalating Middle East tensions.
• Market Reaction:
  • The DAX rebounded, up 1.4%; Euro Stoxx climbed 0.4% after starting the day negatively.
  • Notable stocks:
    • Rheinmetall (German defense): Up 4%, partly recouping last week's 10% slide.
    • Commerzbank: Down 1.4% after rejecting a €37 billion takeover bid.

    “European markets were caught yesterday between balancing hopes for a peace deal against rising Middle East tensions, weren’t they?” – Bernadette [00:37]

• UK Developments:
  • UK gilts outperformed after political signals reassured on fiscal discipline.
  • 10-year yield declined by 7bps to 5.1%.
  • FTSE 100 rose 1.3%; pound gained almost 1% vs. the USD.
  • UK job market data showed a significant drop, with 100,000 jobs cut in April, exceeding expectations.

    “UK employers slashed 100,000 jobs in April. Tax data showed far more than expected.” – Mike Rauber [01:28]

2. US Markets: Sentiment Recovery Driven by Geopolitical News

• Indices:
  • Major equity indices closed lower but rebounded from session lows.
  • Nasdaq fell 0.5%—mainly due to AI sector weakness.
  • Equal-weighted S&P 500 gained 0.6%.
• Geopolitical Impact:
  • President Trump delayed planned strikes on Iran, calming markets.

    “President Trump’s decision to delay planned strikes on Iran supported sentiment, didn’t it?” – Bernadette [01:54]

  • Treasury yields stabilized after recent volatility.
• Corporate News:
  • NextEra Energy announced plans to acquire Dominion Energy ($66.8bn deal), creating the largest US utility—a move driven by projected electricity demands from AI data centers.
  • NextEra’s share price fell over 4%, Dominion Energy rose by ~10%.

3. Energy Markets: US Leverage and Global Flows

• Oil Prices:
  • Brent crude remained steady around $110/bbl, slightly lower after Trump’s comments.
• US Response:
  • US released a record 1.4 million barrels from the Strategic Petroleum Reserve.
  • Oil exports reached a record 14.2m barrels/day in April.

    “The US is leaning hard against higher prices by keeping supply high...making the US the largest energy exporter in history.” – Mike Rauber [03:27]

4. Economic Growth in Switzerland and Japan

• Switzerland:
  • Q1 GDP grew 0.5% q/q, showing resilience amid global shocks.
  • Inflation remains subdued, supporting the Swiss franc’s strength.
• Japan:
  • Economy grew at a 2.1% annualized rate, surpassing forecasts.
  • 10-year government bond yields rose to 2.77% (highest since the mid-1990s).
  • Despite higher yields, the Japanese yen weakened to 159/USD.

    “This supports the case that the country can absorb higher borrowing costs as the central bank normalizes policy and manages inflation.” – Mike Rauber [04:26]

5. Asian Markets and Bond Yields

• Trends:
  • Broadly flat equities; Korea’s tech-driven market down ~2%.
  • Bond yields near this year’s highs in most of Asia, especially Japan.
  • Average 10-year G7 yield approached 4%, up from 3.2% pre-war.

6. What to Expect Today

• Upcoming releases:
  • US: ADP weekly employment, pending home sales.
  • Corporate earnings focus: Home Depot (US consumer sentiment proxy).
  • European equity futures: slightly positive.

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Deep Dive: India’s Gold & Silver Import Duties

With Carsten Menke, Head of Next Generation Research

India’s Role in Global Precious Metals Demand

• Gold:
  • India accounts for roughly 25% of global jewelry demand and 20% of bar and coin demand (declined recently).
  • Demand center is jewelry, but affordability issues have shifted interest toward silver.
• Silver:

  • Jewelry demand grew from ~1,500t in 2015 to over 2,000t last year, but remains under its historical peak.

    “India is one of the world’s largest gold consumers. It accounts for around a quarter of global jewelry demand and a fifth of global bar and coin demand…” – Carsten Menke [06:26]

Why the Duty Hike?

• India’s trade dynamics:
  • Gold and silver are the second-largest import items after crude oil, driving significant capital outflows and widening the trade deficit.
• Policy Move:

  • Duties on gold and silver imports increased to 15% (from 6%), aiming to protect the rupee and brought rates back to early 2020s levels.

    “To protect the struggling rupee from further depreciation, the Indian government increased gold and silver duties to 15% from a previous level of 6% last week.” – Carsten Menke [07:20]

Will Import Duties Dampen Demand?

• Short Term:
  • Increased duties have historically influenced demand, but overall impact is less than broader macroeconomic forces.
• Bigger Factors:

  • Local economic conditions and the Indian rupee’s value play a more significant role.

  • Since 2010, the rupee has depreciated ~4.5% annually against the USD—a much larger effect on local prices than tariff changes.

