US equities at all-time highs, while oil plunges in May

Summary

Moving Markets – US Equities at All-Time Highs, While Oil Plunges in May

Podcast: Moving Markets (Julius Baer)
Episode Date: May 29, 2026
Host: Helen Frear
Guests: Mike Rauber (Market News), Tim Gagy (FX & Metals)

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Episode Overview

This episode of Moving Markets examines the contrasting dynamics at play: US equities surging to record highs despite dramatic declines in oil prices, and the market’s reaction to ceasefire negotiations between the US and Iran. The hosts also discuss shifts in FX and precious metals, with special attention to gold’s technical break and the ultra-quiet FX environment.

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Key Discussion Points & Insights

1. US & European Market Highlights

With Mike Rauber [00:34 – 06:06]

• Middle East Geopolitics Drive Volatility

  • Unconfirmed reports about a US-Iran deal for a 60-day ceasefire and reopening of the Strait of Hormuz buoyed markets, though final approval is pending.

  “Talk is about a 60 day ceasefire extension that would reopen the Strait of Hormuz. But that deal still needs the US President's final approval.” – Mike Rauber [00:48]

• Oil Markets: May Meltdown

  • Brent crude fell another 1%, trading near $93 per barrel, now down over 18% for May—the steepest monthly drop since March 2020.
  • Lower oil prices eased inflation fears, sparking a sovereign bond rally (yields down).

• Equity Markets: Defying Gravity

  • EU’s Stoxx 600 ended -0.5% but rebounded from earlier lows.
  • European defense stocks soared after Ukraine and the EU struck major arms deals.
  • All major US indices closed at record highs: S&P 500, NASDAQ, and even small-cap Russell 2000.
    • Notable stock movers:
      • Eli Lilly rose on news of CVS reinstating coverage for its weight-loss drug.
      • Microsoft lifted by rumors of a significant coding model announcement.
      • Dell Technologies spiked 40% post-close due to strong sales outlook.
      • SpaceX reportedly cut IPO valuation target to $1.8 trillion.
      • Anthropic (AI company) raised its valuation to $965 billion, outpacing OpenAI.

  “After the market close, Dell technologies surged nearly 40% on a better than expected sales outlook.” – Mike Rauber [02:18]

2. US Economic Data Print

• Core PCE (Fed’s preferred inflation gauge):
  • Rose by 0.2% in April, slightly below estimates.
  • Year-on-year, still up 3.3%, marking a two-year high in annual inflation.
  • Concerns noted: Real disposable income declined for the third straight month, and household delinquencies hit the highest levels since the financial crisis.
  • Q1 2026 GDP revised down to 1.6% from initial 2%.

  “Data showed also that real disposable income fell half a percent, marking a third straight monthly decline, while household delinquency reached their highest level since the financial crisis.” – Mike Rauber [03:05]

3. Asian Market Performance

• Japan & South Korea: Equities soared nearly 3% on tech sector strength.

  • Japanese 2-year bond yields edged up.
  • Tokyo inflation slowed for sixth consecutive month.
  • Japan’s industrial output surprised to the upside (+0.8%).

• China: April export prices climbed 5% YoY—the fastest in 3 years—driven primarily by oil and semiconductor demand. Gains were concentrated in key sectors, with ongoing price pressure in traditional exports (rubber, plastics, textiles).

4. Digital Assets Update

• Bitcoin slipped to about $73,000 despite US presidential pro-crypto rhetoric.
  • President Trump’s social media advocacy for crypto and regulatory clarity failed to lift prices.

  “Now this suggests pro crypto messaging from Washington is losing its impact on digital asset prices.” – Mike Rauber [05:14]

5. Preview: Day’s Key Data & Market Open

• Focus on May inflation prints for Germany, France, and Italy, and German unemployment. US traders watching the goods trade balance for April.
• Europe expected to open "slightly in the green."

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FX & Metals: Analysis & Opportunities

With Tim Gagy [06:11 – 09:34]

1. Metals: Volatile, News-Driven

• Gold broke below major support (the 200-day moving average) across several currency pairs before rebounding on ceasefire rumors.

  • First break since 2023, marking a critical technical development.

  “Yesterday gold broke below the 200 day moving average… it's a support line that had not previously been broken since 2023 before the whole central bank driven buying uptrend began.” – Tim Gagy [06:29]

• Outlook:

  • If US-Iran talks are truly constructive, gold may climb, but uncertainty dominates.
  • Notable quip:

    “A friend of mine said yesterday there is light at the end of the cliff, which I thought was rather good.” – Tim Gagy [07:05]

2. FX Markets: Muted & Range-Bound

• Extremely low volatility, tight ranges.
  • Euro-Dollar range was just 40 pips for most of the week, extending to 70 pips.

