U.S.-Iran Optimism Lifts Equities as Inflation Stays Hot

Global equities climbed in final week of May 2026, with sentiment anchored by rising hopes for a U.S.-Iran ceasefire deal and the reopening of the Strait of Hormuz, which pushed oil prices lower and lifted risk appetite. U.S. benchmarks closed at fresh record highs, with the Nasdaq leading the charge as AI-linked momentum held firm, even as April PCE inflation data printed hotter than expected and reinforced a hawkish Federal Reserve posture. China and Hong Kong markets were mixed — industrial profit growth accelerated sharply but fresh regulatory action against offshore brokerages weighed on Hong Kong sentiment and sent the Hang Seng lower. Singapore bucked the regional trend modestly, with the Straits Times Index slipping on profit-taking in financials and telecoms despite strength in select industrial and property names.

 

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🇺🇸 United States

Market Overview

U.S. equity markets advanced in a holiday-shortened week, with several major benchmarks closing at all-time highs as falling oil prices and reported progress on a U.S.-Iran peace deal bolstered investor sentiment. The SPX closed at an all-time record high of 7,581.65 on Friday, May 29, 2026, officially clinching its ninth consecutive weekly gain. Markets were closed Monday in observance of Memorial Day, but the remaining four sessions were enough to push risk assets higher.

(Refer to the major indices' weekly performance tables below.)

Major Indices – Weekly Performance

·       Dow Jones Industrial Average (DJI):: +0.90%

·       S&P 500 (SPX):: +1.43%

·       Nasdaq Composite (COMP): +2.39%

 

Monthly Performance — May 2026

May 2026 delivered a strong month for U.S. equities, with technology-led momentum driving the Nasdaq Composite to a +8.36% monthly gain, its best monthly performance year-to-date. The combination of easing geopolitical risk, resilient corporate earnings, and AI investment enthusiasm underpinned the broad monthly advance, even as elevated inflation kept rate-cut expectations firmly off the table.

(Refer to the major indices' monthly performance table below.)

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Key Highlights and Outlook

1️⃣ U.S.-Iran Ceasefire Hopes Drive Risk Rally

Reports of a 60-day ceasefire extension and a potential reopening of the Strait of Hormuz dominated the week's narrative. Oil prices fell sharply, boosting equities and supporting a ninth consecutive weekly gain in the S&P 500. While investor enthusiasm was tempered by news of fresh U.S. strikes on Iranian targets, risk appetite held firm through Friday on reports that a final deal was imminent.

 

2️⃣ April PCE Inflation Rises; Fed Stays Hawkish
The BEA's April PCE price index rose 3.8% year-on-year — the hottest reading since May 2023 — and core PCE accelerated to 3.3% annually. Fed Governor Cook and Vice Chair Jefferson both flagged upside inflation risks and reinforced the case for a prolonged hold. Markets continue to price a potential hike over the next twelve months, limiting the scope for meaningful Treasury yield compression.

 

3️⃣ GDP Revised Down, but Underlying Demand Holds

Q1 2026 GDP was revised lower to a 1.6% annualised pace, down from an initial 2.0% estimate, with the revision driven by weaker investment and consumer spending. However, the business investment and household spending proxy — a cleaner read on underlying activity — averaged a healthier 2.2% over the past six months, pointing to resilience beneath the volatile headline figure.

 

4️⃣ Durable Goods Orders Surge on Transport Equipment

April durable goods orders jumped 7.9%, driven by a 21.5% surge in transportation equipment orders. Core capital goods orders — a proxy for business investment — fell 1.1% after a strong March, moderating near-term capex expectations. The data reinforced a mixed but broadly solid investment backdrop, with AI-related infrastructure spending continuing to contribute meaningfully to aggregate growth.

 

5️⃣ AI Investment Cycle Continues to Underpin Tech

Anthropic's valuation approached $1 trillion in a pre-IPO round, underscoring sustained investor confidence in AI infrastructure. Business investment in informational processing equipment, software, and R&D surged 6.4% annualised in Q1, contributing a full percentage point to headline GDP. The scale of this AI investment cycle is now being compared to the IT boom of the 1990s, with corporate commentary indicating further spending commitments ahead.

 

6️⃣ Corporate Profits Remain Strong Heading into Summer

GDP-derived corporate profits rose 12% year-on-year in Q1 2026, the strongest reading since the post-pandemic rebound in 2021. Domestic non-financial corporate margins stood at approximately 18%, near post-Covid highs. The breadth and durability of profit growth supports an overweight view on large- and mid-cap U.S. equities as market leadership continues to broaden.

 

S&P 500 Sectors in Focus

Technology was the week's standout performer, extending its year-to-date lead as AI enthusiasm and a more favourable rate backdrop lifted large-cap names. Materials and Consumer Discretionary also posted gains, benefitting from improved risk sentiment and lower energy input costs. On the lagging side, Energy was the weakest sector by a wide margin as falling oil prices eroded the sector's earnings outlook, while Consumer Staples and Utilities retreated as defensive positioning unwound alongside the broader risk-on tone.

