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.
π Weekly charts:
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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.
π Weekly charts:
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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.)
π
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.
π️ 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.
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