{"id":89065,"date":"2026-05-20T09:27:20","date_gmt":"2026-05-20T01:27:20","guid":{"rendered":"https:\/\/www.kgieworld.sg\/research\/?p=89065"},"modified":"2026-05-20T09:27:20","modified_gmt":"2026-05-20T01:27:20","slug":"weekly-securities-newsletter-20-may-2026","status":"publish","type":"post","link":"https:\/\/www.kgieworld.sg\/researchstg\/weekly-securities-newsletter-20-may-2026\/","title":{"rendered":"Weekly Securities Newsletter: 20 May 2026"},"content":{"rendered":"\n
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The Tug-of-War Between Conflict and Negotiation!<\/strong><\/p>\n\n\n\n

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Chart of the Week:
U.S.-Iran Negotiations and Conflicts Intertwine; Seize Buying Opportunities on Extended Market Corrections<\/strong><\/h2>\n\n\n\n

Despite the ceasefire announcement on April 8, the Strait of Hormuz has yet to return to normal operation. The strait remains heavily obstructed by mutual U.S.-Iran blockades, severely limiting the number of passing oil tankers. Although peace frameworks are actively being discussed, no definitive agreement has been reached, and sporadic skirmishes continue to keep Brent crude hovering above US$100\/barrel. Interestingly, tracking the Geopolitical Risk Indicator reveals a gradual, slow decline since the April ceasefire took effect. Even in the face of ongoing rhetoric and minor renewed clashes, this downward trend suggests the market expects both nations to ultimately settle disputes via diplomacy rather than escalating into full-scale conflict. Nonetheless, market volatility will intermittently resurface until the Strait of Hormuz completely reopens.<\/p>\n\n\n\n

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Market Recap 1:
AI Boom & Trump-Xi Summit Hopes Boost US Stocks; Europe Conservative<\/h2>\n\n\n\n

Despite the continuous rise in the latest US inflation data, optimistic market expectations for the AI technology sector have temporarily overshadowed concerns over rebounding prices. Coupled with positive anticipation ahead of the Trump-Xi summit, these factors jointly propelled a strong performance in US equities. However, this optimistic sentiment failed to replicate across the Atlantic, leaving European markets behind. Reflecting comments made by Trump prior to his visit to China that the US-Iran ceasefire agreement is on shaky ground, Brent crude prices rebounded once again. Concerns that resurgent inflation could prompt the Bank of England and the European Central Bank to resume interest rate hikes have visibly revived risk-averse sentiment among European investors. Consequently, declines in German and French stock markets weighed on overall European equities, while UK stocks demonstrated a relatively resilient, shock-resistant character.<\/p>\n\n\n\n

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Market Recap 2:
US-Iran Negotiations Deadlocked; Crude Oil Prices and US Treasury Yields Rebound Again<\/h2>\n\n\n\n

The consecutively released US CPI and PPI data have continued to trend upward on a month-on-month basis and surpassed market expectations, indicating persistent short-term inflationary pressures. Coupled with a rebound in oil prices that supports inflation expectations, market projections for Federal Reserve rate cuts have continued to narrow. This has driven US Treasury yields higher once again, weighing on bond prices; however, short-duration Treasuries, which carry lower interest rate risk, suffered relatively milder declines. Regarding non-US bonds, market expectations that inflationary pressures could prompt the European Central Bank to raise interest rates as early as June have also put performance under pressure for European investment-grade bonds. Furthermore, Asia\u2014which has the highest proportion of Middle Eastern energy imports\u2014remains the region most vulnerable to the US-Iran conflict. As the blockade of the Strait of Hormuz persists, Asia can hardly escape the risk of rising commodity prices, leaving regional bond prices under downward pressure.<\/p>\n\n\n\n

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What\u2019s Trending:
Inflation Rebounds, Warsh Era Faces a Headwind Start<\/h2>\n\n\n\n

Inflation data for April showed no signs of slowing down, with the US headline Consumer Price Index (CPI) annual growth rate rebounding to 3.8%. This figure landed above the market expectation of 3.7% and the previous reading of 3.3%. Concurrently, core CPI rose 2.8% year-over-year, also coming in higher than both the projected 2.7% and the prior month\u2019s 2.6%. An observation of this expansion indicates that the primary driver remains the stubbornly elevated energy component. If the Middle East conflict continues to drag on, high energy costs could prolong the duration of this inflationary resurgence, potentially leading market expectations for interest rate cuts to narrow once again.<\/p>\n\n\n\n

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In Focus 1:
Wage Growth Strengthens Economic Cycles; BoJ Rate Hike Looms in June<\/h2>\n\n\n\n

The latest economic data reveals that although nominal and real wage growth slowed slightly in March, real wages have achieved three consecutive months of positive growth. This indicates that wage increases are beginning to outpace inflation, reflecting an ongoing recovery in Japan\u2019s domestic demand momentum. Consequently, the positive economic cycle\u2014where wage increases drive consumption, and consumption elevates prices to support overall economic growth\u2014is poised to strengthen.<\/p>\n\n\n\n

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In Focus 2:
Strong 1Q26 Earnings Draw Foreign Capital, Policy Backs Semiconductors and Defense<\/h2>\n\n\n\n