(Refer to the SPX sector ETF weekly performance table below.)

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Technical Snapshot

The S&P 500 (SPX) closed at fresh record highs, with price action holding comfortably above its 20-week and 50-week moving averages on continued volume. The Nasdaq Composite (COMP) confirmed technical breakout momentum, with the AI-driven mega-cap complex providing consistent breadth leadership through the week. The Dow Jones Industrial Average (DJI) lagged relatively but remained in a constructive trend; the near-term risk is a pullback should the Iran deal unravel or PCE data continue to surprise to the upside.

📊 Weekly charts:

• DJI weekly chart
• SPX weekly chart
• Nasdaq weekly chart

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🇨🇳 China / Hong Kong

Market Overview

China and Hong Kong markets were mixed during a shortened trading week, with Hong Kong closed on 25 May for Buddha's Birthday. The blue chip benchmark CSI 300 Index edged up 0.97%, the Shanghai Composite Index(SSE) fell 1.08%, reversing the prior week's modest gains as regulatory news flow weighed on sentiment. The Hang Seng Index (HSI) declined -1.65%, dragged by brokerage sector sell-offs following the CSRC crackdown on offshore online trading platforms. Southbound flows remained broadly negative on net, with Alibaba and Tencent among the top net sells for the week.

Index Weekly Performance

·       CSI 300: +0.97%

·       Shanghai Composite Index (SSE): -1.08%

·       Hang Seng Index(HSI): -1.65%

 

Key Highlights and outlook

1️⃣ CSRC Crackdown on Offshore Brokerages Rattles HK

China's securities regulator imposed fines and rectification measures on Tiger Brokers, Futu Holdings, and Longbridge Securities for operating without the required mainland licences. The action triggered sharp declines in offshore-listed brokerage shares and contributed materially to Hong Kong's weekly decline. Regulators appear focused on channelling retail flows through formal, regulated platforms such as Stock Connect.

2️⃣ Industrial Profits Surge but Recovery Remains Patchy

April industrial profits jumped 24.7% year-on-year, accelerating from 15.8% in March, supported by stronger earnings in energy, raw materials, and technology-related exports. However, consumer-facing industries including furniture and autos reported weaker profitability, highlighting the uneven nature of China's recovery. Policy support and external demand remain the key props for industrial earnings momentum.

3️⃣ AI Infrastructure Stocks Attract Southbound Interest

SMIC and Hua Hong Semiconductor led southbound net buys for the week, reflecting continued investor appetite for domestic AI infrastructure and semiconductor names. Baidu's AI cloud revenue surged 79% year-on-year in Q1 2026, with AI-powered services now accounting for more than half of group revenue for the first time. GDS Holdings also reported strong Q1 results, with adjusted EBITDA rising 47.2% year-on-year on hyperscale data centre demand.

4️⃣ Hong Kong Positions as Global Wealth Hub Rival

Hong Kong overtook Switzerland as the world's largest cross-border offshore wealth centre, with assets under management reaching USD 2.95 trillion according to BCG data. HKEX CEO Bonnie Chan separately pitched the city to Central Asian sovereign issuers as a secondary listing venue, citing average daily turnover of HKD 270 billion. The dual messaging underscores Hong Kong's ongoing effort to broaden its capital markets positioning despite lingering geopolitical sensitivities.

5️⃣ Consumer Platform Stocks Offer Selective Opportunities

NetEase (9999.HK) continued to demonstrate resilient earnings momentum with Q1 2026 revenue up 6.1% year-on-year and gross profit rising 14.8%, driven by strong gaming titles and expanding overseas operations. Tongcheng Travel (780.HK) posted 14.4% revenue growth and 19.4% adjusted profit growth in Q1, underpinned by resilient domestic travel demand and deepening penetration into lower-tier cities. Both names trade at undemanding valuations relative to peers. (MSSG Reports)

 

Technical Snapshot

The Hang Seng Index (HSI) closed at 25,182, retreating below near-term support amid brokerage sector headwinds and net southbound outflows. The SSE Composite remains in a corrective phase near the 4,050–4,150 range following the prior month's sharp advance, with the index down -1.08% for the week but still holding a modest year-to-date gain. Sentiment stabilisation will likely require a combination of cleaner regulatory news flow and confirmation that AI infrastructure demand is translating into broader earnings upgrades across the tech complex.

(Refer to the Hang Seng Index constituents’ weekly performance table below.)

📊 Weekly charts:

• SSE weekly chart
• HSI weekly chart

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🇸🇬 Singapore

Market Overview

The Straits Times Index (STI) dipped -0.60% for the final week of May. Despite the modest weekly pullback, the STI held a solid year-to-date advance of +8.43%, supported by a strong performance in May. SATS led all STI constituents with a gain of +17.38%, while City Development and Sembcorp Industries also posted meaningful weekly gains. At the other end, Jardine Matheson, Singtel, and Seatrium were the week's laggards.

