Macro Snapshot – June 2026
- Sheridan Admans
- Jun 3
- 6 min read
May 2026 Market Trends: Global Equities Rise as AI Momentum Offsets Macro Risk
May was a month of market resilience rather than macro comfort. The US-Iran conflict remained an important source of uncertainty, particularly for oil prices and inflation expectations, while central banks continued to face a difficult policy backdrop. Yet equity markets advanced, helped by the combination of AI-related optimism, resilient earnings and improving hopes that the immediate energy shock could fade.
If there was one clear message from the month, it was not that markets ignored risk, but that investors were prepared to look through the immediate geopolitical uncertainty while earnings resilience, policy expectations and the AI investment cycle remained supportive.
Around the world in May
In the US, equity markets were again at the centre of the rally. Technology stocks continued to lead, with the AI theme still providing the clearest explanation for investor confidence. The S&P 500 and Nasdaq both moved higher during the month, helped by ongoing enthusiasm around the long-term earnings potential of artificial intelligence infrastructure.
The UK also delivered a positive month, though in more measured fashion. UK equities rose, but the market’s lower exposure to large-cap technology meant it did not benefit from the AI theme to the same extent as the US or parts of Asia. Domestic political turbulence also added to the uncertainty, following poor local-election results for the major parties and a more fragmented political landscape.
Europe participated in the wider equity rally, with European benchmarks rising over the month. The policy backdrop remained more complicated, with the European Central Bank still weighing inflation risks and markets considering the possibility of a June rate rise.
Performance across Asia and emerging markets remained robust throughout the month. Much like the US, these regions benefited from the prevailing AI narrative, as the semiconductor spending cycle provided a significant tailwind for Taiwanese and South Korean hardware manufacturers. Japanese equities also advanced, even as the domestic policy environment grew more complex with rising government bond yields and ongoing anticipation of further central bank intervention.
Monthly and long-term performance snapshot
The May performance chart below shows a clear split between equities, commodities and fixed income. Equities were broadly positive, with US equity and global equity both up 7.0% in sterling terms, European equity up 5.7%, emerging markets equity up 3.2%, China equity up 2.6% and UK equity up 2.8%.
Copper was the strongest one-month performer, rising 9.1%, while Brent crude oil fell sharply by 10.8%. Gold also fell over the month, down 1.1%, despite the geopolitical backdrop. Bonds were more subdued, with global government bonds up 0.2%, US Treasuries up 0.4% and all-stocks gilts down 0.4%.
The longer-term picture remains striking. Over one year, silver, oil, China equity, gold, copper, global equity, emerging markets equity and US equity have all delivered strong positive returns, while global government bonds and all-stocks gilts remain slightly negative.
The charts below provides a snapshot of unhedged index fund investment returns across a range of asset classes and regional exposures, measured in sterling terms.
Equities rallied despite the macro noise
May was another reminder that markets do not always move in line with the news cycle. The geopolitical backdrop was fragile, central banks remained cautious and the UK political picture became more unsettled. Yet equity markets continued to move higher.
The rally was driven by a combination of corporate earnings, AI-related enthusiasm and investor momentum.
The AI theme was especially powerful. US technology companies remained at the forefront of the rally, while the semiconductor supply chain helped lift parts of Asia and emerging markets. Investors continued to look beyond short-term uncertainty and focus on the longer-term earnings potential of artificial intelligence infrastructure.
That does not mean the risks have disappeared. It does suggest that, for now, markets are more focused on earnings, capital spending and the AI growth story than on the immediate geopolitical headlines.
The question is how long fundamentals can continue to support that level of optimism.
Commodities signalled easing inflation pressure, not a clean risk reset
Commodity markets helped explain the improvement in risk appetite, but the signal was not uniformly bullish.
The clearest move was in oil. Brent crude fell sharply, from around $110 a barrel at the start of May to near $92 by month-end, as markets placed greater weight on the prospect of an extended US-Iran ceasefire and a reopening of the Strait of Hormuz.
