INSIGHT WEEKLY: May 24, 2026
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🌐 Markets Overview
🌐 Markets Overview: Optimism about peace talks lifts markets
The catalyst was familiar - progress signals on US-Iran negotiations eased energy anxiety and gave investors confidence to take risk.
Europe rallied though a Commission forecast cut 2026 growth to 0.9% and raised inflation to 3.0%. Markets looked through it, correctly treating it as a belated acknowledgment of what energy prices had already done rather than new bad news.
Japan got a double boost: the same AI earnings wave lifting semiconductors globally, plus an inflation print soft enough to push back any urgency at the Bank of Japan.
In the US, the mood underneath the surface was less comfortable. Consumer sentiment hit a record low for the third month running, with households pointing directly at the cost of living. Manufacturing is humming - the flash PMI reached a four-year high - but services are softening and inflation components are accelerating. The Fed, per its April minutes, is not close to cutting. The 10-year Treasury briefly spiked to 4.69% mid-week before retreating on Trump's "final stages" Iran comment - a reminder that a single presidential sentence is currently doing more to move bond markets than any data release.
China was the week's outlier on the downside, with fresh April data showing the post-Q1 recovery losing momentum faster than expected.
Gold's retreat was the more surprising move - geopolitical risk hasn't gone away, but safe-haven demand eased anyway.
Oil pulled back on the peace-talk optimism.
🤖AI Stocks
Consider what happened this week: Nvidia reported the most profitable quarter in semiconductor history - $81.6 billion in revenue, up 85% year-over-year, guiding for $91 billion next quarter - and the stock went down. Nvidia has been a wonder stock over the years - the results were very good but it wasn’t enough!
The money went somewhere more specific.
ARM gained nearly half its market value in a single week - not on a product launch, but on analyst re-ratings crystallising a thesis the market had been building toward: that ARM's instruction set is becoming the common language of AI infrastructure. The GPU layer still belongs to Nvidia - but the CPUs coordinating those GPUs are being custom-designed by Google, Amazon, and Microsoft, and every one of them is built on ARM. When your biggest customers are all designing their own chips and they're all using your architecture, your royalty stream compounds with every data centre that gets built. AMD, Qualcomm, Intel, and ASML all moved on the same conviction - that the physical buildout of AI compute has years to run.
Dell’s surge ahead of next week's earnings captured the same logic from a different angle. A $43 billion AI server backlog doesn't need much interpretation. Dell, Super Micro, and Constellation Energy all sit close to where the capital is being deployed. Vertiv, up over 100% year-to-date, pulled back - a reminder that even the right theme can get ahead of itself.
The hyperscalers had a strange week. Alphabet hosted Google I/O, unveiled new Gemini models, and still fell. When you're already up strongly year-to-date and announce what was expected, there's nowhere for the stock to go. The companies spending the most on AI infrastructure are, for now, valued less generously than the companies building it.
Snowflake's gain was pre-earnings positioning.
Macro Watch: This Week’s Economic Developments
🇺🇸 United States
The economy is sending two messages at once. Factory activity jumped to a four-year high on the flash manufacturing PMI, but services softened and consumer sentiment fell to a record low of 44.8 for the third consecutive month. Year-ahead inflation expectations hit 4.8%, well above pre-conflict levels. The people making things feel better; the people buying them feel worse.
That puts the Fed in an uncomfortable position. April meeting minutes showed a majority prepared to tighten further if inflation stays above 2% - and the PMI's price components suggest it might. The 10-year yield hit 4.69% mid-week before retreating when Trump described Iran talks as reaching their "final stages." The bond market is being moved more by geopolitical headlines than economic data.
🇪🇺 Eurozone
Europe's problem is that it has very little control over the thing hurting it most. The Commission's Spring forecast cut 2026 growth to 0.9% and revised inflation up to 3.0% - both moves driven almost entirely by the Middle East energy shock. The prior inflation estimate was 1.9%. That gap in a single forecast round is the cost of being a large net energy importer when the Strait of Hormuz is contested. Exports to the US fell sharply on the April 2025 tariffs, Germany's producer prices hit their highest since May 2023, and the ECB now faces an economy that is simultaneously slowing and re-inflating.