Index Weekly Performance

·       Straits Times Index (STI): +0.19%

 

Key Highlights and Outlook

1️⃣ SATS Surges on Aviation Demand Recovery

SATS (S58) shot up +17.38% for the week, easily the best performer among STI constituents. The move likely reflects a combination of recovering air travel volumes, supported by FY26 revenue growth to a record S$6.35bn and higher cargo and flight volumes. The stock's year-to-date gain remains modest at +1.05%, suggesting the week's move may reflect catch-up with the broader recovery theme.

2️⃣ REITs Under Pressure from Rate and Macro Headwinds

Singapore's REIT sub-sector remained under pressure, with CapAscendas REIT (-0.79%), CapLand IntCom Trust (-0.87%), and Mapletree Industrial Trust (-0.51%) all in the red for the week. The persistently elevated rate environment continues to weigh on distribution yields relative to risk-free alternatives, keeping sentiment cautious. Keppel DC REIT bucked the trend with a +0.87% gain, supported by data centre demand tailwinds.

 

Technical Snapshot

The STI closed at 5,037.86, consolidating near the 5,000–5,100 support zone after last week's modest pullback. The index remains above its 20-week moving average, preserving the medium-term uptrend that has been in place since early 2026. A sustained hold above 5,000 would be required to maintain the constructive technical setup; a break below that level could signal a deeper retracement toward the 4,900 area.

(Refer to the STI stocks weekly performance table below.) 

📊 Weekly chart:

• STI weekly chart

 

📅 Week Ahead (1-5 June 2026)

U.S. May nonfarm payrolls report (Friday) as the key data event, with consensus expecting a moderation in job gains following April's stronger-than-expected print. ISM manufacturing PMI is due on Monday, with services PMI following mid-week.

 

🗓️ Overarching Watchpoint

The durability of the U.S.-Iran ceasefire narrative is the single biggest binary risk for the week ahead. A confirmed, durable deal with Strait of Hormuz reopening would further compress oil prices, ease inflation expectations, and extend the equity rally; a breakdown or fresh military escalation would quickly reverse the week's risk-on gains and reprice rate expectations higher.

Source: Some content and data are excerpted from publicly available market reports.

Eight Weeks and Counting: Yields Rise as Equities Hold Firm

Global equities navigated a week of diverging signals, as rising Treasury yields and sticky inflation pressures tested market resilience across asset classes. U.S. stocks extended their winning streak to eight consecutive weeks — the longest run since 2023 — powered by AI optimism from NVIDIA's strong earnings and cautious optimism around U.S.-Iran negotiations, even as record-low consumer sentiment and surging input costs kept the mood measured. Chinese mainland markets edged lower on disappointing April activity data that missed expectations on industrial output and retail sales, while Hong Kong bore sharper declines as technology and export-sensitive sectors faced headwinds from higher global yields and softening foreign risk appetite. Singapore bucked the regional softness, with the Straits Times Index advancing on broad-based constituent gains led by industrials, financials, and select mid-cap names. 

🇺🇸 United States

Market Overview

The Dow Jones Industrial Average (DJI) surged to a fresh all-time high, gaining +2.13% and marking the standout move of the week among major U.S. benchmarks, while the S&P 500 (SPX) added +0.88% for its eighth straight weekly advance — the longest winning streak since 2023. The Nasdaq Composite (COMP) rose a more modest +0.45%, with gains underpinned by NVIDIA's stronger-than-expected earnings and sustained AI sector momentum, even as the 10-year Treasury yield climbed toward 4.69% mid-week before partially retreating on U.S.-Iran negotiation optimism. Small-cap and value stocks outperformed large-cap and growth shares, and the equal-weighted S&P 500 outpaced its market cap-weighted counterpart, pointing to broadening participation beneath the headline numbers. 

(Refer to the major indices' weekly performance tables below.)

Index Weekly Performance

- Dow Jones Industrial Average (DJI): +2.13%

- S&P 500 (SPX): +0.88%

- Nasdaq Composite (COMP): +0.45%

 

Key Highlights and Outlook

1️⃣ Eight-Week Winning Streak, Broadening Participation

The S&P 500 closed higher for the eighth consecutive week — its longest unbroken advance since 2023 — with the Dow reaching a fresh all-time high. Notably, small-cap and value stocks outperformed, and the equal-weighted index outpaced its market-cap-weighted counterpart, suggesting the rally is becoming less concentrated and more durable across sectors and market segments.

2️⃣ NVIDIA Earnings Reinforce AI Investment Thesis

NVIDIA's stronger-than-expected quarterly results provided the key mid-week catalyst, reinforcing the AI-driven earnings narrative that has underpinned much of the market's recovery since April. The results helped offset geopolitical uncertainty stemming from the ongoing U.S.-Iran conflict and kept technology-adjacent names well supported despite the backdrop of rising rates.

