MARKETS IN A NUTSHELL — FOR MAY 2026

US and world share market indices again made new records, helped by better-than-expected corporate earnings and the AI boom. Semiconductor shares have had their strongest start to the year since the dotcom bubble. Meanwhile, about 85% of companies in the index of the 500 most valuable listed companies on US stock markets reported first-quarter earnings that beat estimates.

Enthusiasm spread to emerging Asia, where Korean and Taiwanese chipmakers boosted markets. Samsung burst through a $1 trillion valuation and is now within sight of $2 trillion. TSMC — already valued over $2 trillion — is the world’s sixth-largest corporation by market valuation. However, Chinese share markets traded lower, despite surging exports.

Global bond markets were less cheerful last month. Three months of war-related oil shortages are starting to bite. Inflationary pressures are rising across several major economies, and bond markets are sending clear signals. In May, the US sold 30-year debt at yields above 5% for the first time since 2007. Bond prices fall when yields rise.

Newly confirmed US central bank chair Kevin Warsh starts with an awkward brief: political pressure for lower rates, equity markets at record highs and price pressures that argue for restraint. In Europe, policymakers may soon be forced into raising interest rates for the first time in three years as inflation accelerates.

South Africa faces the same problem, with less room to absorb it. Fuel and transport costs have helped to push inflation higher, despite government fuel-levy relief. The ever-hawkish SA Reserve Bank raised its main policy rate to 7%. This is not good news for struggling consumers. With commodity prices — including oil — taking a breather last month, the JSE traded sideways. However, South African bonds climbed again after Moody’s Investors Service improved South Africa’s credit-rating outlook.

The Foord global funds are positioned away from the frothiest sections of global markets. A hedge against a fall from extreme levels of US share markets weighed on the performance of the flagship Foord International Fund, as did positions in utilities as the interest rate outlook worsened. The global equity funds traded lower after Chinese shares fell.

The Foord SA multi-asset funds were negative in the month, dragged lower by global assets and the stronger rand. The Foord Equity Fund maintains its lower weight to cyclical resources shares and has performed credibly this year. The Foord fixed income suite is positioned for resilience if inflation accelerates, as now seems likely. The funds have performed near the top of their respective sectors this year.

The animal spirits in global share markets seem unconstrained for now. The bull market may yet have further to run, especially if anticipated listings of SpaceX, Anthropic and OpenAI feed investors’ appetite for anything tied to the AI theme. But inflation is moving in the wrong direction again, and bond markets are suggesting caution.

Foord portfolios are positioned with that asymmetry in mind. We are prepared to give up some upside in the most crowded trades to protect capital where prices already assume too much good news. That discipline can feel unrewarding in exuberant markets. It usually matters most when markets change their mind.