Japanese equities staged a prominent rally following the conclusion of the Golden Week holidays. Largely benefiting from the stellar earnings reports released by US technology heavyweights, the Nikkei 225 Index, spearheaded by the semiconductor sector, briefly broke through the 62,000-point threshold to chart a new historic high. Furthermore, with one-third of the Nikkei constituents having reported their earnings, approximately 58% of these companies delivered profits and 67% reported revenues that beat market expectations. Wall Street consensus has even revised next-quarter earnings guidance upward by around 7% for Japanese tech firms. These outstanding financial performances and forward-looking forecasts have continuously drawn foreign capital into the market, which is expected to accelerate the upward momentum of Japanese stocks.<\/p>\n\n\n\n

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Chart of the Week: Fed Meeting: A Dilemma for Any Future Chair. The Fed kept rates unchanged at 3.5\u20133.75%, in line with expectations. At his Senate hearing, chair nominee Kevin Warsh reiterated that interest rates should remain the primary policy tool and expressed concerns over the size of the balance sheet.<\/p>\n","protected":false},"author":1,"featured_media":78162,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_eb_attr":"","_uag_custom_page_level_css":"","_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[35],"tags":[],"class_list":["post-89065","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-global-markets-weekly-updates"],"aioseo_notices":[],"uagb_featured_image_src":{"full":["https:\/\/www.kgieworld.sg\/researchstg\/wp-content\/uploads\/2025\/09\/g9fb145868bbf4b2a0a600cc5191443399fbcb8b9a0187cdd7c7e76e4e43f03ce27420dc14de53e4d0b320ccd4e12316d_1280-582929.jpg?wsr",851,1280,false],"thumbnail":["https:\/\/www.kgieworld.sg\/researchstg\/wp-content\/uploads\/2025\/09\/g9fb145868bbf4b2a0a600cc5191443399fbcb8b9a0187cdd7c7e76e4e43f03ce27420dc14de53e4d0b320ccd4e12316d_1280-582929-150x150.jpg?wsr",150,150,true],"medium":["https:\/\/www.kgieworld.sg\/researchstg\/wp-content\/uploads\/2025\/09\/g9fb145868bbf4b2a0a600cc5191443399fbcb8b9a0187cdd7c7e76e4e43f03ce27420dc14de53e4d0b320ccd4e12316d_1280-582929-199x300.jpg?wsr",199,300,true],"medium_large":["https:\/\/www.kgieworld.sg\/researchstg\/wp-content\/uploads\/2025\/09\/g9fb145868bbf4b2a0a600cc5191443399fbcb8b9a0187cdd7c7e76e4e43f03ce27420dc14de53e4d0b320ccd4e12316d_1280-582929-768x1155.jpg?wsr",768,1155,true],"large":["https:\/\/www.kgieworld.sg\/researchstg\/wp-content\/uploads\/2025\/09\/g9fb145868bbf4b2a0a600cc5191443399fbcb8b9a0187cdd7c7e76e4e43f03ce27420dc14de53e4d0b320ccd4e12316d_1280-582929-681x1024.jpg?wsr",681,1024,true],"1536x1536":["https:\/\/www.kgieworld.sg\/researchstg\/wp-content\/uploads\/2025\/09\/g9fb145868bbf4b2a0a600cc5191443399fbcb8b9a0187cdd7c7e76e4e43f03ce27420dc14de53e4d0b320ccd4e12316d_1280-582929.jpg?wsr",851,1280,false],"2048x2048":["https:\/\/www.kgieworld.sg\/researchstg\/wp-content\/uploads\/2025\/09\/g9fb145868bbf4b2a0a600cc5191443399fbcb8b9a0187cdd7c7e76e4e43f03ce27420dc14de53e4d0b320ccd4e12316d_1280-582929.jpg?wsr",851,1280,false]},"uagb_author_info":{"display_name":"admin","author_link":"https:\/\/www.kgieworld.sg\/researchstg\/author\/admin\/"},"uagb_comment_info":0,"uagb_excerpt":"Chart of the Week: Fed Meeting: A Dilemma for Any Future Chair. The Fed kept rates unchanged at 3.5\u20133.75%, in line with expectations. At his Senate hearing, chair nominee Kevin Warsh reiterated that interest rates should remain the primary policy tool and expressed concerns over the size of the balance sheet.","_links":{"self":[{"href":"https:\/\/www.kgieworld.sg\/researchstg\/wp-json\/wp\/v2\/posts\/89065","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.kgieworld.sg\/researchstg\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.kgieworld.sg\/researchstg\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.kgieworld.sg\/researchstg\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.kgieworld.sg\/researchstg\/wp-json\/wp\/v2\/comments?post=89065"}],"version-history":[{"count":0,"href":"https:\/\/www.kgieworld.sg\/researchstg\/wp-json\/wp\/v2\/posts\/89065\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.kgieworld.sg\/researchstg\/wp-json\/wp\/v2\/media\/78162"}],"wp:attachment":[{"href":"https:\/\/www.kgieworld.sg\/researchstg\/wp-json\/wp\/v2\/media?parent=89065"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.kgieworld.sg\/researchstg\/wp-json\/wp\/v2\/categories?post=89065"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.kgieworld.sg\/researchstg\/wp-json\/wp\/v2\/tags?post=89065"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}