May 2026 Market update

Overview

Markets continued to rally in May, with UK investors seeing a 5.8% return in global equities and several major benchmarks hitting all-time highs.

Easing tension around the Strait of Hormuz allowed the market focus to shift back to earnings, while a surge in AI-related names provided an additional boost.

The investment boom around the AI ecosystem continued to underpin equity markets in May. One forecast indicated major technology companies are expected to spend over $500bn on AI infrastructure in 2026, more than double the level seen two years ago, as they race to build data centres and computing capacity.

Developments in the Middle East remained an important influence on markets, and although a full ceasefire agreement appears elusive, there was no major escalation during the period.

With energy prices easing, concerns about a sustained inflation shock moderated. Combining this with resilient economic data has resulted in central banks taking a cautious approach, with markets now pricing rates to be held steady throughout 2026 pending further changes in data.

Full update below…