  “Volatility... keeps falling. Ranges are ridiculously narrow.” – Tim Gagy [07:38]

  • No significant drivers to break out of the narrow bands; healthy demand for both buying and selling dollars appears "blocked".
  • No imminent change expected, even if geopolitical news breaks positively.

3. Market Opportunities

• Aussie Dollar: Remains a preference for Tim—suggests adding on dips or using reverse convertibles.
• Gold: Prefers using technical solutions like reverse convertibles given the difficulty of timing direct purchases.
• Major currencies: Too little movement for conviction trades; possible (minor) range-trading opportunities for cash-rich investors, but risk of getting stuck is present.

  “There’s not a million opportunities out there. It's definitely a pretty tough market.” – Tim Gagy [09:29]

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Memorable Quotes & Moments

• “Oil reversed earlier gains to close lower... this brings its May decline to over 18%, the steepest since March 2020.” – Mike Rauber [00:48]
• “Dell technologies surged nearly 40% on a better than expected sales outlook.” – Mike Rauber [02:18]
• “A friend of mine said yesterday there is light at the end of the cliff, which I thought was rather good.” – Tim Gagy [07:05]
• “The interest in selling dollars is blocked by the lack of yield elsewhere, which I've spoken about many times. And the interest in buying dollars remains blocked by wariness.” – Tim Gagy [07:55]

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Timestamps for Key Segments

• Market News Roundup (Mike Rauber): [00:34 – 06:06]
• US, European & Asian market highlights: [00:34 – 05:04]
• Digital assets update: [05:04 – 05:36]
• Day’s data preview & open: [05:36 – 06:03]
• Metals & FX with Tim Gagy: [06:11 – 09:34]

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Tone & Takeaways

The episode stays analytical yet conversational, with concise summaries underscoring the tension between risk (geopolitical, economic) and reward (record equity highs, select stock outperformance). The technical break in gold and the near-paralysis in FX markets is rendered with dry humor and realism—reflective of the cautious optimism and wariness pervading markets in late May 2026.

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Listeners are encouraged to keep an eye on breaking geopolitical news, tech-sector earnings, and key inflation data for guidance on near-term market moves. For FX and metals traders, patience (and technical strategies) is key in a market where conviction trades are difficult to place.

Transcript

[A]

Good morning everyone, and welcome to Julia Spares Moving Markets podcast. It's Friday 29th May, and my name is Helen Frear. My first guest this morning will be Mike Rauber and he'll be giving us a roundup of the latest news in financial markets. And then I'll be catching up with Tim Gagy on the latest moves in FX and metals markets. But first up with the market news, it is Mike. Good morning, Mike. Thanks for joining me.

[B]

Yeah, Good morning, Helen.

[A]

U.S. stocks advanced on Thursday and European shares pared losses following so far unconfirmed reports that the US and Iran have reached an agreement to extend the ceasefire and start negotiations.

[B]

Yeah, indeed. So talk is about a 60 day ceasefire extension that would reopen the Strait of Hormuz. But that deal still needs the US President's final approval. Treasury Secretary Scott Besant added to the speculation by saying that we perhaps have the makings of a deal. Oil reversed earlier gains to close lower Brent is down a further 1% this morning near $93 per barrel. Now this brings its may decline to over 18%, the steepest since March 2020.

[A]

Okay, and how was this reflected in financial markets?

[B]

Lower oil prices means easing inflation risks and so sovereign bonds continue to rally with yields lower. The pan European Stoxx 600 ended the day 0.5% off, but off its low as you mentioned before. Now, European defence stocks rallied after Ukraine's Parliament ratified a 90 billion euro loan agreement and the EU and Ukraine agreed to buy Sweden's Gripen fighter jets. Now over in the US after starting the day, lower equities rose with not only the S&P 500 and NASDAQ but also the small cap Russell 2000 closing at an all time high. Eli Lilly advanced after CVS said it will bring back SEP bound coverage. The company's weight loss drug. And Microsoft was up on a report that it will release a new coding model next week.

[A]

The technology sector is still very much in focus, right?

[B]

Absolutely. After the market close, Dell technologies surged nearly 40% on a better than expected sales outlook. SpaceX, meanwhile, is reported to have cut its IPO valuation target to at least 1.8 trillion from around $2 trillion. And AI firm Anthropic raised $65 billion, valuing the company at 965 billion, surpassing competitor OpenAI. Entropic with its chatbot Cloth is on track to reach $50 billion in annualized revenue next month.

[A]

We had some US economic data out as well. Core PCE, the Fed's preferred measure of inflation, rose by 0.2% in April. That came in slightly below expectations.

