Market navigator:
week of 4 May 2026

What happened last week

• Oil surges to four-year high: Brent crude briefly touched $126 per barrel — its highest since 2022 — after reports of potential US strikes on Iran, before retreating to around $108. Trump rejected Tehran's proposal to reopen the Strait of Hormuz, keeping the naval blockade in place until a nuclear agreement is reached.
• Japan defends the yen: USD/JPY reached 160.72 for the first time since July 2024 before Japanese authorities intervened, triggering a 3% surge in the yen. Officials cautioned against speculative positioning during the Golden Week holiday, signalling readiness to intervene again. However, history suggests intervention effects are short-lived without complementary monetary policy tightening, and the Bank of Japan (BoJ) has yet to commit to a concrete hiking path.
• Fed holds, dissents mount: The Federal Reserve (Fed) held rates at 3.5%–3.75%, recording four dissents — the most since 1992. Three regional presidents objected to retaining an easing bias in the policy statement. Incoming chair Kevin Warsh's nomination has cleared the Senate Banking Committee while Powell confirmed he will remain on the Board of Governors after his chairmanship ends on 15 May.
• Central banks in wait-and-see mode: The BoJ, European Central Bank (ECB) and Bank of England (BoE) all held rates unchanged, citing Middle East uncertainty as the dominant constraint on policy. The BoJ had three dissenters calling for an immediate hike. The ECB warned that upside inflation and downside growth risks had intensified. The BoE flagged a scenario where oil rises to $130 per barrel and remains elevated could push inflation above 6% by early 2027, requiring interest rates to rise to 5.25%.

Markets in focus

AI monetisation differentiates the Magnificent Seven

The S&P 500 gained 0.9% last week, again led by technology stocks. The index delivered a remarkable April with a 10.4% return — its best monthly performance since 2020. The Nasdaq 100 outperformed with a 1.49% weekly gain and a 15.6% advance in April. However, the rally has stretched valuations: the S&P 500 now trades at 21.0x forward earnings, approximately one standard deviation above its 10-year average, warranting caution heading into May.

Last week's defining theme was a sharp earnings divergence among the Magnificent Seven. Alphabet surged 12.0%, driven by Google Cloud's 63% revenue growth to $20 billion. Apple added 3.3% after posting an earnings beat with a better-than-expected revenue outlook. Amazon edged 1.6% higher, supported by Amazon Web Services reaccelerating to 28% revenue growth — its fastest pace in 15 quarters.

In contrast, Meta fell 9.8% after raising full-year capital expenditure guidance to $125–145 billion and recording the first sequential decline in daily active users in its history, partly attributed to restricted app access caused by the Middle East conflict. Microsoft slipped 2.4% despite robust growth, as investors focused on cloud gross margin compression and its $190 billion spending commitment. The divergence underscores the pressure on hyperscalers to justify heavy AI capital expenditure with clear revenue monetisation.

Technical momentum in the US Tech 100 shows no sign of slowing. With the previous target at 27,507 met, the index is now targeting the 61.8% Fibonacci extension of the up wave from April to October 2025 at 28,874. That said, a technical pullback may materialise first given the overbought signal from the relative strength index (RSI). Immediate support lies near 26,200, at the level of previous peaks.

Figure 1: US Tech 100 index daily price chart

Hang Seng lags Asia's AI rally

The Hang Seng Index fell 0.8% last week, capping a modest 4.0% April gain that significantly underperformed the MSCI AC Asia Pacific Index's 13.1% monthly advance. The regional market rally was heavily concentrated in AI-leveraged markets — Japan, South Korea and Taiwan — where greater exposure to semiconductor and AI equipment manufacturers drove outsized gains. Investors now turn their attention to President Trump's visit to Beijing on 14–15 May, with any breakthrough on US-China trade relations closely watched for its implications for Hong Kong-listed equities.

At the stock level, SMIC surged 10.3% as the DeepSeek V4 launch continued to act as a catalyst, reinforcing investor conviction in domestic chipmakers as China's semiconductor self-sufficiency drive accelerates amid ongoing US export restrictions. In contrast, CATL fell 12.5% after pricing a HK$5 billion share placement — Hong Kong's largest offering this year — at the bottom of its marketed range, representing a 7% discount to its prior closing price. While the deal attracted more than 150 institutional investors, dilution at a steep discount weighed on near-term sentiment.

On the earnings front, CNOOC surged 5.3% after reporting a 7.1% rise in Q1 net profit to RMB39.1 billion, as elevated oil prices boosted revenues. BYD edged 1.3% higher despite net profit declining 55% year-on-year (YoY) to RMB4.09 billion, as the halving of China's electric vehicle (EV) purchase tax incentive weighed heavily on demand.

Technically, the absence of a near-term catalyst has left the Hang Seng Index (HSI) range-bound, trading between 25,500 and 26,250. Notably, three key moving averages (MAs) are converging near 25,900, suggesting the market lacks directional conviction in the near term. Failure to hold above the lower bound of the range could drive the index towards the next support level near 25,000.

