The Week in Markets
Brent crude whipsawed from above $110 to below $100 this week before rebounding above $100 as fresh clashes near the Strait of Hormuz exposed how fragile the ceasefire remains. William Blair described Hormuz as “Schrödinger’s Strait” — neither open nor closed — noting vessel traffic has fallen from roughly 100–130 ships a day to just 0–10, leaving the world short as much as 4.6mn barrels per day even after substitutions. AllianceBernstein argued the bigger shock extends well beyond crude: Qatar’s Ras Laffan LNG complex has lost capacity equal to 3–4% of global LNG supply, while jet fuel — now the tightest part of the barrel — has already triggered 20,000 Lufthansa cancellations.
UK 30-year gilt yields surged to 5.79% this week — their highest since 1998 — as higher oil prices and political uncertainty forced investors to reprice Britain’s inflation and fiscal outlook. Before the Hormuz shock, markets expected Bank of England cuts; they are now discounting roughly 85bp of tightening by year-end, with around 50bp priced by September, according to Invesco, noted that front-end UK rates have closely tracked crude and remains underweight sterling. Franklin Templeton, however, argued markets may be overpricing the BoE’s response, warning that slowing growth, weaker household incomes and rising demand destruction could ultimately matter more than the near-term inflation spike. Friday’s relief rally in gilts may prove just that — relief, not resolution.
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Wall Street’s rebound has become one of the narrowest on record, with UBS’s measure of meaningful S&P 500 contributors falling to just 42 stocks, versus roughly 100 historically, while five tech names account for more than half of recent gains - as reported by Financial Times. Yet earnings remain powerful enough to keep markets climbing. Aviva Investors wrote the AI theme continues to underpin equities “largely independently of the shifting geopolitical backdrop,” with semiconductor stocks now up more than 60% year-to-date. J.P. Morgan Asset Management's latest equity outlook noted profit growth is increasingly concentrated, with AI enablers delivering 39% earnings growth, versus just 8% for “everything else.” Strong markets — but narrow leadership leaves little margin for disappointment.
Japan’s latest currency intervention has bought time — not a turning point. After USD/JPY pushed beyond 160, Tokyo is estimated to have spent roughly ¥5.5tn ($35bn) supporting the yen, helping drive a sharp rebound before momentum faded. Northern Trust said the yen now behaves more like “a risk asset” than a traditional haven, with policymakers focused on preventing a disorderly break beyond ¥160 rather than engineering lasting strength. Muzinich & Co observed the Bank of Japan’s policy outlook is becoming more difficult: it cut 2026 GDP forecasts to 0.5% from 1.0%, raised core CPI to 2.8%, and left rates unchanged as higher oil prices squeeze profits, households — and Japan’s energy import bill.
Asia’s equity rally is becoming the clearest sign yet that the AI boom is broadening beyond Silicon Valley. Samsung surged above a $1tn market value, helping lift the Kospi above 7,000 for the first time, while SoftBank jumped 18% and Japan’s Nikkei hit a record 62,833 as investors piled into regional chip and AI leaders. Ashmore said South Korea’s memory-chip cycle is delivering “an earnings tailwind no other major index can match,” with DRAM revenues forecast to rise 51% this year. Lombard Odier Investment Managers wrote Q1 marked “a clear inflection point for AI-related assets,” noting semiconductors now make up 48% of the tech sector as investors rotate toward tangible earnings growth — and toward markets like South Korea.
Growth rate of blended earnings per year for MSCI tech indices
Source: Lombard Odier IM
📅 Monday, May 11, 2026
📅 Tuesday, May 12, 2026
📅 Wednesday, May 13, 2026
📅 Thursday, May 14, 2026
Source: Bloomberg, All times GMT/UTC
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