3️⃣ Treasury Yields Test Equities; Fed Signals Hawkish Patience

The 10-year Treasury yield climbed to a midweek peak of 4.69% — near the top of its three-year range — before retreating to around 4.56% as diplomacy headlines provided relief. Fed minutes from the April meeting showed a majority of policymakers open to further tightening if inflation remains persistently above the 2% target, reinforcing a higher-for-longer rate narrative that could test valuations if yields resume their ascent.

4️⃣ Inflation Metrics Remain Concerning

May flash PMI data showed input costs rising at the fastest pace since late 2022, with selling price inflation also accelerating sharply. Headline CPI reached 3.8% in April while producer prices climbed 6%, raising the question of whether inflation pressures extend beyond energy alone. The University of Michigan's Consumer Sentiment Index fell to a record low of 44.8, with one-year inflation expectations rising to 4.8% — the highest since the Middle East conflict began.

5️⃣ Housing Market Remains Depressed

The NAHB Housing Market Index edged up to 37 but stayed below the neutral threshold of 50 for the 25th consecutive month, as 30-year mortgage rates climbed to 6.51% — the highest since August. Housing starts declined and pending home sales growth decelerated, underscoring the drag that elevated borrowing costs continue to exert on the interest-rate-sensitive housing sector.

6️⃣ U.S.-Iran Diplomacy Provides Partial Market Relief

President Trump's comment that U.S.-Iran talks were in their "final stages" provided a mid-week sentiment boost, helping Treasuries recover and moderating equity volatility. No deal was finalised, and the situation remained fluid, but investors increasingly priced a diplomatic resolution as the more probable scenario, with oil prices easing slightly — a development that could offer meaningful relief to headline inflation if a deal materialises.

S&P 500 Sectors in Focus

Defensive and rate-sensitive sectors led the week's advance, with Utilities and Health Care posting the strongest gains, followed closely by Real Estate — the latter likely reflecting positioning around expectations that any Middle East de-escalation could ease inflationary pressures and eventually bring rates lower. Technology continued to outperform on an absolute basis, supported by NVIDIA's earnings beat and the broader AI capex cycle narrative, while Consumer Discretionary also advanced solidly. At the other end of the table, Communication Services was the sole sector to close in negative territory, while Materials ended essentially flat, weighed by uncertainty over the global demand outlook. 

(Refer to the SPX sector ETF weekly performance table below.)

Technical Snapshot

The S&P 500 (SPX) extended its eight-week winning streak, consolidating near recent highs with momentum indicators remaining constructive, though mildly overbought conditions warrant attention should Treasury yields resume their advance. The Dow Jones Industrial Average (DJI) confirmed its breakout to a fresh all-time high, a technically significant development that reinforces the underlying strength in blue-chip equities. The Nasdaq Composite (COMP) lagged on a relative basis but remains well above its key moving averages; a shallow pullback toward recent breakout levels would likely represent a constructive entry opportunity rather than a trend reversal.

📊 Weekly charts:

DJI weekly chart

SPX weekly chart

Nasdaq weekly chart

 

🇨🇳 China / Hong Kong

Market Overview

Chinese equities retreated over the week as disappointing April activity data renewed concerns about the durability of the domestic recovery. The CSI 300 Index declined -0.30% and the Shanghai Composite (SSE) fell -0.54%, with mainland markets proving relatively resilient compared to Hong Kong, where the Hang Seng Index (HSI) dropped -1.37% as technology and export-sensitive sectors faced compounded pressure from higher global yields and softer foreign risk appetite. Bright spots were limited — notable weekly gainers within the HSI included Lenovo and Sunny Optical, while the bulk of the index gave ground. 

Index Weekly Performance

- CSI 300 (CSI 300): -0.30%

- Shanghai Composite (SSE): -0.54%

- Hang Seng Index (HSI): -1.37%

 

Key Highlights and Outlook

1️⃣ April Activity Data Miss Revives Stimulus Expectations

China's April activity data missed consensus on all key metrics: industrial output grew 4.1% year over year versus 5.7% in March, while retail sales expanded just 0.2% YoY — the weakest reading since late 2022. Fixed asset investment contracted in the January-to-April period. The persistent weakness in property-related activity and soft consumption data raised market expectations for additional targeted fiscal or sector-specific support measures heading into the second quarter.

2️⃣ PBOC Holds Rates; Targeted Stimulus Seen as Preferred Tool

The People's Bank of China left the one-year Loan Prime Rate at 3.00% and the five-year LPR at 3.50% for the 12th consecutive month, matching market expectations but reinforcing a posture of deliberate restraint. The steady-rate decision suggested Beijing's near-term preference for targeted fiscal measures and accelerated infrastructure project rollouts — some approved in 1Q26 — over broad-based monetary easing, with selective support for priority sectors the more likely lever to prop up domestic demand.

