Charting the global economy: Euro Area business activity sags

Euro-area business activity unexpectedly contracted in April 2026 as services weakened amid demand shocks from the Iran war, pressuring regional growth and lifting price pressures. Germany saw services plunge while industry held up; France’s manufacturing surprised to the upside. Energy-driven inflation rose in the UK (CPI 3.3% YoY in March) and pushed motor-fuel prices sharply higher, while Shell said European refineries are running “max jet” to meet jet-fuel demand, risking supply pinch points for aviation. In the US, resilient retail sales in March — led by a record jump in gasoline spending — and economists’ higher PCE inflation forecasts (Bloomberg survey sees Q2 PCE +3.6% YoY) reduce the odds of multiple Fed rate cuts this year. Elsewhere, South Korea’s AI-led export rebound and central-bank moves across emerging markets add regional divergence. Net market impact: mixed — European growth and services concerns weigh on regional assets, rising energy-driven inflation supports commodity prices and keeps US rates higher for longer, while pockets of strength (US consumer, Korea tech exports) provide offsets.