Last week : ATH for SP500 ; Space X IPO set for 12 June ; Nvidia amazing Q1 earnings released ; INR & TRY at record lows
WEEKLY TRENDS
New All Time High (ATH) for the S&P, but it’s the SMEs index, Russell that outperformed last week (+2.5%) together with the Euro zone (+3.5%) with ST Micro (+10%) Arcelor Mittal (+9%) Publicis (+8%) ; the Nikkei too had a strong performance with +3%. Nvidia showed a massive +85% earnings progression YoY, EPS up 140% YoY and an amazing 75% gross margin with an $80bn buyback programme too. However investors took profits for now as such a performance is unlikely to sustain.
Another piece of news last week, was certainly, the SpaceX 12th June IPO registration last Wednesday (the largest IPO ever valued at $1.75trn or 2.5 times Aramco’s) has made the whole sector fly (OHB at +28% last week). Anthropic and OpenAI are also eyeing IPOs this year (the previous estimated at $900bn, the latter looking to IPO in Sep).
Less steepening of the US curve (-8bps) with higher front end (+5bps) and lower long end (-3bps). The CME Fedwatch tool now shows the FED is expected to raise by 25bps before the year-end. Note Monday is a US-UK bank holiday, and we shall have the releases of Q1 earnings from Dell and the April US PCE inflation data.
MARKETS
Equities
Q4 earnings weekly performances :
Nvidia (-6%) Analog Devices (-7%) Walmart (-8%) Home Depot (+5%)
M&A : Dominion Energy (+10%) $67bn merged with NextEra Energy
Macro Data releases : USQ1 GDP 2nd estimate ; April PCE (28 May)
WHAT ANALYSTS SAY
Cité Gestion, 22 May 2026
Authors : John Plassard, Head of Investment Strategy
The yield on the 10-year US Treasury note is now hovering ‘close’ to the symbolic 5% mark, a threshold that has become psychologically very significant for Wall Street. US bonds once again become a genuine alternative to equities. Institutional investors can then achieve a high return on an asset considered relatively safe, which may trigger arbitrage at the expense of equity markets.
Goldman Sachs even refers to a “danger zone”, as high long-term rates automatically weigh on valuations, particularly in a market currently heavily concentrated around tech giants and artificial intelligence. Beware: a 5% yield does not automatically trigger a stock market crisis. What really matters is the speed of the rate rise, its cause, and companies’ ability to maintain their profits in a more costly environment.
In theory, rising yields affect equities through three channels: valuation, asset allocation and the cost of capital. When the risk-free rate rises, future cash flows are worth less today, which particularly penalises growth stocks. Investors may also reduce their exposure to equities if they can earn close to 5% on Treasuries. Finally, companies must refinance their debt at higher costs, which weighs on share buybacks, investment and highly indebted firms.
But theory has its limits: the precedent of 2023 remains particularly interesting. At the time, the US 10-year yield had already briefly exceeded 5% for the first time in 16 years. Markets initially corrected before quickly rebounding, as investors believed that the peak in rates was near and that the US economy would avoid recession. Today, the situation is different: the rise in yields is taking place against a backdrop of geopolitical reflation, with high oil prices, energy tensions and a Fed potentially forced to become more restrictive once again.
The real problem is that current valuations have been built up over more than a decade of extremely low interest rates. In other words, the danger stems less from the absolute level of rates than from the mismatch between current valuations and the new cost of capital. As for technology, the idea that rising rates would automatically destroy tech stocks is far too simplistic.
Nvidia, Microsoft, Amazon, Alphabet and Meta do not rely solely on distant promises: these companies are already generating massive cash flows. The risk, therefore, is not the automatic demise of tech, but valuations becoming too stretched if yields continue to rise and earnings cease to surprise on the upside.
The real economy, on the other hand, cannot sustain high interest rates indefinitely. US mortgage rates remain close to 7%, which is weighing on access to housing, construction and household confidence. Car loans, student loans and small business financing are also becoming more expensive. Companies must refinance their debt on less favourable terms, which particularly penalises the most indebted firms.
This does not necessarily trigger an immediate recession, but gradually erodes purchasing power, margins and investment.
Markets are no longer just wondering when the Fed will cut rates, but whether it might ultimately be forced to raise them again. As long as oil prices remain high and the Strait of Hormuz remains disrupted, the US central bank will find it very difficult to adopt a clearly accommodative stance. The message for investors is therefore relatively clear : there is probably no need to panic, but neither should this bond market movement be taken lightly. We are no longer in the world of 2010–2021, where extremely low rates justified almost all valuations.
In this new environment, balance sheet quality, earnings visibility, pricing power and cash flow generation are once again becoming essential. A 5% US 10-year yield does not automatically kill Wall Street, but it profoundly changes the rules of the game for the entire financial markets.
BNP Paribas Asset Management, 20 May 2026
Author : Daniel Morris, Chief Market Strategist
Since Brent crude hit a low of $99 per barrel on 17 April (the price before the war began was $71), prices have risen to $124 before falling back to $106 on 14 May. During this period, the S&P 500 index rose by 5.3%, whilst the MSCI World ex-USA fell by 0.6% (in local currency).