3️⃣ Putin-Xi Summit Reinforces Sino-Russian Ties Amid Washington Pivot

Russian President Vladimir Putin visited Beijing on May 19–20, with China and Russia signing over 40 bilateral agreements spanning trade, energy, technology, and media cooperation. Discussions around the proposed Power of Siberia 2 gas pipeline attracted attention, though no final agreement was announced. The summit underscored Beijing's dual-track foreign policy — maintaining deep strategic alignment with Moscow while simultaneously stabilising the relationship with Washington following the Xi-Trump bilateral meeting earlier in May.

4️⃣ Copper and Semiconductors Emerge as Structural Plays

Elevated global oil prices and the ongoing U.S.-Iran stalemate continued to support the case for inflation hedges. Copper producers — including Jiangxi Copper (358 HK), rated BUY with a 12M target price of HKD 46.63 — attracted interest as structural demand drivers from AI data centres, renewable energy infrastructure, and grid upgrades converge with a tightening global supply picture. Meanwhile, SMIC (981 HK), rated BUY with a 12M target price of HKD 88.00, reported 1Q26 revenue up 11.5% YoY with gross margin ahead of expectations at 20%, and guided for revenue growth of 14–16% QoQ in 2Q26 — reinforcing its position as a key beneficiary of China's semiconductor localisation drive.

5️⃣ World Cup Catalyst Approaching for Consumer and Streaming Names

With the 2026 FIFA World Cup kicking off on 11 June, event-driven positioning began building around streaming and consumer-facing equities. China Mobile (941 HK), rated BUY with a 12M target of HKD 95.00, could benefit via its Migu streaming platform, while Budweiser APAC (1876 HK), rated BUY with a 12M target of HKD 9.16 and a forward dividend yield of 6.2%, returned to volume growth in China in 1Q26 and is positioned to capture peak summer season and World Cup consumption momentum across key Asian markets.

Technical Snapshot

The Hang Seng Index (HSI) extended its pullback from April highs, closing the week lower and testing near-term support around the 25,600 level with momentum indicators turning neutral-to-negative. The Shanghai Composite (SSE) displayed relative resilience, declining modestly and stuck between its 20-50 day moving average, reflecting the market's awareness of potential policy support as a floor. A sustained hold of the HSI above the 25,000–25,200 support band is essential to preserve the broader uptrend; failure to do so would likely invite further selling and shift the technical picture to cautious.

(Refer to the Hang Seng Index constituents’ weekly performance table below.)

📊 Weekly charts:

SSE weekly chart

HSI weekly chart

 

🇸🇬 Singapore

Market Overview

The Straits Times Index (STI) rose +1.58% over the week, closing at 5,068.15 and outperforming both Hong Kong and mainland Chinese benchmarks, as Singapore equities benefited from a constructive global backdrop and broad-based constituent participation. Gains were well distributed across industrials, financials, and select property and REIT names, with only a handful of index constituents closing lower on the week. 

Index Weekly Performance

- Straits Times Index (STI): +1.58%

 

Key Highlights and Outlook

1️⃣ STI Outperforms Region on Broad Participation

The STI's +1.58% advance — bringing its YTD gain to +9.08% — stood in contrast to the declines recorded in Hong Kong and mainland China, reflecting Singapore's positioning as a relative safe harbour in the region. All three local banks contributed positively to the advance, with DBS, OCBC, and UOB all ending the week higher as investors continued to favour dividend-yielding blue-chips in a higher-for-longer rate environment.

2️⃣ ST Engineering and SGX Lead the Week's Gainers

ST Engineering (S63) surged +8.68%, the strongest single-stock performance in the index, likely driven by earnings momentum and sustained demand for its defence and aerospace businesses. SGX (S68) added +6.01%, supported by elevated regional trading volumes and its structural position as a beneficiary of cross-border market activity; ThaiBev (Y92) rounded out the top performers at +6.98%, rebounding from prior weakness.

3️⃣ S-REITs Stabilise; CapAscendas and Mapletree PACT Recover

Select S-REITs within the STI staged a partial recovery, with CapitaLand Ascendas REIT (A17U) and Mapletree PACT (N2IU) both advancing after recent underperformance. While both names remain in negative YTD territory, the week's price action suggested some stabilisation as rate expectations plateaued and yield-seeking buyers returned to retest support levels in the sector.

4️⃣ Wilmar, Singtel, and YZJ Shipbuilding Lagged

Wilmar (F34) declined -5.53%, extending recent weakness as commodity price headwinds and margin concerns continued to overhang the stock. Singtel (Z74) slipped -4.77% amid sector rotation out of telcos, while YZJ Shipbuilding (BS6) fell -4.79% in what appeared to be profit-taking after its solid YTD run. These laggards were more than offset by broad gains elsewhere in the index, keeping the overall tone firmly positive for the week.

Technical Snapshot

The STI maintained its positive trajectory, advancing to 5,068.15 and approaching the upper boundary of its recent trading range with momentum indicators remaining constructive. The index's +9.08% YTD gain reflects sustained institutional interest in Singapore-listed blue-chips, and the week's advance was accompanied by reasonably broad participation — a healthy signal for trend continuation. A hold above the 5,000 level would reinforce the near-term uptrend, with the next meaningful resistance zone around 5,100–5,150; near-term pullbacks toward 5,000 should be viewed as support rather than signal.

