Macro at a Glance
Ukraine intensified attacks on Russian energy infrastructure throughout May, targeting refineries and export facilities across multiple locations including Kirishi, Perm, Ryazan, Moscow, Syzran, and Yaroslavl. By mid-month, Kyiv reported striking 11 Russian oil facilities, with additional assaults on the Novorossiysk oil terminal, an Armavir depot, and a tanker at Taganrog's port.
The affected refineries represent approximately one-quarter of Russia's refining capacity, with diesel production declining by roughly 10% during the month. This disruption carries significant global implications, particularly given the near-total closure of the Strait of Hormuz, which has reduced Middle Eastern crude exports from approximately 18.3 million barrels daily to 8.8 million since March. Despite stable Russian diesel exports in May, further infrastructure damage could exacerbate existing supply pressures as the IEA anticipates 2026 demand exceeding supply by 1.78 million barrels daily.
Asian Semiconductor Markets Rally: Taiwan's TAIEX surged 14.9% in May, driven by TSMC and AI-related suppliers. South Korea's KOSPI experienced even more dramatic gains at 28.5%, with Samsung Electronics and SK Hynix both surpassing $1 trillion in market capitalization. This concentration risk highlights investor exposure to global AI capital expenditure trends.
Turkish Central Bank Holds Rate: The Central Bank of Türkiye maintained its benchmark policy rate at 37%, pausing an easing cycle following an inflation surprise. Annual CPI climbed to 32.37% in April, exceeding expectations of 31.25%, driven primarily by energy and food pressures linked to the Iran conflict.
Official reserves declined by record $43.4 billion in March as geopolitical tensions prompted emerging market selloffs and state intervention. The TCMB implemented dollar-for-lira swaps reaching $3.7 billion by month-end while drawing down gold swaps, keeping gross reserves at approximately $172 billion.
One Sector, One Insight
Basic Materials and Energy
Urea prices corrected sharply in May after earlier surge-driven momentum, falling 34.4% to $447.50 per tonne on May 29, though remaining 23.5% above year-prior levels. China's authorization of new urea exports may relieve supply pressure. Nitrogen producers CF Industries and Nutrien saw strong Q1 operating results offset by May share declines of 8.1% and 6% respectively, though geopolitical sensitivities continue creating renewed shortage risks.
Consumption and General Public Services
The Swatch and Audemars Piguet "Royal Pop" pocket watch launch on May 16 generated unprecedented demand across London, New York, and Paris, with Audemars Piguet's website receiving 10 times its typical annual visitor volume in a single day. Chrono24 recorded launch requests at 2.9 times the Moon Swatch 2022 peak.
Estimated sales of 500,000 to 1 million units at a 60% gross margin could contribute over CHF 100 million to net income—roughly 40% of full-year forecasts. However, structural challenges persist: FY2025 operating profit stood at just CHF 135 million (2.1% margin) with manufacturing losses of CHF 303 million. The stock trades at 41x expected 2026 earnings, raising questions about whether demand generation can translate into factory utilization and margin recovery.
Financial Services
UniCredit CEO Andrea Orcel launched an unsolicited €35–37 billion stock-swap offer for Commerzbank on May 5, 2026, following 19 months of speculation and record Q1 net profit of €3.22 billion (up 16% year-over-year). Commerzbank's board rejected the bid on May 18, calling it inadequate.
CEO Bettina Orlopp warned the deal would trigger significant job cuts, threaten business areas, and risk over €1 billion in revenue. A comprehensive 137-page board assessment cited Russia exposure risks and potential job losses exceeding 11,000.
By May 26, a regulatory voting rights notification revealed Orcel has accumulated a commanding 38.87% total stake in Commerzbank—combining 26.77% in direct equity with 12.10% via Total Return Swaps, granting functional majority at future shareholder meetings. German corporate sentiment remains fragile, with the ifo Business Climate Index at 84.9 in May versus April's six-year low of 84.4, intensifying scrutiny on deal value creation.
Healthcare
Obesity treatment emerged as a major healthcare growth driver in May. Eli Lilly controls 60% of the US obesity market, with recent trial results demonstrating substantial weight loss. The company maintains strong commercial momentum for marketed GLP-1 drugs including Zepbound and Mounjaro.
GLP-1 medications are reshaping pharmaceutical, obesity, and diabetes investment perspectives. Development of weight-loss pills is expanding the overall market rather than merely fragmenting existing segments, while increasing competitive pressure and pricing constraints. Eli Lilly shares surged approximately 28% during May, reaching all-time highs above $1,140 per share and solidifying market capitalization well over $1 trillion.
Industrials
Honda reported its first loss in 70 years, reflecting the automotive sector's struggle with electric vehicle transition costs. Net losses stemmed from substantial EV investments, weaker Chinese sales, and expensive strategy repositioning.
The broader industrial and automotive sectors face mounting pressures: heavy capital deployment for EVs, slower-than-anticipated demand adoption, and policy uncertainty are compressing profitability. Market expectations for Honda's operating loss approached $2.5 billion, demonstrating widespread awareness of EV strategy difficulties and signaling continued industry challenges.
Technology and Network Equipment
SpaceX released its S-1 form on May 20, seeking to raise up to $75 billion at a valuation of $1.75–2 trillion, though without disclosing share quantity or pricing details. The prospectus revealed a $60 billion acquisition option for AI code editor Cursor (signed April with $10 billion break fee) and plans for orbital AI compute satellite deployment beginning 2028.
SpaceX operates as an integrated space, connectivity, and AI enterprise following xAI's February 2026 consolidation (which previously acquired X in March 2025). Starlink generates profitability at $11.4 billion revenue with approximately 39% operating margin in 2025, though corporate cash burn remains unprecedented: $18.7 billion total revenue in 2024 against $2.6 billion operating loss ($4.9 billion net loss) and $29.1 billion outstanding debt as of Q1 2026.
Notably, Anthropic PBC agreed to pay $1.25 billion monthly through May 2029 for compute access across xAI's COLOSSUS and COLOSSUS II systems, though a subsequent Musk statement characterized this as a "180 day lease with 90 day notice mutual cancellation."
Stock of the Month
Micron Technology, an American semiconductor manufacturer specializing in random-access and flash memory chips, experienced spectacular May performance, trading at $971 (up 92% monthly and 909% year-over-year). Multiple long-term supply agreements, anticipated AI fast memory shortages, and UBS's reevaluated $1,625 price target (previously $535) propelled the company past $1 trillion market capitalization.
Key Performances
| Index/Asset | May 31 Close | Monthly Change | YTD Change |
|---|---|---|---|
| S&P 500 | 7,580.06 | +6.22% | +10.73% |
| Dow Jones | 51,032.46 | +4.44% | +6.18% |
| NASDAQ | 26,972.62 | +9.32% | +16.05% |
| FTSE 100 | 10,409.28 | +1.92% | +4.81% |
| CAC 40 | 8,183.34 | +1.38% | +0.42% |
| DAX | 25,104.70 | +4.80% | +2.50% |
| SMI 20 | 13,542.66 | +3.92% | +2.07% |
| MSCI World | 4,855.52 | +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 Crude $/bbl | 91.12 | -22.80% | +47.16% |
| Gold Spot $/oz | 4,538.16 | -0.52% | +5.09% |
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