Market Navigator: Nasdaq and HSI retreat ahead of NVIDIA earnings
Week of 18 May 2026

Last week's recap: Inflation pressure mounts while Trump meets Xi in Beijing

• China inflation turns a corner: China's consumer price index (CPI) rose 1.2% year-on-year (YoY) in April, beating the 0.9% consensus, lifted by energy prices and holiday travel spending. The producer price index (PPI) surged 2.8% YoY — the fastest since July 2022 and well above the 1.5% forecast — driven by Middle East supply disruptions and Beijing's capacity-reduction drive.
• US inflation highest since May 2023: US annual inflation accelerated to 3.8% in April (March: 3.3%), with energy costs jumping 17.9% YoY and accounting for over 40% of the monthly increase. Core CPI rose 0.4% month-on-month (MoM) and 2.8% YoY, keeping prices well above the Federal Reserve's (Fed) 2% target.
• US Treasury yields extend climb: Surging oil prices, persistent inflation and a run of soft Treasury auctions pushed the 30-year yield to 5.13% — its highest closing level since June 2007 — while the 10-year yield rose to 4.60%. Markets now price a 50% probability of a Fed rate hike this year, underpinning a 1.5% weekly dollar gain — its strongest in two months.
• Trump-Xi summit: trade and Taiwan: The leaders pledged to enhance economic cooperation at the Beijing summit, but China agreed to purchase Boeing jets well below pre-trip expectations. There were also few concrete outcomes beyond a broad commitment to stabilise relations, while Xi warned that mishandling Taiwan could lead to conflict. The yuan briefly touched a three-year high before retreating to around 6.81 per dollar.

Markets in focus: Nasdaq 100 snaps seven-week streak, HSI retreats below 26,000 and sterling hits six-week low

Nasdaq 100 snaps seven-week winning streak as AI hardware names retreat

US equity markets showed signs of fatigue last week, with the S&P 500 eking out a marginal 0.1% gain, the Dow declining 0.2%, and the Nasdaq 100 slipping 0.4% — its first weekly decline in seven weeks. The broader macro backdrop weighed heavily: WTI crude oil surged 10.5% to close above $105 per barrel as the Iran conflict showed no signs of resolution, global government bonds yields spiked on mounting inflation concerns, and the Trump-Xi summit yielded no concrete commitments on trade or geopolitical flashpoints.

At the stock level, profit-taking hit several AI-related hardware names. Intel fell 12.9% after a UBS report confirmed the company is losing server market share to AMD and ARM, compounding the reversal from its extraordinary 260% year-to-date run. Super Micro Computer dropped 12.2% as ongoing legal proceedings related to alleged Nvidia chip smuggling to China continued to weigh on sentiment, while SanDisk declined 9.9% in line with the broader semiconductor selloff.

Cisco was the standout gainer, surging 22.4% after posting a record quarterly result. Revenue rose 12% YoY to $15.8 billion, beating expectations, while year-to-date AI infrastructure orders from hyperscalers reached $5.3 billion — already above its prior full-year target — prompting management to raise its FY2026 AI order guidance to $9 billion.

Following an impressive rally of close to 30% since 31 March, the US Tech 100 index pulled back on Friday, providing a healthy reset as the index targets the 30,000 level. The medium-term bullish trend remains intact as long as the index holds above 26,200. Immediate support lies near 28,200, where the 20-day moving average (MA) resides.

Figure 1: US Tech 100 index daily price chart

HSI retreats below 26,000 as summit disappointment and mixed earnings weigh

The Hang Seng Index (HSI) declined 1.6% last week, as the Trump-Xi summit failed to provide the concrete catalyst markets had anticipated. Despite a broadly constructive tone, China offered no firm commitment on Iran, while sensitive trade issues — including chip export restrictions and rare earth controls — remained unresolved. The absence of substantive breakthroughs left investors to refocus on corporate earnings, where China's large-cap internet platforms delivered a mixed but revealing set of results.

Alibaba's Q4 FY2026 results were the most concerning: revenue grew just 3% YoY, core e-commerce declined 1%, and the operation swung to a loss of RMB 848 million — the first since 2021 — as the company committed to exceeding its RMB 380 billion three-year AI investment envelope. Tencent's Q1 revenue rose 9% YoY, with AI monetisation showing early traction through advertising services, though management flagged further acceleration in capital expenditure (capex) in the second half. JD.com delivered 5% revenue growth, with retail operating margin expanding to a record 5.6%. Losses in its food delivery business narrowed meaningfully, signalling that the heaviest phase of investment may have passed. Across all three, the strategic playbook is similar — spend aggressively to capture market share — but the monetisation timeline appears longer and less certain in China than among their US peers. Their shares returned -4.8%, -3.2% and +7.9% respectively last week.

Despite an improvement in momentum through the week, Friday's pullback drove the HSI below the previous support level near 26,250. The weekly close below the 200-day MA suggests the index has reverted to a range-bound environment, with 25,500 now acting as the near-term support level and the recent high of 26,845 as the new resistance level.

Figure 2: Hang Seng Index daily price chart

Sterling slides to six-week low as Starmer leadership crisis deepens

Sterling fell 2.3% against the dollar last week — its worst weekly performance since November 2024 — as a deepening political crisis engulfed the Starmer government. Health Secretary Wes Streeting became the most prominent cabinet minister to resign on Thursday, criticising Starmer's leadership. Over 90 Labour MPs have called on Starmer to set a departure timetable following the party's disastrous local election results, which delivered sweeping gains for Reform UK and the Greens. With multiple potential challengers circling and no formal leadership contest yet triggered, markets are pricing in a prolonged period of political uncertainty.

