Weekly Market Review – 11 May 2026

Strong corporate earnings supported a broad-based rally in global equity markets over the week, with performance driven largely by continued strength in the technology sector. The US and Japan led gains, while the UK lagged on fading optimism over a US-Iran peace deal.

US: The tech sector continues to lead the way

US equities rallied, supported by strong earnings, with around 85% of S&P 500 companies having reported and close to 85% beating expectations. The Technology sector led gains on continued optimism around AI related demand. Economic data painted a mixed picture, with jobless claims remaining low and payrolls exceeding expectations, although labour force participation fell to its lowest level since 2021. The unemployment rate remained steady at 4.3%. Productivity growth slowed in the first quarter, suggesting some loss of economic momentum. Construction spending and factory orders were stronger than expected, driven in part by demand linked to AI infrastructure. However, consumer sentiment fell to a record low, highlighting ongoing pressure from higher prices and tariff concerns.

Japan: Strong global AI demand and easing geopolitical tensions results in another record high for the Nikkei

Japanese equities rallied strongly in a shortened trading week, with the Nikkei 225 index reaching record highs, driven by technology and semiconductor stocks. Market sentiment was supported by global AI demand and easing geopolitical concerns, which helped alleviate concerns around high energy costs. The yen remained volatile amid speculation of policy intervention. Real wages rose for a third consecutive month, suggesting improving domestic conditions and a more sustainable wage inflation cycle. This supports the case for the Bank of Japan to continue gradual policy normalisation.

China: Resilient domestic demand sees Chinese equities well supported

Chinese equities advanced following the holiday period, led by technology and consumer sectors. Economic data pointed to resilient domestic demand, with services activity expanding faster than expected despite weaker export orders. Investor sentiment was supported by signs of stabilisation in US and China trade relations ahead of the upcoming high-level talks. However, consumer behaviour remains cautious, with holiday travel volumes rising but spending per trip declining slightly. This suggests a still uneven recovery in consumption. Overall, markets are balancing improving domestic activity with ongoing external and geopolitical uncertainty.

Europe: Strong corporate earnings drive European equities

European equities posted modest gains overall, supported early in the week by easing geopolitical tensions and generally solid earnings. Germany’s DAX inched up 0.19%, Italy’s FTSE MIB rose 2.16% and France’s CAC 40 Index was little changed. Sentiment weakened later in the week following renewed US tariff threats towards the EU. Economic data was mixed, with euro area producer prices rising sharply, driven largely by energy costs. Germany saw strong factory order growth, suggesting improving industrial demand, although construction activity weakened notably. The ECB signalled a potential rate increase if inflation does not show sustained improvement, reinforcing a cautious policy stance.

UK: Equities sold off towards the end of the week amid rising oil prices

UK equities underperformed over the period, with the FTSE 100 declining as global trade tensions weighed on sentiment. Economic data was more encouraging, with the composite PMI rising to 52.6 in April (a figure above 50 implies expansion), indicating a return to moderate expansion across manufacturing and services. The improvement suggests some resilience in domestic activity despite external headwinds. To election results, where major losses for Labour added to uncertainty, with the prospect of political change seeing bond markets elevated.

What's Important This Week: 11 May to 15 May 2026

President Trump and Xi Summit

This Thursday and Friday they meet in Beijing

Why it's important

Any meeting between the world's two leading superpowers is significant. This one comes against the backdrop of ongoing tensions in the Gulf, which adds an additional layer of complexity. China retains influence over Tehran, while Trump is under domestic pressure to secure an outcome, particularly as rising petrol prices in the US begin to impact consumers more materially.

From China's perspective, higher energy prices can accelerate structural shifts towards green energy and electric vehicles, sectors where it has strong positioning. As long as the broader economic impact remains contained, there may be less urgency to push for a rapid resolution.

Trade will also remain a key point of contention, with the earlier tariff dispute still unresolved beneath the surface. Alongside this, discussions are likely to touch on strategically important areas such as semiconductor access, precious metals supply chains, and Taiwan.

US Treasury Secretary Scott Bessent visit to Japan

From Monday through to Wednesday, US Treasury Secretary Scott Bessent will meet with senior Japanese officials, including Prime Minister Sanae Takaichi.

Why it's important

The Japanese yen has strengthened almost 3% against the US dollar at points over the past two weeks. As we have highlighted previously, the currency remains undervalued on a number of measures. It has also historically been used as a low-cost funding currency by global investors to finance purchases of higher yielding assets elsewhere.

However, as Japanese interest rates have begun to rise, this dynamic is starting to shift, reducing the attractiveness of the yen as a funding tool. At the same time, inflation in Japan is picking up, and a weaker currency only exacerbates imported price pressures, creating additional challenges for policymakers.

Against this backdrop, any coordinated messaging, or even the potential for policy alignment aimed at supporting the yen, would likely be well received by both the US and Japanese authorities. In effect, there appears to be a shared interest in preventing excessive currency weakness, meaning any signals from this meeting could carry meaningful implications for FX markets and broader risk sentiment

This update reflects Omnis’ view at the time of writing and is subject to change. The document is for informational purposes only and is not investment advice. We recommend you discuss any investment decisions with your financial adviser. Omnis is unable to provide investment advice. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Past performance should not be considered as a guide to future performance.