    “Since 2010, [the rupee] has depreciated by around 4.5% per year versus the US dollar, thus having a much bigger impact on local prices than any change in import tariffs.” – Carsten Menke [08:12]

Market Implications

• Short-term:
  • Some softness in Indian gold and silver imports is likely in coming months, but a major drop is not expected.
• Broader Market Dynamics:
  • India is a steady demand base, not a marginal price setter for international gold or silver.
• Gold Outlook:
  • Global prices will be driven more by central bank and Western investment demand.
  • Bullish on fundamentals, with strong official sector buying expected to continue.
• Silver Outlook:

  • Less robust than gold, given recent volatility and correction following exuberance earlier in the year.

    “India is not a major price driver, neither for gold nor for silver. So it’s rather providing a good base of demand…what matters more for gold is the outlook for central bank buying and Western world investment demand.” – Carsten Menke [09:15]

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Memorable Quotes and Moments

• “President Trump’s decision to delay planned strikes on Iran supported sentiment, didn’t it?” – Bernadette [01:54]
• “The US is leaning hard against higher prices by keeping supply high…making the US the largest energy exporter in history.” – Mike Rauber [03:27]
• “India is not a major price driver…what matters more for gold is the outlook for central bank buying and Western world investment demand.” – Carsten Menke [09:15]

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Important Timestamps

• 00:37 – European markets: Peace hopes vs. tensions
• 01:28 – UK yields, labor market, political context
• 01:54 – US equity reactions post-Iran developments
• 02:50 – NextEra-Dominion merger and AI energy demands
• 03:27 – US oil policy, global export records
• 04:03 – Switzerland and Japan: Q1 GDP data
• 05:03 – Asian markets and G7 bond yields
• 06:12 – India’s global gold and silver demand explained
• 07:20 – Rationale for higher Indian import duties
• 08:12 – Local vs. global factors driving Indian demand
• 09:15 – Outlook for gold/silver markets post-tariffs

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Conclusion

This episode provides a concise yet thorough snapshot of a market landscape balancing between the pulls of peace optimism and persistent geo-economic risks. While major moves in commodities and equities continue to be shaped by geopolitics, macro data, and sectoral shifts (notably energy and utilities), the deeper dive on Indian gold and silver demand highlights that global price dynamics are usually determined outside emerging-market consumer trends. The expert perspectives offered here emphasize fundamentals and context, making this a valuable summary for investors and interested market followers.

Transcript

[A]

Welcome to Julius Baer's Moving Markets podcast on Tuesday 19th May with me, Bernadette and Dirko. I'm looking forward to catching up on the latest financial markets news with my colleague Mike Rauber this morning. And for those of you who perhaps missed it last week, India more than doubled gold and silver import duties. We're going to be joined by our head of Next Generation Research, Carsten Menke, to look at the story a little more closely. Now though, let's catch up with the latest developments in financial markets. Good morning to you, Mike.

[B]

Good morning, Bernadette.

[A]

European markets were caught yesterday between balancing hopes for a peace deal against rising Middle east tensions, weren't they?

[B]

Indeed. But stocks recovered from an early risk off start with the dax ending up 1.4% and euro stocks gaining 0.4% on the day. In notable corporate developments, Rheinmetall rose 4%. That's the German defense company partly reversing last week's 10% loss, while Commerzbank fell 1.4% after it rejected unique 37 billion euros bid, calling it too low.

[A]

And in the UK gilts outperformed after Andy Burnham's spokesman ruled out easing fiscal rules, reassuring investors if Keir Starmer should lose his premiership to the mayor of Greater Manch.

[B]

Ten year yield fell seven basis points to 5.1%. The FTSE 100 rose 1.3% and the pound rose nearly 1% against the US dollar, although the Prime Minister has said that he will not step down. But this morning we got some data that will make his life certainly not easier. UK employers slashed 100,000 jobs in April. Tax data showed far more than expected.

[A]

All right then, moving across to the US Major equity indices closed lower but recovered from session lows. President Trump's decision to delay planned strikes on Iran supported sentiment, didn't it?

[B]

He made the statement in a social media post and this certainly helped markets recover from their earlier lows. Now, despite the 0.5% drop in the Nasdaq on weakness in AI names, most sectors advanced, lifting the equal weighted less tech heavy S&P 500 up 0.6%. Treasury yields also remain stable after last week's sharp rise, supporting sentiment on the equity side.

[A]

And looking at Company News, the U.S. utility company next Era Energy plans to acquire Dominion energy in a 66.8 billion US dollar deal, creating the largest electric utility in the United States. Can you tell us a bit more?

[B]

Thirdly, the deal reflects consolidation in the power sectors as utilities scale up for rising electricity demand. From AI data centers. They're expected to reach nearly 12% of US demand by 2028. Now the deal expands Nextera's exposure to growth markets such as Virginia, home to the largest U.S. data center cluster. NextEra sales fell over 4%, but those of Dominion Energy rose nearly 10% and

[A]

oil prices edged lower on Trump's comments. But Brent remains stuck around 110 US dollars per barrel. Right?

[B]

The US is leaning hard against higher prices by keeping supply high. It released more than 1.4 million barrels from the Strategic Petroleum Reserve last week. Now that's a record flow. At the same time, exports hit a record 14.2 million barrels per day in April, about 1 in 7 barrels consumed globally, making the US the largest energy exporter in history. And now that's a report from the Wall Street Journal.

