Monthly Macro Review - May 2026

Macro at a glance

Ukraine stepped up its campaign against Russia's energy infrastructure in May, striking refineries and export facilities including Kirishi, Perm, Ryazan, Moscow, Syzran and Yaroslavl, as well as oil and gas facilities along the Baltic and Black Sea routes. By 21 May, Kyiv said it had struck 11 Russian oil facilities during the month, with further attacks later reported on the Novorossiysk oil terminal, an oil depot in Armavir and a tanker at the port of Taganrog. The affected refineries account for around a quarter of Russia's refining capacity, whilst Russian diesel production fell by approximately 10% during the month. The global implications are particularly significant as the oil market is already struggling with the near-total closure of the Strait of Hormuz: Middle Eastern crude exports have fallen from roughly 18.3 million barrels per day before the crisis to nearly 8.8 million since March. Although Russian diesel exports remained stable in May, further disruption to Russian refining or export infrastructure could tighten global fuel supply at a time when the IEA already expects world oil demand to exceed supply by 1.78 million barrels per day in 2026. (Reuters, IEA)

Taiwanese and South Korean equities posted exceptional returns in May, as investors continued to favour the Asian companies at the heart of the global AI semiconductor supply chain. Taiwan's TAIEX rose by 14.9% during the month, buoyed by strong momentum in TSMC (TSM) and other AI-related suppliers. South Korea's KOSPI surged by an even more remarkable 28.5%, driven largely by Samsung Electronics (005930.KS) and SK Hynix (000660.KS), both of which surpassed $1 trillion in market capitalisation during the month. Whilst hopes of easing tensions in the Middle East bolstered market sentiment at the end of May, the rally also highlights the increasing concentration of both markets around a limited number of leading semiconductor firms and their exposure to global AI capital expenditure. (Reuters, Yahoo Finance)

The Central Bank of Türkiye (TCMB) held its benchmark policy rate at 37% through May, pausing an easing cycle that had delivered five consecutive cuts since mid-2025. The hold followed an upside inflation surprise, with annual CPI rising to 32.37% in April, a six-month high and above market expectations of 31.25%, driven largely by energy and food price pressures linked to the Iran war. March balance-of-payments data released in May revealed a record $43.4B decline in official reserves as the war triggered emerging market selloffs and prompted state intervention. To support its position, the TCMB built up dollar-for-lira swaps with local banks, reaching a stock of $3.7B by month-end, while drawing down its gold-for-lira swaps, leaving gross reserves at around $172B though the swap-adjusted net position was lower than the gross figure suggests. Bank of America and Barclays have reassessed their lira positions, citing surging oil import bills as a headwind to currency stability. (TCMB, Bloomberg, ING)

One Sector, One Insight

Basic Materials and Energy:

After surging earlier this year as disruptions through the Strait of Hormuz constrained Middle Eastern supply, urea prices corrected sharply in May. The benchmark price fell by 34.4% over the month to $447.50 per tonne on 29 May, although it remained 23.5% above its level a year earlier. China's decision to authorise new urea exports may ease some of the supply pressure. The price surge supported first-quarter operating results at nitrogen producers such as CF Industries (CF) and Nutrien (NTR), although their shares declined by 8.1% and 6% respectively during May. However, the risk of renewed disruptions or shortages cannot yet be ruled out, as the market remains highly sensitive to geopolitical developments and potential constraints on key export routes. (Trading Economics, Reuters)

Consumption and General Public Services:

The Swatch (UHR.SW) and Audemars Piguet "Royal Pop" launch on May 16 was a standout retail phenomenon in the watch industry this month. The CHF 350–375 pocket watch attracted unprecedented queues across London, New York and Paris, with Audemars Piguet's website receiving 10x its typical annual visitor volume in a single day and Chrono24 recording launch day requests at 2.9x the Moon Swatch 2022 peak. For Swatch Group, a 60% gross margin on estimated sales of 500k–1M units could contribute over CHF 100M to net income, roughly 40% of full-year forecasts. However, the collaboration masks deeper structural challenges: FY2025 operating profit stood at just CHF 135M (2.1% margin), with manufacturing losses of CHF 303M, and the stock already trades at 41x expected 2026 earnings. Royal Pop confirms Swatch's ability to generate demand; whether it can translate that into factory utilisation and margin recovery remains the key question. (CNN, FT, Bloomberg, MarketScreener)

Financial Services:

After 19 months of speculation and record Q1 net profit of €3.22B (+16% YoY), UniCredit (UCG.MI) CEO Andrea Orcel launched an unsolicited €35–37B stock-swap offer for Commerzbank (CBK.DE) on May 5, 2026. Commerzbank's board rejected the bid on May 18, calling it inadequate and urging shareholders to reject it. CEO Bettina Orlopp warned the deal would entail significant job cuts, threaten entire business areas, and put over €1 billion of revenue at risk. A 137-page board assessment cited Russia exposure risks, with analysts warning of up to 11,000 job cuts. While the formal shareholder acceptance window was extended to July 3 following an initial retail tender rate of just 0.02%, UniCredit has aggressively bypassed the gridlock. A regulatory voting rights notification on May 26 revealed Orcel has built a commanding 38.87% total stake in Commerzbank, combining 26.77% in direct equity with 12.10% held via Total Return Swaps, which grants the Milanese bank a functional majority at future general meetings, turning up the pressure on Frankfurt's defense. The macro context does add headwinds to Orcel's synergy case: with German corporate sentiment still very low (the ifo Business Climate Index edged up to 84.9 in May, a fragile recovery from April's six-year low of 84.4), the burden of proof on deal value creation remains high. (Bloomberg, ifo Institute, Trading-Treff)

Healthcare:

Obesity treatment has become a major driver of growth in the healthcare sector this May. Eli Lilly (LLY) remains ahead in the obesity race, currently owning 60% of the US market, with recent trial results showing substantial weight loss and reinforcing investor confidence in the company. At the same time, Lilly continues to benefit from strong commercial momentum across its already marketed GLP-1 drugs, especially Zepbound and Mounjaro. GLP-1s are completely reshaping how investors think about pharmaceuticals, obesity, and diabetes. Reuters reported that the development of weight-loss pills is expanding the market rather than simply dividing it, while also increasing competition and putting pressure on pricing. Over the past month, Eli Lilly shares surged by roughly 28%, climbing to a record all-time high above $1,140 per share. This extended rally has firmly cemented the drugmaker's market capitalization well over the historic $1 trillion mark. (Reuters)

Industrials:

Honda's (7267.T) first loss in 70 years is significant for the automobile sector as it shows how costly the shift to electric vehicles has become for legacy automakers. Their net loss was driven by large EV-related investments, weaker sales in China, and the high cost of resetting its electric vehicle strategy. This reflects a broader pressure point for the industrial and auto sector: heavy capital spending on EVs, slower-than-expected demand, and policy uncertainty are all squeezing profits. Reuters had already reported that Honda was expected to post an operating loss of around $2.5 billion, which shows that the market was aware that the company's EV strategy was under difficulty. It signals that the global auto industry is still in the middle of a challenging and expensive reset. (Reuters, BBC)

Technology and Network Equipments:

Space Exploration Technologies Corporation, widely known as SpaceX, released its S-1 form on May 20. While the prospectus did not include details such as the number of shares the company plans to sell or pricing, SpaceX is seeking to raise up to $75 billion at a valuation of $1.75–2 trillion. The S-1 form brought lots of new information to light, including a $60B acquisition option for AI code editor Cursor, signed in April with a $10B break fee, and plans to start deploying orbital AI compute satellites as early as 2028. The company is now a combined space, connectivity, and AI business, consolidated with xAI (an artificial intelligence company merged in February 2026, which had itself previously acquired X, formerly Twitter, in March 2025). While Starlink is carrying the profits ($11.4B revenue at ~39% operating margin in 2025), the company is burning cash at an unprecedented rate: last year, it recorded around $18.7B in revenue and a $2.6B operating loss ($4.9B net loss), with outstanding debt of $29.1B as of Q1 2026. Importantly, the form states that AI company Anthropic PBC has agreed to pay $1.25B/mo until May 2029 for access to compute capacity across xAI's COLOSSUS and COLOSSUS II, a statement which was subsequently impaired by a Musk tweet calling it a "180 day lease with 90 day notice mutual cancellation". (Fortune, FT, Morningstar, Space Exploration Technologies S-1 form, SpaceNews)

The stock of the month

Micron Technology (MU), an American semiconductor company that manufactures random-access and flash memory chips, has surged spectacularly in May: trading at $971, it is up over 92% this month, and over 909% YoY. Future earnings visibility from multiple long-term supply agreements and expected supply shortages for AI fast memory, as well as a reevaluated $1,625 price target from UBS (previously $535), have brought the company to surpass $1T market capitalization. (FT, StockAnalysis, Yahoo Finance)

Key performances

Name	As of May 31	Monthly change	YTD
S&P500	7580.06	6.22%	10.73%
Dow Jones	51032.46	4.44%	6.18%
NASDAQ	26972.62	9.32%	16.05%
FTSE100	10409.28	1.92%	4.81%
CAC40	8183.34	1.38%	0.42%
DAX	25104.70	4.80%	2.50%
SMI20	13542.66	3.92%	2.07%
MSCI WORLD	4855.52	5.60%	9.80%
VIX	15.32	-18.55%	2.47%
CHF/USD	1.2800	1.24%	1.47%
CHF/EUR	1.0976	1.44%	2.22%
Brent $/bbl	91.12	-22.80%	47.16%
Gold Spot $/oz	4538.16	-0.52%	5.09%

Upcoming events

Jun 10–11: US CPI & PPI

Jun 10–11: ECB meeting

Jun 17–18: US FOMC meeting

Written by Hippolyte Metzger-Otthoffer, Melisa Yetisir, Anastasia Kosolompova and Cyrille Desponds