Investment environment overview 05/2026

May ended with a nine-week winning streak for the S&P 500, its longest weekly streak since December 2023, with the index gaining 5.2% for the month, while the Nasdaq surged 8.4% as equities pushed to fresh highs despite a backdrop that continued to remain anything but calm. In Europe, the STOXX 600 gained 2.4% and recovered to its highest level since the start of March, lifted by a solid end to the Q1 earnings season and a revived defence rally after Ukraine ratified the EU’s EUR 90b loan agreement –  sending Saab 7.4% higher on the day alone, with Rheinmetall and Renk close behind. The dominant structural theme, however, was not monthly returns but what lies immediately ahead: a listing supercycle.

SpaceX filed its S-1 with the SEC on 20 May, confirming a Nasdaq debut under ticker SPCX targeting roughly USD 75b at a USD 1.75t valuation – a raise more than 2 times larger than Saudi Aramco’s 2019 record. Nvidia reinforced the mood on the same day, reporting Q1 revenue of USD 81.6b, up 85% YoY, with data centers alone contributing USD 75.2b and CEO Jensen Huang declaring simply: “Agentic AI has arrived”.

After a brief surge to around USD 80,000 in mid-May, Bitcoin closed the month at USD 73,000 with a -4.2% decline – while in early June, Bitcoin crashed significantly over 72 hours, bringing the total correction from May’s high to more than -18%.

Rewiring the Nasdaq

The SpaceX listing does not arrive in isolation. From May 1, Nasdaq rewrote its index methodology in ways the market has only begun to absorb. A new “Fast Entry” rule allows top-ranked listings to join the Nasdaq-100 after just 15 trading days, replacing the old 3-12 month seasoning window, while the 10% minimum free-float requirement was simultaneously scrapped. Applied to SpaceX’s scale, the consequences are concrete: JPMorgan estimates that floating half the company at a USD 1.75t valuation could force passive funds to sell roughly USD 95b of the eight largest incumbent Nasdaq-100 names to rebalance.

With OpenAI and Anthropic queued right behind SpaceX, the stakes are rising fast. In fact, Anthropic just raised USD 65b in May at a massive USD 965b valuation, overtaking OpenAI’s last private valuation for the first time. For active fund managers, this new index setup is a golden opportunity to buy great stocks at a discount. But for everyday investors holding passive index funds that track large-cap US tech, it means a real drop in the value of their current shares – and that risk is now uncomfortably close.

A new Fed chair and a bond market with views of its own

Kevin Warsh was sworn in as the 11th modern Fed chair on 22 May, succeeding Jerome Powell after a 54-45 Senate vote, the most divisive confirmation in Fed history. As we have already mentioned before, Warsh is widely regarded as a balance sheet hawk, yet has recently argued for looking through tariff and geopolitics driven inflation spikes and leaning toward lower policy rates, a position BofA has cautioned may face resistance from a committee watching inflation re-accelerate.

In our last monthly overview, we mentioned that the bond market is already looking further out. US 30-year yields touched 5.2% on 19 May – levels not seen since 2007. With the average G7 10-year yield having climbed from approximately 3.2% in February to nearly 4% today, and 62% of US fund managers expecting 30-year yields to reach 6% by end-2026 or 2027, the bond market is quietly sending a message that equity markets, so far, have chosen to ignore.

A managed détente

President Trump’s state visit to Beijing on 14-15 May delivered a notable, if carefully calibrated, easing in US-China tensions. In meetings with Xi Jinping at the Great Hall of the People and later at Zhongnanhai, the two leaders agreed to pursue a “constructive relationship of strategic stability”. China committed to USD 17b in annual US agricultural purchases and confirmed an order for 200 Boeing aircraft, giving tangible support to American exporters. The two sides also agreed to establish a new Board of Trade to keep tariff and market access disputes contained, while Trump, accompanied by a high-profile delegation of US CEOs including Jensen Huang, Tim Cook and Elon Musk, used the summit to press for better access for American firms. Additional steps included US approval for select Chinese companies, such as Alibaba, Tencent, and ByteDance, to acquire NVIDIA H200 chips, offering some easing in technology export controls. Differences over Taiwan, however, remained firmly in place, with both sides reiterating their longstanding positions.

Volatility lingers across commodities

Commodity markets remain volatile, but both precious metals and energy continue to require careful tactical positioning. Precious metals have entered a corrective phase following their recent rally, and we expect price uncertainty to persist over the longer term. As a result, we advise patience on long-term strategic entries, while keeping room to build modest medium-term positions to capture short-term moves back toward January peaks. In energy, unresolved Middle East tensions present a significant upside risk; while crude oil consolidates, a failure to restore Gulf exports creates a meaningful probability of testing the USD 120-140 range. For the USD, the key level remains 101 on the dollar index: as long as it stays below this level, we maintain our cautious bearish stance, though a break below 1.1450 in EUR/USD would signal a renewed bullish trend for the greenback.