Market Commentary: 14 May 2026
Stocks Surge Despite Oil Supply Concerns
- Stock markets (MSCI World Index) have risen by 7% so far this year, despite the Iran conflict.
- Bond markets (Bloomberg Global Aggregate Index) are now flat, but volatile.
Please note that the content of this review should not be considered as investment advice or any form of recommendation. If you require investment advice, please do not hesitate to get in touch with a member of our qualified team.
Key Themes
Stock markets have risen strongly since bouncing on 30 March, in anticipation of the US-Iran ceasefire which took effect on 7 April. Investors are forward-looking by nature and they expect the Strait of Hormuz to reopen before global oil supplies run dry. Semiconductor stocks have experienced a historic rally, amid a record level of spending on Artificial Intelligence (AI) technology. While stocks are doing well, bond yields are rising due to higher inflation and an emerging political crisis in the UK.
UK
The FTSE 100 has remained quite steady throughout the market turbulence, rising and falling to a lesser extent than global peers. Shares in larger companies continue to offer an attractive blend of good value and stable income streams, supported by a large proportion of overseas earnings. However, a sustained recovery in smaller companies remains elusive, as domestic economic growth is expected to weaken as the year progresses.1
United States
Stocks in the Philadelphia Semiconductor Index have gained more than 60% in just over 6 weeks, while traditional hardware companies such as Intel, Dell and SanDisk have also experienced a sudden boom where their valuations have multiplied. This is fuelled by unprecedented capital spending on AI data centres, creating huge demand for products such as memory chips, processors, cabling and cooling equipment.2
The last time hardware stocks moved like this was in February 2000, at the peak of the dot-com bubble. Some analysts have warned they could experience a sharp sell-off once the spending ends – similar to then, when they dropped by 80% over the following 18 months.3
Europe
When the US attacked Iran, investors became concerned that Europe would be very vulnerable to inflation from higher oil prices. The Euro Stoxx 50 has lagged other developed markets since then, with carmakers and industrial manufacturers heavily exposed to the cost of energy. The Eurozone economy grew by just 0.1% in the first quarter, and German growth estimates for 2026 were recently halved from 1.0% to 0.5%.4
Asia & Emerging Markets
The South Korean stock market has jumped 81% higher year-to-date, with Samsung also benefitting from the AI buildout and gaining 135%. As a reminder that market sentiment can quickly change, Indian stocks were the previous favourites among emerging market investors after trebling in four years, but excitement cooled in 2025 and they are down 7% this year.
Bonds
The UK government is facing political instability once again, with the prospect of a fifth Prime Minister in seven years. While this is by no means a unique situation in developed democracies – Italy (2011-2022), Australia (2007-2015) and Japan (2006-2012) have experienced similar periods of upheaval – the prospect of a more left-leaning PM and Chancellor combination has rattled the UK bond market. The 10-year gilt yield has breached the psychologically important 5% level for the first time since 2008.5 Mortgage and credit costs will rise in turn, placing further pressure on an already weak economy.
Points of Interest
Space is becoming another hot investment theme. Elon Musk’s SpaceX is expected to list on the US stock market this summer and achieve a record for the largest IPO in history – potentially offering $75 billion worth of shares, with the entire company valued at $1.75 trillion.6 This could make Musk the world’s first trillionaire on paper, although selling his stake for cash would be very difficult. The fervour surrounding the space sector has also created strong gains for some UK names, with Seraphim Space Investment Trust and Starlink supplier Filtronic plc both trebling since December.
Summary
Recent events remind us that financial markets can shift focus very quickly – from long-term themes such as AI, to sudden geopolitical shocks, and back again. Markets are currently looking through the issues in the Middle East, but if the Strait of Hormuz remains closed it will eventually cause more serious issues in global energy markets. Where the tipping point sits in the calendar, nobody really knows, and investors can cope with a “known unknown” for now – until the real effects are more acutely felt.
In short, the rest of the year could take two different paths: a sustained return to “business as usual” and a tech-led bull market, or a more challenging environment shaped by higher costs and economic stagflation.
Note: Past Performance Is Not A Reliable Indicator Of Future Performance
Sources may be found online here, or provided on request
GWA Portfolio Performance
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MGTS Qualis Funds
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