However, with the earnings season now behind us, good news to offset the less encouraging reports from the Middle East may become scarcer. US economic data could provide some support in this regard. US non-farm payroll figures again reflected relatively strong job creation in April. The healthcare sector once again accounted for the lion’s share of job creation, but this has been the case for several decades given the ageing of the US population.
The declines recorded in the financial and information sectors have been interpreted by some as a sign of job losses caused by artificial intelligence. Given the redundancies carried out by companies, which have been widely reported in the press, it is indeed likely that AI is having some impact, but this is probably not significant at this stage. Employment in professional services continued to rise, whilst the declines in financial services were concentrated in the insurance sector (which is growing slowly) and the fall observed in the information sector is mainly attributable to the film industry. With adult unemployment stable at below 4% and wage growth improving, the US labour market appears robust for the time being, suggesting stable consumer demand despite high petrol prices, as evidenced by the 0.5% rise in retail sales in April.
Europe, meanwhile, faces a threat if the Strait of Hormuz remains closed and if falling oil stocks trigger a further surge in prices. The latest economic statistics are less encouraging than those from the United States. Purchasing Managers’ Index (PMI) figures for the services sector fell in most major European countries in April, shifting from expansion to contraction or sinking further into contractionary territory. PMIs for the US services sector remained stable or improved, reflecting expansion.
This divergent economic backdrop has been reflected in the performance of European equities this year relative to their US counterparts, as measured by the Russell Value Index, which has a similar sectoral composition.
Before the war began, both regions were up 7% at the end of February. Since then, European equities have fallen by 3%, whilst US value stocks have gained 4%.
China (like Asia more broadly) is also more exposed to the crisis than other regions. Credit growth has slowed in the country and PMI indices show only modest expansion. Exports have served as a lifeline, but this is unlikely to be sustainable. Countries flooded with cheap Chinese imports are increasingly concerned about their own industrial base and may well tighten trade restrictions in the future.
The war in Iran has undoubtedly only exacerbated the problems of an already weak economy. Chinese equities (excluding technology) have underperformed emerging markets as a whole since the start of the year.
The gap is even more pronounced in the technology sector. Whilst technology shares have risen by 58% and 157% in Taiwan and South Korea respectively since 1 January, they have fallen by 12% in China.
Investors in Chinese equities are hoping that the recent summit between Beijing and Washington will lead to a marked improvement in relations between the two superpowers.
Invesco, 19 May 2026
Authors : Yvan Pittet, Senior RM
Since the outbreak of the conflict in the Middle East in late February 2026, energy has been one of the few asset classes to have recorded gains, both in terms of directly exposed commodities and shares linked to this sector. The two main global benchmarks for crude oil prices, Brent and WTI, have broken through the US$100 per barrel mark. The biggest rise, however, has been in European natural gas. The broader commodities market has been more mixed, with cyclical metals such as copper and nickel falling slightly.
In the equity markets, the sectors that benefited most from rising energy prices posted the strongest performances. Traditional energy sector ETFs and MLPs (US-listed investment vehicles that own and operate energy infrastructure such as oil pipelines, transport and storage networks, and which charge fees for the transport of oil and gas) all posted positive returns, whilst the MSCI World Index fell by around 3.2% over the same period.
Solar energy also slightly outperformed the market as a whole, demonstrating that the long-term drive towards energy security remains relevant, even during times of severe crisis.
Investor behaviour in ETFs directly reflected these dynamics. Energy sector ETFs recorded net inflows of around US$700m, representing 7% of assets under management in this segment. More specialised segments also benefited: ETFs tracking energy transportation companies (MLPs) recorded inflows representing 2.6% of assets under management, whilst solar energy ETFs attracted inflows representing 2.2%.
These fluctuations can be attributed to Europe and Asia’s heavy reliance on energy imports from the Middle East. Although Europe has reduced this reliance since 2022, it remains vulnerable to supply disruptions. Every day the Strait of Hormuz remains closed increases the risk of a prolonged disruption. Rising energy prices are expected to drive up inflation, but markets do not yet anticipate a widespread energy shortage that would severely disrupt the economy in the medium term.
Looking ahead, should tensions ease and oil and gas flows resume, even at a reduced rate, the risk premium that investors demand for holding oil, given the uncertainty, could narrow rapidly. Attention could then shift back to the structural themes that dominated before the conflict, namely the economic implications of artificial intelligence and the pressure it exerts on US equity valuations. In this scenario, markets outside the US would likely rebound strongly, turning the current turbulence into a potentially attractive entry opportunity.
In the longer term, the issue of energy security has become a priority. The conflict has indeed served as a reminder of just how vulnerable Europe and Asia remain to geopolitical disruptions in the Middle East. This is likely to accelerate investment in domestic energy sources and infrastructure.
Renewable energies, particularly solar energy, are gaining strategic importance, as they offer a path to energy independence that is not subject to the same geopolitical risks as fossil fuel imports.
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