[A]

Over here, there were some encouraging Q1 GDP releases. Switzerland yesterday and then in Asia, Japan this morning. What can you tell us, Mike?

[B]

Switzerland's economy grew 0.5% faster than late 2025, despite oil shocks and trade tensions. This steady improvement signals resilience across key sectors of the economy. And unlike in other countries, price pressures remain largely contained, underpinning the country's stability but also the strong Swiss franc.

[A]

And how about Japan?

[B]

Japan's economy grew 2.1% annualized. Now that's above forecast. This supports the case that if the country can absorb higher borrowing costs as the central bank normalizes policy and manages inflation. 10 year Japanese government bond yields continued their ascent this morning, rising to 2.77%, the level last seen in the mid-1990s. But interestingly, this is not helping the Japanese yen. It is weakening back to 159 per US dollar this morning, having now given up most of its recent intervention led gains.

[A]

And how are Asian markets generally faring today, Mike?

[B]

Asian equity markets are broadly flat with Korea's tech heavy market down about 2% now in bonds. Last week's sell off is easing in Asia except in Japan as I mentioned before, but yields remain near this year's high. So we're still a big focus in markets in Asia but also globally. The average 10 year G7 government bond yield is nearing 4%, up from about 3.2% before the war began in late February.

[A]

And what should we be expecting today Mike?

[B]

I mentioned the UK data already. Otherwise we have in the US the ADP weekly employment change and US Pending home sales report in earnings season. Just I want to highlight Home Depot in the US giving us more insights into the state of the consumer amid high gasoline prices and lastly, looking at European equity futures, they are slightly in the green. And that's all for me.

[A]

Super. Thank you very much for the news update this morning, Mike.

[B]

Thank you very much for having me, Bernadette.

[A]

And now it's time to talk to Carsten. Good morning to you.

[C]

Good morning, Bernadette.

[A]

So I mentioned it at the top of the show, Carsten, last week, India more than doubled gold and silver import duties. But before we dive into those details, can you tell us how important India is in terms of global demand?

[C]

Sure. So, thanks to a long lasting cultural affinity and of course also its vast population, India is one of the world's largest gold consumers. It accounts for around a quarter of global jewelry demand and a fifth of global bar and coin demand, which is in fact down from a few years ago. Silver consumption in India has also been on the rise during the past few years as gold has become increasingly unaffordable to some. This is primarily reflected in jewelry demand again, which is up from around 1500 tons in 2015 to more than 2000 tons last year. That said, also considering rising silver prices during the past few years, India's silver consumption is well below a peak of more than 3,000 tonnes a few years ago.

[A]

And what's behind the rise in import duties?

[C]

Well, firstly, we have to understand that India does not mine any or hardly any gold domestically. So the majority of consumption is imported. There's a bit of recycling, but the majority is imported. So jointly, gold and silver are India's second biggest import item after crude oil, contributing significantly to capital outflows from the country and also its trade deficit. So to protect the struggling rupee from further depreciation, the Indian government increased gold and silver duties to 15% from a previous level of 6% last week. And this brings them back to the level where they have been between 2022 and 2024.

[A]

Okay then, Carlson, in your experience, how much of an impact do such tariffs have?

[C]

Well, of course, changes in import duties impact demand or impacted demand in the past at least. But this does not seem like the dominant driver. More important is the economic backdrop, especially for the farmers in rural India and the local price level. So, looking beyond global price trends, local prices are strongly influenced by the value of the Indian rupee. Since 2010, it has depreciated by around 4.5% per year versus the US dollar, thus having a much bigger impact on local prices than any change in import tariffs. And reflecting all of these factors, India's gold and silver imports have fluctuated quite strongly during the past decade. Ranging from less than 400 tonnes to more than 900 tonnes for gold, and from less than 3,000 tonnes to more than 9,500 tonnes for silver.

[A]

Okay then, so what's the bottom line for gold and silver markets?

[C]

Well, I think that we might see some softness in Indian imports during the next few months as the market readjusts, but major weakness seems unlikely. What we also have to consider then is that India is not a major price driver, neither for gold nor for silver. So it's rather providing a good base of demand, but it's not the marginal buy. So what matters more for gold is the outlook for central bank buying and Western world investment demand. The former remains strong and the latter should pick up again in our view, suggesting an overall favorable fundamental backdrop for gold. Silver also depends primarily on investment demand. But following the exuberance we've seen early in the year and the correction, the case for silver, in our view, is less clear than it is for gold.

[A]

Superb. Thank you very much for joining us today, Carsten, and bringing us some interesting information about that story.

[C]

Thanks for having me.

[A]

Well, that's it for today's podcast. Thank you all for listening and of course, thanks to Mike and Carsten for being with me today. Please do tune in again tomorrow when Roman Canciani will be your host and he will be joined by more of our experts to bring you up to speed on what's moving markets. So don't miss that. Meanwhile, good luck today and goodbye for now.

[D]

The information and opinions expressed in this podcast constitute marketing material and are not the result of independent financial or investment research. Please refer to www.juliusbear.com legal podcasts for further other important legal information.