🇬🇧 United Kingdom
The UK got some rare good news on inflation. April CPI came in at 2.8%, well below March's 3.3%, helped by the energy price cap. For a Bank of England threading the needle between persistent inflation and a weakening economy, the softer print provides some cover - though the Bank has already signalled a re-acceleration to 3.0-3.5% in Q2 and Q3.
The labour market tells the harder story. Unemployment rose to 5.0% with job openings at their lowest in five years. Inflation cooling and employment softening together is not healthy rebalancing - it looks more like demand quietly draining away.
🇯🇵 Japan
Q1 GDP beat at 2.1% annualised, but analysts noted the figures predate the full impact of elevated energy costs - meaning the headline may be flattering what comes next. The more immediate market mover was Friday's CPI: core inflation below the BoJ's 2% target for a third consecutive month, reducing tightening urgency and sending the yen to around 159. June remains live per board member Koeda, but the data is not pushing in that direction. JGB yields near three-decade highs suggest bond investors are focused on Japan's fiscal trajectory more than near-term BoJ moves.
🇨🇳 China
The first-quarter optimism is fading fast. Industrial output, retail sales, and fixed asset investment all disappointed in April, with retail sales posting their worst reading since late 2022. The PBOC held rates for the 12th consecutive month - reinforcing that broad stimulus is not coming, and leaving unanswered the question of what the policy response actually is.
Putin's visit to Beijing on May 19-20 - signing 40-plus agreements on trade, energy, and technology, shortly after Xi hosted Trump - captures China's position precisely. Two foreign policy tracks running simultaneously: deepening ties with Moscow, preventing a rupture with Washington. How long that balance holds is one of the more consequential open questions in global markets.
🌐 Artificial Intelligence and Tech
The two biggest IPOs in history landed in the same week.
SpaceX filed its public S-1 on May 20, targeting a valuation of $1.75 to $2 trillion and a raise of up to $75 billion. The filing revealed $18.67 billion in 2025 revenue - but also a $4.94 billion net loss, the xAI merger turning a previously profitable launch business into a loss-maker by design.
The following day, OpenAI filed its own S-1, targeting a Q4 listing at up to $1 trillion, with Goldman Sachs and Morgan Stanley leading. OpenAI generates $2 billion a month in revenue and loses $1.22 for every dollar it earns.
Two companies defined by ambition and burn rates, both asking public markets to price a future that hasn't arrived yet.
Google rewrote the rules of search after 25 years. At I/O 2026, Google replaced the familiar search box with an AI-powered interface built on Gemini 3.5 Flash that accepts text, images, files, and video. The list of blue links is giving way to "information agents" - persistent background processes that monitor the web around the clock and surface findings without being asked. AI Mode has already surpassed one billion monthly users. The question Google didn't answer is what happens to the web's publishing economics when nobody clicks the links anymore.
Nvidia opened a second front. On the same earnings call where it reported $81.6 billion in quarterly revenue and guided for $91 billion next quarter, Jensen Huang announced Nvidia's Vera CPU has already generated $20 billion in standalone revenue this year - a brand new $200 billion market. The logic: GPUs do the thinking, but AI agents run on CPUs. Vera is designed to process tokens rather than run multiple application instances - a fundamentally different design philosophy from Intel and AMD. The stock still fell. The numbers were that good.
Alibaba is building the chip stack for an agent-driven world. Alibaba's chip division T-Head's Zhenwu M890 is purpose-built for agentic workloads - systems that must retain long context, coordinate with other models, and execute complex multi-step tasks. Three times the performance of its predecessor, with a roadmap through 2028. T-Head has shipped more than 560,000 units across 400 customers. The M890 doesn't need to match Nvidia's best - it needs to be good enough for a Chinese enterprise market that can no longer access it.
Crypto highlights
Every major crypto finished lower, with no asset-specific catalyst driving the moves - this was purely risk sentiment and rising Treasury yields pulling the rug. Bitcoin tracked tech weakness. Ethereum extended its multi-month underperformance against Bitcoin, which at this point is less a weekly observation than a structural question about whether the Ethereum narrative has genuinely lost its cycle momentum.
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