(Refer to the STI weekly performance table below.)

📊 Weekly charts:

STI weekly chart

 

📅 Week Ahead (26–30 May 2026)

U.S. markets will focus on the April core PCE deflator — the Fed's preferred inflation gauge — alongside the second estimate of Q1 GDP, both of which carry significant implications for the rate outlook. Any fresh commentary from Fed officials on the pace of policy adjustment and the trajectory of U.S.-Iran negotiations will remain closely watched; a diplomatic breakthrough could materially alter the inflation and yield picture heading into June.

In China and Hong Kong, May official PMI data will offer an early read on whether the momentum loss seen in April's activity numbers has extended into the second quarter. Any signalled fiscal support measures or accelerated infrastructure approvals from Beijing would be monitored as potential catalysts for a stabilisation in both mainland and Hong Kong equities heading into the World Cup period.

 

🗓️ Overarching Watchpoint

The April U.S. core PCE print is the single most consequential data point of the week: a reading that confirms inflation remains stubbornly above the Fed's comfort zone would push markets to price a higher-for-longer rate path more aggressively, applying fresh pressure to equity valuations and potentially snapping the S&P 500's eight-week winning streak. Conversely, a softer-than-expected print — or concurrent progress on U.S.-Iran talks — could provide the conditions for the rally to extend further into June.

 

Source: Some content and data are excerpted from publicly available market reports.

Stay Invested: Rising Inflation Tests Markets Ahead of Summer

U.S. equities ended a choppy week largely flat as hotter-than-expected CPI and PPI data, rising Treasury yields, and elevated oil prices offset gains from the energy sector. China and Hong Kong markets retreated after early optimism from the Trump-Xi summit in Beijing faded, with the absence of major policy breakthroughs limiting follow-through buying across China internet and export-sensitive names. Singapore's Straits Times Index bucked the regional trend, advancing on broad-based strength in banking stocks and index heavyweights. Across markets, re-accelerating inflation re-emerged as the dominant macro concern heading into the summer months.

 

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🇺🇸 United States

Market Overview

U.S. equities posted a mixed week as hotter-than-expected inflation readings and rising Treasury yields dominated the narrative. The S&P 500 (SPX) edged marginally higher by +0.13% — briefly touching a record intraday high on Thursday before retreating on Friday — while the Dow Jones Industrial Average (DJI) slipped -0.17% and the Nasdaq Composite (COMP) dipped -0.08%, as the 10-year Treasury yield climbed to approximately 4.59%, the highest level in over a year. 

(Refer to the major indices' weekly performance tables below.)

Index Weekly Performance

- Dow Jones Industrial Average (DJI):  -0.17%

- S&P 500 (SPX):  +0.13%

- Nasdaq Composite (COMP):  -0.08%

 

Key Highlights and Outlook

1️⃣ Inflation Accelerates: April CPI and PPI Both Surprise to the Upside

April CPI rose 0.6% month over month and 3.8% year over year — the sharpest annual jump since May 2023 — driven by a 3.8% monthly surge in energy prices. Core CPI also came in above estimates at +0.4% MoM and +2.8% YoY. The hotter-than-expected data reinforced concerns that inflation is broadening well beyond oil and tariff-related categories.

2️⃣ Wholesale Prices Reinforce Persistent Price Pressure

April's producer price index climbed 1.4% month over month — the largest monthly gain since March 2022 — with energy prices surging 7.8% after a 10.1% rise in March, and year-over-year PPI accelerating to 6.0%. Chicago Fed President Austan Goolsbee acknowledged the U.S. has an "inflation problem" that extends beyond tariff and oil-related drivers, fuelling concerns the Fed may need to maintain restrictive policy for longer.

3️⃣ Treasury Yields Climb to 14-Month Highs

The 10-year U.S. Treasury yield rose to approximately 4.59% by Friday's close, its highest level in over a year, as bond markets priced in a more prolonged restrictive Fed policy path. The move pressured rate-sensitive sectors — real estate and utilities led weekly declines — while reinforcing the market view that near-term rate cuts remain firmly off the table.

4️⃣ Retail Sales Solid but Momentum Slows

April retail sales rose 0.5% month over month, in line with expectations but decelerating from March's 1.6% gain. Control group sales — a key GDP input — increased 0.5%, supported by spending at gas stations and electronics stores. The data confirmed consumer resilience even as cost pressures mount, while weekly initial jobless claims came in at 211,000, slightly above the 207,000 consensus estimate.

5️⃣ Energy Dominates; Consumer Discretionary Leads Broad Declines

Energy was the standout outperformer this week as elevated oil prices lifted the sector, while health care and consumer staples also posted modest gains. Consumer discretionary suffered the steepest weekly decline among S&P 500 sectors, followed by real estate and materials, all reflecting heightened sensitivity to elevated rates and slowing consumer spending. The week's sector divergence underscores the market's current bifurcation between commodity-linked names and rate-sensitive sectors.

