Monthly Report May 2026

Driven by the AI boom, global equity markets continued their positive trend in May. While the Swiss Performance Index in CHF and the German DAX in EUR each gained 3.3%, the S&P 500, MSCI World, and the MSCI Emerging Markets index rose by 5.3%, 4.6%, and 9.7% respectively (all in USD). Hopes for a lasting ceasefire between the US and Iran led to a significant decline in oil prices during the month. However, because the Strait of Hormuz remains de facto closed and a significant increase in inflation was observed in April, long-term interest rates remain at elevated levels.

USA and China Meet for Talks

During talks between Donald Trump and Xi Jinping, both sides agreed to build a "constructive relationship of strategic stability." This diplomatic phrasing signals that neither the US nor China intends to pursue confrontation in the short term.
Beijing has pledged to expand imports of American products, specifically intending to purchase 200 Boeing aircraft and re-allow higher agricultural imports, including US beef and poultry. Additionally, tightened controls on rare earth exports from the end of 2025 have been temporarily suspended, though restrictions on heavy rare earths from April 2025 remain in place. This allows China to retain significant influence over global supply chains for AI hardware, defense, electromobility, and the energy transition. Accordingly, there was no concession from the US regarding export controls on AI chips or semiconductor technology.
Competition between the US and China in the technology sector persists. The US focuses on mutual trade, while China reiterated that Taiwan represents its most important red line.

Fund and Mandate Performance

All Format investment assets achieved positive performance in May. Growth-oriented investments in Swiss Equities and Swiss Mid & Small Cap Equities saw the strongest gains, rising by 7.3% and 6.1% respectively, significantly outperforming their benchmarks. The year-to-date performance of the funds and mandates can be accessed via the link below.

Outlook

The meetings of the major central banks will take place in mid-June. The market currently expects a 0.25% interest rate hike from the European Central Bank (ECB). In contrast, no change in monetary policy is anticipated in the US and Switzerland. However, due to higher inflation, it seems clear that the interest rate cuts expected from the US central bank earlier in the year will be postponed.
Later in the year, it will become clear how significantly higher inflation will actually dampen economic growth driven by AI investments.
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Best regards
Matthias Hug and Markus Lackner

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