This shift was significant because oil acted as the primary conduit through which geopolitical instability impacted bond yields, inflation forecasts, and the cautious stance of central banks. Consequently, the decline in oil prices mitigated one of the most pressing strains on the financial markets.
Gold also moved lower, which reinforced the sense that investors were demanding less protection from geopolitical risk. A stronger dollar and higher-rate expectations also weighed on the metal, limiting its safe-haven support.
Copper told a different part of the story. Its strong gain was more cyclical, pointing to improved risk appetite, infrastructure demand and continued confidence in the capital-spending cycle linked to electrification, data centres and AI infrastructure.
Taken together, the commodity moves suggested a market less worried about an imminent inflation shock, less inclined to pay for protection, and still willing to reward growth-sensitive exposures.
That helped support equities in May, but it should not be read as an all-clear. The same commodity complex that eased market concerns during the month remains highly exposed to geopolitics, rates and the durability of global demand.
Bonds remained caught between inflation risk and growth concern
Bond markets remained unsettled in May, with the policy debate still framed by an uncomfortable trade-off: inflation risk has not gone away, but growth is not strong enough to give central banks a free hand.
In the US, markets remained focused on the risk that rates could stay higher for longer, particularly with inflation pressures still prominent. In the UK, the Bank of England appeared more concerned about weak growth, but not enough to dismiss the inflation risk created by energy prices and currency moves.
Europe and Japan added to the same theme. The European Central Bank was still weighing the case for further tightening, while Japanese government bond yields continued to rise as investors priced a less accommodative Bank of Japan.
The result was a difficult backdrop for duration. US Treasury yields moved higher, gilts remained volatile, and Japanese government bond yields continued to reset higher.
The role of fixed income within a diversified portfolio is undergoing a transition. The bond market is no longer tracking a single driver; instead, yields are responding to a complex interplay of energy costs, inflation expectations, currency movements, and central bank caution, alongside broader concerns regarding fiscal sustainability.
That makes fixed income more useful as a source of income and scenario balance than as a simple hedge against equity risk.
What stands out for investors
Equity resilience was the defining feature of May, with US, global, European, emerging market and UK equities all delivering positive sterling returns.
AI remains the dominant growth theme, supporting US technology stocks and parts of Asia’s semiconductor supply chain.
Oil fell sharply, easing one immediate inflation pressure point, but energy remains highly sensitive to geopolitical developments.
Bonds remain fragile, especially where yields are responding to persistent inflation pressure and central-bank caution.
The UK market rose, but more modestly than the US and parts of Asia, reflecting lower exposure to the AI theme and added domestic political uncertainty.
One-year returns remain highly uneven, with commodities and equities leading while gilts and global government bonds remain slightly negative.
In summary
May reinforced a familiar market tension: the macro backdrop remained unsettled, but risk appetite stayed firm. Geopolitical uncertainty, cautious central banks and volatile bond markets did not prevent equities from extending gains.
The message was not that risk had disappeared. Rather, investors placed greater weight on earnings resilience, policy expectations and the AI investment cycle than on the immediate news flow.
AI continues to dominate market leadership and capital allocation decisions, helping support equities across more than one region. The risk is not the theme itself, but the possibility that confidence begins to outrun the fundamentals supporting it.
For investors, the key issue is less whether markets can rise further and more whether current pricing still reflects a balanced assessment of risk, growth and policy expectations.
Disclaimer: This commentary is for informational purposes only and reflects general market observations. It does not constitute investment advice, a recommendation, or an invitation to engage in any investment activity. Everyone’s situation is different, so if you are unsure about a decision, it’s important to seek guidance from a qualified financial professional.
The views, forecasts and figures included reflect analysis at the time of writing, unless otherwise stated. Sources used are believed to be reliable, but markets and circumstances can change quickly, which means our views may also evolve over time.
