Global Markets​

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In May 2026, global markets remained constructive as investors continued to price in geopolitical de-escalation. Sentiment was further supported by resilient corporate earnings, particularly in areas linked to artificial intelligence, allowing markets to refocus on growth themes after earlier concerns around energy supply and inflation.

 

Global equities posted positive returns in May, with the MSCI World index gaining around 4.5%, supported by continued strength in technology-related sectors. The US market led the rally, with the S&P 500 rising around 5.3%, driven by robust earnings growth and sustained enthusiasm for AI-related investment, although gains remained concentrated in a relatively small group of large-cap technology names, especially Nvidia. Emerging markets outperformed developed markets, gaining around 9.7%, led by Korea and Taiwan, both of which benefited from their exposure to the AI supply chain and semiconductor demand. Japan equities also advanced, helped by positive macroeconomic data and strength in AI and semiconductor-related names. European equities ended the month moderately higher, with the MSCI EMU rising around 4.1%, as stronger-than-expected earnings and hopes of Middle East de-escalation outweighed weak macroeconomic data.

 

Commodity markets weakened in May, with the S&P GSCI falling around 7.6%. Oil prices fell sharply, dropping below $100 per barrel as investors became more confident that disruption to global energy supply would be contained. However, the pace at which energy markets can return to more normal conditions will depend on how quickly operations in the Strait of Hormuz are fully restored. Energy was the weakest component of the index, while agriculture and precious metals also declined. Industrial metals advanced, supported by ongoing demand linked to electrification, renewable energy and data centre investment.

 

Global fixed income markets delivered modestly positive returns despite elevated volatility. The Bloomberg Global Aggregate index ended the month with a small gain of around 0.3%. Bond yields initially rose amid fears of escalation in the Middle East, but later retraced as hopes for a US-Iran agreement increased and stagflation concerns eased. US Treasuries lagged other major government bond markets as investors brought forward expectations of further rate increases against a still-robust economic backdrop. German bund yields ended lower despite inflation pressure in the eurozone. Credit markets were also supported by solid corporate fundamentals, with corporate bonds outperforming government bonds.

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As of 29 May 2026:

 

UK 10 Year Gilt Yield 4.821%

US 10 Year Treasury Yield 4.443%

Germany 10 Year Bund Yield 2.942%

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UK Market

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May was a modestly positive month for UK equities, although the market continued to underperform global peers due to its lower exposure to the AI-driven technology rally. The FTSE All-Share index rose around 1.2%, supported by gains in consumer discretionary and basic materials, while heavyweight energy and healthcare sectors declined. The UK market therefore benefited from improved global risk appetite, but its sector composition limited the extent of the upside compared with the US and Asian markets.

 

The domestic macroeconomic backdrop became more supportive for rates, even as growth momentum remained weak. UK annual inflation fell to 2.8%, helped by the long-planned cap on household energy bills, while labour market data softened, with job openings falling to their lowest level in five years. Together, these developments reduced expectations that the Bank of England would need to raise interest rates sharply.

 

Gilts were volatile during the month, partly reflecting uncertainty around fiscal policy and public debt following regional election results and increased speculation around political change. However, the move in yields reversed toward month-end as softer inflation and weaker labour market data became the dominant drivers. As a result, gilts outperformed the broader global government bond market, with the 10-year gilt yield ending May at around 4.82%.

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Ark Insights

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May saw markets remain constructive as investors continued to price in geopolitical de-escalation, while resilient corporate earnings and AI-related sectors supported equity gains. The month also highlighted a broader normalisation in sentiment, with oil prices easing and fixed income markets stabilising despite continued volatility.

 

Looking ahead, much will depend on whether geopolitical tensions continue to ease and whether energy markets can return to more normal conditions. A sustained decline in oil prices could help reduce inflation pressures and support rate expectations, while renewed disruption would risk keeping inflation elevated and weighing on growth.

 

In this environment, maintaining a well-diversified portfolio across asset classes, regions and themes remains essential, particularly as market gains remain concentrated in a narrow group of technology-related sectors.

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The views expressed in this update are not intended as an offer or solicitation for the purchase or sale of any investment or financial instrument. The views reflect the views of Ark Investment Management at the date of this document and, whilst the opinions stated are honestly held, they are not guaranteed and should not be relied upon and may be subject to change without notice. Investments entail risks. Past performance is not necessarily a guide to future performance. There is no guarantee that you will recover the amount of your original investment. The information contained in this update does not constitute investment advice and should not be used as the basis of any investment decision. Any references to specific securities or indices are included for the purposes of illustration only and should not be construed as a recommendation to either buy or sell these securities or invest in a particular sector. If you are in any doubt, please speak to us or your financial adviser as appropriate.

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