Market navigator: RBA hikes, Trump-Xi summit and US inflation
Week of 11 May 2026

Last week's recap: RBA's third hike, US non-farm payrolls add 115,000

• RBA hikes, but peak nears: The Reserve Bank of Australia (RBA) raised the cash rate by 25 basis points to 4.35% in an 8-1 vote, its third consecutive increase. Growth projections have been revised lower and labour market conditions are expected to ease, as the Middle East conflict weighs on the outlook. We believe a pause until November to assess rate hike impact appears more probable than the August hike markets are pricing.
• US labour market holds firm: April non-farm payrolls rose 115,000 — exceeding the 63,000 consensus — while the unemployment rate held at 4.3% and average hourly earnings grew 3.6% year-on-year (YoY). JOLTS job openings edged down to 6.87 million in March but remained above consensus. Together, the data point to a resilient labour market despite broader economic uncertainty.
• Hormuz ceasefire under strain: The US suspended Project Freedom — its mission to escort merchant vessels through the Strait of Hormuz — to encourage Tehran to review the peace proposal. The UAE came under renewed attack while US forces struck Iranian military sites. Despite the exchange of fire, Trump insisted the ceasefire held. Brent crude retreated to around $100 a barrel on diplomatic optimism.
• Asia's AI frenzy hits new highs: Artificial intelligence (AI)-driven semiconductor stocks advanced, with South Korea's KOSPI surging 13.6% to breach 7,000 for the first time and Taiwan's TAIEX gaining 6.9%. Samsung Electronics reclaimed the $1 trillion market capitalisation mark, becoming the second Asian company after TSMC to do so.

Markets in focus: S&P 500 sixth consecutive weekly gain, Hang Seng reclaims 26,000 and gold above $4,700

AMD earnings drive S&P 500's AI-concentrated rally

The S&P 500 and Nasdaq 100 extended their winning streaks to six consecutive weeks — the longest run since October 2024 — gaining 2.3% and 5.5% respectively to set fresh record highs. However, the rally remains heavily concentrated in AI-related names. Seven of the eleven S&P 500 sectors delivered flat or negative returns, and only 40% of index constituents have recovered to pre-war levels. The Dow Jones lagged with a 0.2% gain, dragged by underperformance in the financial and energy sectors.

Corporate earnings drove divergent outcomes across the technology sector. Datadog surged 42.4% after first-quarter revenue topped $1 billion for the first time — growing 32% YoY — as the cloud observability platform benefited from accelerating demand for AI infrastructure monitoring. Super Micro Computer jumped 30.6% despite missing revenue estimates, as gross margin rebounded sharply to 10.1% from 6.3% in the prior quarter, with fourth-quarter guidance also exceeding consensus. AMD advanced 26.3% to a record high after data centre revenue surged 57% YoY to $5.8 billion, with chief executive Lisa Su doubling the server central processing unit (CPU) demand market forecast to $120 billion.

On the downside, Zoetis plunged 27.4% after US companion animal revenue fell 11%, as price-sensitive pet owners reduced veterinary visits amid macroeconomic pressures, prompting a cut to full-year guidance.

Technical momentum in the US 500 index continues to build. The index is now targeting the 61.8% Fibonacci extension of the up-wave from April to October 2025 at 7,612. That said, several indicators — including a cross above the upper Bollinger Band and an over-bought signal from the relative strength index (RSI) — suggest a technical pullback may be imminent. The 20-day moving average (MA) provides immediate support near 7,187.

Figure 1: US 500 index daily price chart

Kuaishou and Baidu surge as Hang Seng Index reclaims 26,000

The Hang Seng Index (HSI) reclaimed the 26,000 mark, closing the week at 26,394 — a gain of 2.4%. Southbound flows resumed following the Golden Week holiday, though initial sessions saw net outflows driven by profit-taking in the Tracker Fund and Tencent.

Hong Kong's first-quarter gross domestic product (GDP) rose 5.9% YoY, but the strong headline figure belies weakening forward-looking indicators — the purchasing managers' index (PMI) points to deteriorating business sentiment. This is echoed in Golden Week data: domestic trips rose 3.6% YoY to 325 million, yet per-trip spending fell to RMB 571 — still below the RMB 603 recorded in 2019 — weighing on consumption stocks including Midea, Li Ning and ANTA. 

Kuaishou surged 23.4% after its Kling AI platform launched native 4K video generation — the first in the industry to support direct cinema-quality output without complex post-production — targeting professional film and advertising clients. Baidu gained 22.3%; the South China Morning Post reported that its AI chip unit Kunlunxin is targeting a valuation of at least RMB 100 billion in a Hong Kong listing, with Chinese regulators confirming the unit has formally initiated the listing guidance process on the STAR Market.

Looking ahead, the Trump-Xi summit and large-cap earnings from Tencent, Alibaba and JD.com will be the primary drivers of market sentiment this week.

After trading within a tight range between 25,500 and 26,250 for a month, the HSI broke above the upper bound on Thursday. The weekly close above 26,250 is an early indication of the index finding support at that level, allowing it to target the next resistance near 27,200. A golden cross between the 20-day and 200-day MAs also signals an improved near-term technical outlook.