6️⃣ "Sell in May" Debate Returns as Summer Risks Mount

With the S&P 500 up over 8% year-to-date and near record highs, the seasonal "sell in May" debate has resurfaced. Historical data suggests the May–October period delivers softer average returns compared to the November–April window, and with inflation re-accelerating and the U.S. midterm election cycle in view, a period of near-term consolidation cannot be ruled out. That said, upward revisions to 2026 earnings forecasts — supported by tech, AI, and energy sectors — continue to underpin the fundamental case for remaining invested.

 

S&P 500 Sectors in Focus

Energy was the clear standout this week, surging as oil prices remained elevated and posting the sharpest weekly gain across all eleven S&P 500 sectors by a significant margin. Health care and consumer staples also outperformed, offering relative defensiveness amid the volatile inflation backdrop, while technology managed a marginal gain despite meaningful headwinds from rising yields. On the downside, consumer discretionary suffered the steepest weekly decline, followed by real estate and materials — all sectors with meaningful rate sensitivity or exposed to slowing consumer demand. (Refer to the SPX sector ETF weekly performance table below.)

Technical Snapshot

The S&P 500 (SPX) reached a record intraday high on Thursday before pulling back to close at 7,408.50, suggesting near-term resistance at current levels amid the inflation-driven yield headwind. The Nasdaq Composite (COMP) remains technically constructive above key support levels, though the marginal weekly decline reflects cautious positioning ahead of further inflation and Fed guidance. The DJI's modest retreat keeps it within its medium-term uptrend, with the 4.59% 10-year Treasury yield now the key macro variable to monitor into June.

📊 Weekly charts:

• DJI weekly chart
• SPX weekly chart
• Nasdaq weekly chart

 

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🇨🇳 China / Hong Kong

Market Overview

China equities pulled back after early-week gains linked to Trump-Xi summit expectations, with the CSI 300 edging lower by -0.25% and the Shanghai Composite (SSE) declining -1.07% as summit optimism faded in the absence of major policy breakthroughs. Hong Kong underperformed regional peers, with the Hang Seng Index (HSI) falling -1.63% amid continued caution toward China internet and export-sensitive names. Investor sentiment was initially supported by resilient April trade and inflation data, though the lack of concrete tariff concessions capped any meaningful follow-through buying. (Refer to the major indices' weekly performance tables below.)

Index Weekly Performance

- CSI 300:  -0.25%

- Shanghai Composite (SSE):  -1.07%

- Hang Seng Index (HSI):  -1.63%

 

Key Highlights and Outlook

1️⃣ Trump-Xi Summit Reinforces Stabilisation but Yields No Breakthroughs

Presidents Trump and Xi concluded a two-day summit in Beijing on May 15, with both sides signalling support for stable bilateral relations. China reportedly agreed to increase purchases of U.S. agricultural and energy products, while discussions covered semiconductor and rare-earth supply chain mechanisms, though no major export restriction rollbacks were announced. For markets, the summit reinforced expectations of managed de-escalation rather than a structural reset, with Trump extending an invitation for Xi to visit Washington in September.

2️⃣ Services PMI Expands; Domestic Demand Remains Resilient

April's RatingDog China General Services PMI rose to 52.6 from 52.1 in March, while the composite PMI output index climbed to 53.1 from 51.5, driven by stronger domestic demand and faster new business growth. Export orders, however, declined for a second consecutive month, highlighting the persistent divergence between resilient domestic activity and softening external demand amid ongoing tariff headwinds.

3️⃣ Firmer Inflation Data Reduces Near-Term Monetary Easing Expectations

China's PPI surged 2.8% year over year in April — accelerating sharply from 0.5% in March and the fastest pace since July 2022 — driven by higher commodity prices and AI-related investment demand in nonferrous metals and energy processing. Consumer inflation also firmed modestly, with CPI rising 1.2% year over year. The data supported the view that industrial pricing is stabilising, reducing near-term pressure on Beijing to deliver broad-based monetary easing.

4️⃣ Export Strength Underscores External-Demand Resilience

China's exports rose 14.1% year over year in April, accelerating from March and exceeding market expectations, while imports surged 25.3% on firmer domestic demand and higher commodity purchases. Exports to the U.S. rose 11.3% despite ongoing tariff tensions, suggesting continued front-loading activity ahead of the summit. The robust trade data provided early-week support to sentiment before fading as the summit produced no structural concessions.

5️⃣ HSI Constituents Split; Consumer and EV Names Outperform

Within the Hang Seng Index, consumer and EV-related names led gains for the week, with JD.com (+7.93%), Li Auto (+7.92%), and Midea (+7.44%) posting the strongest weekly advances on improved domestic spending sentiment. On the other side, education, biotech, and selected growth names underperformed, with New Oriental, Pop Mart, and Innovent Bio among the steepest decliners as investors rotated out of higher-beta growth positions. 

(Refer to the Hang Seng Index constituents' weekly performance table below.)

