Economic & Market Overview — May 2026

May Overview

Global equity markets delivered another strong month in May, extending the recovery that began in April and rewarding investors who remained invested through a period of heightened geopolitical uncertainty. The MSCI World Index rose 4.6%, lifting year-to-date gains to 10.7%. Performance was underpinned by strong corporate earnings, sustained investment in artificial intelligence infrastructure, and improving sentiment around geopolitical developments in the Middle East. Risk assets performed strongly as markets continued to prioritise earnings momentum and structural growth themes over short-term macro concerns.

In the United States, equities reached fresh record highs as corporate profitability once again exceeded expectations. The S&P 500 gained 5.1%, the Nasdaq advanced 8.4%, and the Dow Jones Industrial Average rose 2.8%. Earnings season provided a key tailwind, with approximately 83% of S&P 500 constituents beating analyst forecasts. Technology stocks remained the dominant driver of returns, supported by accelerating artificial intelligence investment and continued capital expenditure from major cloud providers. NVIDIA was again central to sentiment, reinforcing confidence in the durability of the AI investment cycle. Macroeconomic data in the US remained mixed. Inflation edged higher, with both headline and core measures still above the Federal Reserve’s long-term target, with core personal consumption expenditure (PCE) rising to 3.5% year-on-year. Despite this, markets appeared comfortable with the prospect of rates remaining higher for longer, provided growth and earnings remain resilient.

European markets posted positive but more subdued returns relative to the US and Japan. The Euro Stoxx 50 gained 2.9%, Germany’s DAX rose 3.3%, and France’s CAC increased 0.8%. Inflationary pressures resurfaced across the region, with Eurozone inflation rising to 3.5% year-on-year, driven in part by elevated energy costs. Europe therefore remains particularly sensitive to oil price volatility given its reliance on energy imports. The UK delivered a modest gain, with inflation surprising slightly to the downside at 3.0% year-on-year, benefiting from lower domestic energy costs, though the outlook remains uncertain.

Emerging markets delivered a mixed performance. Chinese equities gave up early gains as profit-taking in technology and semiconductor stocks weighed on sentiment, with the Shanghai Composite declining 1.1% and the Hang Seng falling 2.3%. In contrast, Japan was a standout performer, with the Nikkei surging 11.9% to new record highs, supported by global AI enthusiasm and a broader re-rating of corporate governance and profitability.

Commodity markets were volatile. Brent crude fluctuated throughout the month but ended lower as easing geopolitical tensions between the US and Iran weighed on prices, although levels remain elevated year-to-date. Precious metals weakened, with gold down 1.7% as investors rotated toward risk assets, while platinum group metals also came under pressure despite supportive supply dynamics.

South African equities underperformed global markets, with the FTSE/JSE All Share Index down 0.3% as weakness in resource counters offset gains elsewhere. Mining stocks were pressured by lower precious metal prices, while financials posted modest gains and property remained broadly stable. Limited exposure to global technology leaders meant the local market did not fully participate in the AI-driven equity rally. The rand strengthened 2.7% against the US dollar, supported by softer US data and domestic monetary policy developments. Locally, inflation rose to 4.0% year-on-year in April, with core inflation also increasing, reflecting emerging price pressures. In response, the South African Reserve Bank raised the repo rate by 25 basis points to 7.0%, citing heightened inflation risks and potential second-round effects.

Overall, May underscored the resilience of global equity markets in the face of persistent inflation, elevated geopolitical uncertainty, and tighter monetary conditions. Strong corporate earnings and structural growth themes — particularly artificial intelligence — remained the dominant drivers of performance, with investors continuing to focus on fundamentals and long-term growth opportunities.

Market Performance

Market indices as at 31 May 2026. All returns in Rands except where otherwise indicated.

A + indicates a stronger rand. Source: Morningstar Direct.