Figure 2: Hang Seng Index daily price chart

Gold back above $4,700 as silver surpasses $80 on Iran peace hopes

Gold and silver staged a partial recovery last week, with gold climbing above $4,700 per ounce and silver surpassing $80 — its highest level since mid-March — as hopes for a US-Iran peace deal triggered a decline in oil prices and eased near-term inflation concerns. Silver posted a weekly gain of over 6%. Nevertheless, both metals remain deeply in negative territory since the war began on 27 February, with gold down 10.7% and silver off 14.4% from pre-war levels.

The paradox is striking: despite a conflict that has rattled global risk markets, precious metals have failed to fulfil their traditional safe-haven role. War-induced inflation has emerged as the key pressure point — with the Federal Reserve (Fed), Bank of England, European Central Bank, Bank of Japan and most recently the RBA all flagging upside inflation risks in their policy communications, raising the prospect of higher-for-longer interest rates that increase the opportunity cost of holding non-yielding assets.

Central bank demand has also been mixed. According to the World Gold Council, central banks were net sellers of 30 tonnes in March, with Turkey offloading 60 tonnes for foreign exchange and liquidity purposes, partially offset by purchases from Poland, Uzbekistan, Kazakhstan and China — the latter extending its buying streak to 17 consecutive months.

Silver's industrial demand story remains intact, underpinned by tight physical supply, though near-term price action will be sensitive to developments in US-Iran negotiations.

The technical outlook for gold remains positive over the medium term. Momentum has also improved, with a positive crossover in the moving average convergence divergence (MACD) indicator. A potential golden cross between the 20-day and 50-day MAs also warrants attention — potentially forming a new support level near $4,700. However, the advance may be capped by a trend line connecting recent peaks near $5,000.

Figure 3: Spot gold daily price chart

Week ahead: Trump's Beijing visit; China and US inflation data

China and the US face opposing inflation tests this week — Beijing seeks evidence of demand-led reflation, while Washington braces for conflict-driven price pressures to filter through to consumers.

China's April consumer price index (CPI) is expected to moderate to 0.8% YoY from 1.0% in March, despite completing six consecutive months in positive territory. Markets will scrutinise the composition: elevated energy and transportation costs — linked to Middle East conflict-driven commodity price rises — have flattered the headline figure, while consumer and durable goods prices remain in contraction. The producer price index (PPI), which turned positive for the first time since September 2022 in March, is forecast to accelerate to 1.5% YoY. A reading driven primarily by commodity input costs rather than end-demand would question the durability of China's reflationary momentum.

In the US, April core inflation is expected to accelerate to 0.4% month-on-month (MoM) after apparel, transportation services and shelter costs saw their steepest increases in March. Fed officials have adopted an increasingly hawkish tone, with Minneapolis Fed President Neel Kashkari warning that a prolonged closure of the Strait of Hormuz could prompt rate increases. A reading above consensus could reignite rate hike speculation, putting pressure on both US equities and the bond market.

Beyond the data, President Trump's visit to Beijing on 14–15 May — his first trip to China in eight years — will command equal market attention. The current trade truce is due to expire on 10 November 2026, making the summit a key opportunity to outline plans for the longer-term trade framework. On Iran, the Trump administration is pressing China to use its influence with Tehran to reopen the Strait of Hormuz. Taiwan is also firmly on the agenda, with Beijing signalling it is the 'biggest risk' in bilateral ties. Any material change in the US position on Taiwan, or disagreement on trade terms, could renew market uncertainty.

On the corporate front, Alibaba, Tencent and JD.com will dominate investor attention alongside SoftBank, whose results will offer insights into returns on AI investment. 

Figure 4: China inflation data

Key macro events this week: inflation data and Trump-Xi summit

(All times in GMT+8)

Monday 11 May 2026

• 9.30am — China inflation rate YoY (April): previous 1%, consensus 0.8%
• 9.30am — China PPI YoY (April): previous 0.5%, consensus 1.5%
• 10.00pm — US existing home sales (April): previous 3.98 million, consensus 4.05 million

Tuesday 12 May 2026

• 8.30am — Australia Westpac consumer confidence change (May): previous -12.5%
• 9.30am — Australia NAB business confidence (April): previous -29
• 8.30pm — US core inflation rate MoM (April): previous 0.2%, consensus 0.4%
• 8.30pm — US core inflation rate YoY (April): previous 2.6%, consensus 2.7%
• 8.30pm — US inflation rate MoM (April): previous 0.9%, consensus 0.6%
• 8.30pm — US inflation rate YoY (April): previous 3.3%, consensus 3.7%

Wednesday 13 May 2026

• 8.30pm — US PPI MoM (April): previous 0.5%, consensus 0.4%
• Trump-Xi summit, Beijing (Day 1)

Thursday 14 May 2026

• 2.00pm — UK GDP growth rate QoQ preliminary (Q1): previous 0.1%, consensus 0.6%
• 8.30pm — US retail sales MoM (April): previous 1.7%, consensus 0.6%
• Trump-Xi summit, Beijing (Day 2)

Friday 15 May 2026

• Trump-Xi summit, Beijing (Day 3)

Key corporate earnings

(In local exchange time)

Tuesday 12 May 2026

• Mitsubishi Heavy Industries 
• JD.com

Wednesday 13 May 2026

• Alibaba
• Tencent
• Softbank 
• Sumitomo Mitsui Financial Group 
• Cisco

Thursday 14 May 2026

• Applied Materials

Friday 15 May 2026

• Mitsubishi UFJ Financial Group 

_{Source: Trading Economics, Nasdaq, LSEG (as of 10 May 2026)}