The turmoil added a meaningful risk premium to UK assets. Ten-year gilt yields rose to 5.1% — their highest since 2008 — reflecting both the political uncertainty and the broader global repricing of sovereign debt amid elevated inflation. While first quarter (Q1) gross domestic product (GDP) expanded 0.6% quarter-on-quarter (QoQ) — the fastest pace in a year, led by a 0.8% expansion in services — the reading warrants caution on two counts. First, Q1 has consistently been the strongest quarter since 2022, with residual seasonality likely flattering the headline figure. Second, the data predates the full impact of the political crisis and only partially captures the response to the Middle East conflict. Since then, business confidence and hiring intentions have been deteriorating. The path of least resistance for GBP/USD remains to the downside until the leadership picture clarifies.

From a technical perspective, GBP/USD's outlook has turned negative after decisively falling below both the 50-day and 200-day MA last week. The relative strength index (RSI) also points to negative momentum as it approaches the 30 level. The downtrend will remain dominant unless the currency pair reclaims the 200-day MA near 1.343, though immediate support is expected near 1.316 — a local low recorded in late March.

Figure 3: GBP/USD daily price chart

Week ahead: China activity, UK inflation and NVIDIA earnings

China's April activity data on Monday will be the week's first major test of economic momentum. Fixed asset investment has rebounded as infrastructure spending accelerated, and industrial production is expected to strengthen as global businesses build stockpiles ahead of anticipated supply disruptions and price pressures stemming from the Middle East conflict. Retail sales — previously running at a modest 1.7% YoY — will be closely watched as an indicator of whether geopolitical uncertainty is weighing on consumer confidence. The property sector is forecast to remain in contraction for a 34th consecutive month.

The UK CPI release on Wednesday will reveal how much of the cost pressures flagged in May's purchasing managers' index (PMI) data — input costs at their fastest pace since June 2022 and selling prices at their highest since November 2022 — are being passed through to consumers, with direct implications for the Bank of England's (BoE) rate path.

In Japan, April core inflation data on Friday follows a surprisingly soft Tokyo reading, where price growth slowed to its lowest since March 2022 as energy subsidies and a high base offset upward pressure from a weaker yen and elevated import costs. Should underlying inflation remain subdued, the Bank of Japan (BoJ) may defer its next rate hike. Markets currently price approximately a 70% probability of a June move; a dovish repricing could renew pressure on the yen.

On the corporate front, Baidu reports on Monday, with attention on the potential Kunlun Xin spin-off and progress in AI monetisation. NVIDIA reports on Wednesday with its share price at record highs; supply chain capacity, the Rubin next-generation product roadmap and forward guidance will be in focus.

Figure 4: China economic activity data

Key macro events this week: China growth indicators; UK and Japan inflation

(All times in GMT+8)

Monday 18 May 2026

• 9.30am — China house price index YoY (April): previous -3.4%
• 10.00am — China industrial production YoY (April): previous 5.7%, consensus 5.9%
• 10.00am — China retail sales YoY (April): previous 1.7%, consensus 2.0%
• 10.00am — China fixed asset investment (YTD) YoY (April): previous 1.7%, consensus 1.6%

Tuesday 19 May 2026

• 7.50am — Japan GDP growth rate QoQ preliminary (Q1): previous 0.3%, consensus 0.4%
• 8.30am — Australia Westpac consumer confidence change (May): previous -12.5%
• 9.30am — Australia Reserve Bank of Australia (RBA) meeting minutes
• 2.00pm — UK unemployment rate (March): previous 4.9%, consensus 4.9%

Wednesday 20 May 2026

• 2.00pm — UK inflation rate YoY (April): previous 3.3%, consensus 3%

Thursday 21 May 2026

• 2.00am — US Federal Open Market Committee (FOMC) minutes
• 7.50am — Japan trade balance (April): previous ¥667 billion, consensus -¥29.7 billion
• 9.30am — Australia unemployment rate (April): previous 4.3%, consensus 4.3%
• 4.30pm — UK S&P Global manufacturing PMI flash (May): previous 53.7, consensus 53.5
• 4.30pm — UK S&P Global services PMI flash (May): previous 52.7, consensus 51.7
• 8.30pm — US building permits preliminary (April): previous 1.363 million, consensus 1.38 million
• 8.30pm — US housing starts (April): previous 1.502 million, consensus 1.42 million
• 9.45pm — US S&P Global manufacturing PMI flash (May): previous 54.5, consensus 53.8
• 9.45pm — US S&P Global services PMI flash (May): previous 51.0, consensus 51.3

Friday 22 May 2026

• 7.30am — Japan core inflation rate YoY (April): previous 1.8%, consensus 1.7%
• 2.00pm — UK retail sales MoM (April): previous 0.7%, consensus -0.6%

Key corporate earnings

(In local exchange time)

Monday 18 May 2026

• Baidu

Tuesday 19 May 2026

• Home Depot

Wednesday 20 May 2026

• NVIDIA
• Analog Devices

Thursday 21 May 2026

• NetEase
• Walmart

_{Source: Trading Economics, Nasdaq, LSEG (as of 16 May 2026)}