Figure 2: Hang Seng Index daily price chart

Nikkei's stellar April run loses steam

The Nikkei 225 slipped 0.3% last week but still delivered a stellar 16.1% return in April, driven by AI-related semiconductor and equipment stocks. Two headwinds dominated: the 10-year Japanese government bond (JGB) yield edged above 2.5% — its highest level since 1997 — as markets priced in a prolonged inflationary impact from the Middle East conflict, and yen intervention pressure weighed particularly on export-oriented sectors. Trading volumes are expected to thin further this week as Japanese markets partially close for the Golden Week holiday.

Earnings delivered a sharp divergence. Bathroom equipment and semiconductor ceramics maker TOTO surged 18% after fiscal year net profit jumped 231% YoY, driven by a one-third increase in ceramics segment sales supplying components for AI semiconductor manufacturing. Advantest fell 5.5% despite a strong earnings beat, as conservative full-year guidance projecting flat operating margins and continued capacity constraints disappointed investors who had driven the stock up more than 50% year-to-date. Hitachi declined 8.3% after fiscal year operating profit guidance came in slightly below consensus, overshadowing an upward revision to its energy segment medium-term targets.

The technical outlook for the Japan 225 remains bullish over the medium term, with the index trading well above its 200-day MA. The next upside target stands at around 65,800 — equivalent to 161.8% the inverse of the February-to-March correction. However, the advance may prove non-linear: the index has recently experienced a false breakout above the previous record high's resistance level at 60,038. Failure to hold above the 20-day MA support could see the index pull back towards 56,000.

Figure 3: Japan 225 price chart

The week ahead

The Reserve Bank of Australia's (RBA) interest rate decision on Tuesday dominates the regional calendar. Although last week's inflation data showed headline consumer price index (CPI) easing to 4.6% YoY — below the 4.8% consensus — and trimmed mean CPI holding steady at 3.3% YoY, both measures remain comfortably above the RBA's 2–3% target band. Transportation costs surged 8.9%, driven by elevated fuel prices linked to the Middle East conflict, while the unemployment rate held at 4.3%, underscoring continued labour market resilience. Markets are pricing an 83% probability of a 25-basis-point hike to 4.35%, which would be the third consecutive increase and would fully reverse all rate cuts delivered in 2025. A surprise hold would likely weaken the Australian dollar — currently trading near four-year highs against the US dollar — and prompt a broader reassessment of the RBA's policy trajectory.

US labour market data takes centre stage on Friday, with non-farm payrolls (NFP) expected to slow sharply to 73,000 from the prior 178,000. Last week, initial jobless claims fell to their lowest level since 1969, suggesting actual redundancies remain contained despite high-profile layoffs. A stronger-than-expected print would further dampen expectations of Fed rate cuts in 2026, particularly as Middle East tensions sustain upward pressure on energy prices. ISM services purchasing managers' index (PMI) and the University of Michigan consumer sentiment index will provide additional insight into whether geopolitical uncertainty is weighing on the broader economy.

On the corporate front, Palantir faces scrutiny over AI disruption risks, while Advanced Micro Devices (AMD) — having surged over 70% last month on central processing unit (CPU) re-rating optimism — must now justify its elevated valuation. Toyota reports on Friday, navigating US tariff uncertainty alongside an uncertain demand outlook in which sustained fuel price increases could dampen appetite for conventional combustion engine vehicles while boosting demand for its hybrid lineup.

Figure 4: US employment data

Key macro events this week

(All times in GMT+8)

Tuesday 5 May 2026

• 12.30pm — Australia RBA interest rate decision: previous 4.1%, consensus 4.35%
• 8.30pm — US trade balance (March): previous -$57.3 billion, consensus -$59.0 billion
• 10.00pm — US ISM services PMI (April): previous 54.0, consensus 53.8
• 10.00pm — US JOLTs job openings (March): previous 6.882 million, consensus 6.87 million

Wednesday 6 May 2026

• 9.45am — China RatingDog services PMI (April): previous 52.1, consensus 52.0

Thursday 7 May 2026

• 7.30am — BoJ monetary policy meeting minutes (March)
• 9.30am — Australia trade balance (March): previous A$5.686 billion, consensus A$4.45 billion

Friday 8 May 2026

• 8.30pm — US non-farm payrolls (April): previous 178,000, consensus 73,000
• 8.30pm — US unemployment rate (April): previous 4.3%, consensus 4.3%
• 10.00pm — US Michigan consumer sentiment preliminary (May): previous 49.8, consensus 49.5

Saturday 9 May 2026

• 11.00am — China trade balance (April): previous $51.13 billion, consensus $82.4 billion
• 11.00am — China exports YoY (April): previous 2.5%
• 11.00am — China imports YoY (April): previous 27.8%

Key corporate earnings

(In local exchange time)

Monday 4 May 2026

• Palantir

Tuesday 5 May 2026

• Advanced Micro Devices
• HSBC

Wednesday 6 May 2026

• Arm
• Novo Nordisk

Thursday 7 May 2026

• Shell
• McDonald's

Friday 8 May 2026

• Sony
• Toyota
• Nintendo

_{Source: Trading Economics, Nasdaq, LSEG (as of 2 May 2026)}