Technical Snapshot

The Hang Seng Index (HSI) retreated to 25,962.73, remaining below the 26,500 resistance level that has capped recent recovery attempts, with selling concentrated in higher-beta internet and biotech names rather than broad-based index liquidation. Price action was orderly, and the pullback does not signal a breakdown from the medium-term recovery structure that has been in place since the January lows. The near-term direction will likely be determined by whether fresh policy signals from Beijing can sustain the trade stabilisation narrative established at the summit.

📊 Weekly charts:

• SSE weekly chart
• HSI weekly chart

 

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🇸🇬 Singapore

Market Overview

The Straits Times Index (STI) was the standout performer among the week's tracked markets, gaining +1.37% to close at 4,989.08 — within striking distance of the psychologically significant 5,000 level. The advance was broad-based, led by banking stocks and index heavyweights Singtel and Jardine Matheson, while S-REITs and property counters lagged on rate sensitivity. (Refer to the major indices' weekly performance tables above.)

Index Weekly Performance

- Straits Times Index (STI):  +1.37%

 

Key Highlights and Outlook

1️⃣ Banking Sector Drives the STI Higher

All three local banks advanced for the week, with OCBC (O39) leading at +4.61%, followed by DBS (D05) at +2.59% and UOB (U11) at +2.02%. The sector's outperformance reflected a combination of resilient net interest income expectations, continued dividend appeal, and the higher-for-longer rate environment working in banks' favour. Collectively, the three banks were the primary driver of the STI's weekly advance.

2️⃣ Singtel and Jardine Matheson Add Meaningful Index Support

Singtel (Z74) rose +2.77% and Jardine Matheson (J36) gained +2.72% during the week, both contributing meaningfully to the index's advance. Singtel's gain extended its steady recovery, supported by continued confidence in its regional operating model, while Jardine's uptick reflected broader investor comfort with its diversified Asian footprint amid the current macro environment.

3️⃣ S-REITs and Property Names Under Pressure

Rate-sensitive real estate counters remained under pressure as U.S. Treasury yields climbed to 14-month highs, with Frasers L&C Trust (BUOU) declining -5.53%, City Dev. (C09) falling -4.84%, CapCom Trust (C38U) losing -2.16%, and CapAscendas REIT (A17U) slipping -0.81%. The continued divergence between banking names and real estate names reflects the STI's internal bifurcation along rate-sensitivity lines. (Refer to the STI weekly performance table below.)

4️⃣ STI Approaches 5,000 Milestone; YTD Performance Holds at +7.38%

The STI's close at 4,989.08 puts the index within 11 points of the 5,000 level — a psychologically significant milestone — and YTD gains of +7.38% position Singapore as one of the stronger-performing markets in the region. The sustainability of the 5,000 test will likely depend on the global rate trajectory and continued outperformance from the banking sector, which has been the primary engine of index gains year-to-date.

 

Technical Snapshot

The STI closed at 4,989.08, establishing a new weekly closing high and bringing the 5,000 level into immediate technical focus for the coming week. Near-term momentum is positive, supported by the banking sector's strong contribution, healthy trading volume, and the index's sustained position above its key moving average levels. A clean weekly close above 5,000 would represent a meaningful technical milestone, with near-term support likely found in the 4,900–4,920 range on any pullback.

(Refer to the STI weekly performance table below.)

📊 Weekly charts:

• STI weekly chart

 

📅 Week Ahead (18–22 May 2026)

U.S. macro focus shifts to housing data and the minutes from the Fed's most recent FOMC meeting, which will be closely parsed for any shift in the rate-hold consensus following the week's sharper-than-expected inflation readings. Fed speakers scheduled for the week will also be monitored for any language signalling a shift toward renewed tightening bias, with equity and bond markets sensitive to any departure from the current hold stance.

In China, markets will watch for concrete follow-through from the Trump-Xi summit, including any formal announcements on agricultural purchases or rare-earth and semiconductor negotiation mechanisms. April industrial output and retail sales data are also due, providing further read-through on whether domestic demand momentum is sustaining against the backdrop of persistent external headwinds and a more cautious global trade environment.

Singapore's macro calendar is light, with attention centred on the STI's test of the 5,000 level and the continuation of regional earnings reporting. Regional central bank policy meetings in Southeast Asia will be monitored for any divergence from the Fed's hold posture, particularly given the firming inflation backdrop — with any hawkish surprise carrying implications for S-REIT valuations and rate-sensitive SGX-listed names.

 

🗓️ Overarching Watchpoint

The single biggest binary risk of the coming week is whether U.S. Federal Reserve officials signal a meaningful shift toward rate hike consideration in response to April's sharply higher CPI and PPI readings. Any language departing from the current hold consensus — in FOMC minutes or public Fed commentary — could trigger a material re-pricing across equities, bonds, and rate-sensitive sectors globally, with particular implications for S-REITs, HSI internet names, and the Nasdaq Composite.

 

Source: Some content and data are excerpted from publicly available market reports.