[B]

But on the year prices are still up 3.3%, the highest in two years. Data showed also that real disposable income fell half a percent, marking a third straight monthly decline, while household delinquency reached their highest level since the financial crisis. According to the Wall street journal, first quarter GDP was also revised down to 1.6%, annualized from 2% previously reported. In short, the Fed, now chaired by Trump appointee Kevin Walsh, faces a challenging task now.

[A]

Over in Asia, equity markets are trading at new all time highs. South Korea and Japan are up nearly 3% on strength in technology names. Hong Kong's Hang seng is up 1%

[B]

and first in Japan. Looking at the broader financial markets there, two year government bond yields edged higher after slightly weak auction. The yen is holding near 159.30 per dollar as Tokyo's key inflation gauge cooled unexpectedly for six straight months to 1.4%, though a rate hike next month is still seen as likely. And industrial output rose 0.8% in April. That was much better than expected because economists had expected a contraction of 0.6%.

[A]

In China, April export prices rose at their fastest annual pace in three years, driven by the global oil shock and the AI led surge in chip prices.

[B]

The headline number is that the prices rose 5%, but really price gains were concentrated in a few exports, while most products including rubber, plastics and textiles continue to decline. This divergence likely reflects intense competition in traditional sectors, limiting producers ability to pass on higher input costs.

[A]

Turning to digital assets, Bitcoin weakened, trading around $73,000 despite a fresh push on social media by President Trump.

[B]

Yeah. Now this suggests pro crypto messaging from Washington is losing its impact on digital asset prices. The US President highlighted the US as the crypto capital of the world in a true social post, praised the industry's returns and reiterated support for the Clarity act to establish clearer rules.

[A]

Okay, just lastly then, what should we be expecting today, Mike?

[B]

A host of data releases including the flash inflation prints for May from Germany, France and Italy, alongside with German unemployment for May. And in the US we'll also get the advanced goods trade balance for April. And just taking a quick look at futures, I see that Europe will open up slightly in the green.

[A]

Wonderful. Thanks a lot Mike for the great roundup this morning.

[B]

Thank you very much for having me, Alan.

[A]

And now over to you, Tim. Good morning. Firstly.

[C]

Good morning, Alan.

[A]

So quite an up and down week and very headline driven. Seen most clearly in metals. Gold broke some important Support levels. What do you think happens next?

[C]

Yeah, metals are still very sensitive to news flow regarding the war between the US and Iran and sharp swings get triggered by just whatever the most recent headline is. Yesterday gold broke below the 200 day moving average against dollars, sterling and Swiss francs. It's then bounced higher on these latest ceasefire rumors. Unconfirmed reports the moving average is important because that's a support line that had not previously been broken since 2023 before the whole central bank driven buying uptrend began. Closing above this line today will be better than closing below it and so far that was quite likely, but nonetheless we did trade through it yesterday and that's a level that's been talked about a lot of late. I think if there really is progress between the US and Iran and talks really are constructive on both sides, then I would expect gold to move higher and we are $1,000 lower than the high of the year. But as always, it's a bit early to know how real this all is. A friend of mine said yesterday there is light at the end of the cliff, which I thought was rather good. So let's see what the weekend brings us.

[A]

FX seem to be much quieter with tight ranges all week, despite the news flow. So any change in sight here?

[C]

FX is so quiet. Volatility. The TJS keeps falling. Ranges are ridiculously narrow. Between Monday and Wednesday, Eurodollar traded in a range of 40 pips. It's just nothing. Yesterday we did see a brief dip below 116 to extend the range to 70 pips for the week, but it's not really exciting. And then here we are. So the short answer is no, I don't. I don't think there's any change in sight. I think the interest in selling dollars is blocked by the lack of yield elsewhere, which I've spoken about many times. And the interest in buying dollars remains blocked by wariness of a safe haven surgeon. If things get worse again or some other, or if things really do improve and then there's going to be potentially some selling. So even if there's real progress in the peace talks, I don't think this translates into a big dollar sell off. I think we stay in the same ranges for the foreseeable future, boring as that may be.

[A]

All right, what opportunities are you looking at this week then, Tim?

[C]

That's a pretty tough one. As you can probably tell, the same themes are still evident. We still like the Aussie dollar here, and I look to add exposure on dips, either directly or maybe through a reverse convertible for example, metals are tough, they are easier to trade. Using hindsight at the moment today, it's blindingly obvious that we should have bought gold yesterday. Below 4400 yesterday it was a bit less clear. So in gold, as I said, I think I'd really stick to reverse convertible setting a put. I think trying to pick the buy level is too hard, but I think nonetheless there's good opportunities there in the major currencies. It's hard to have any conviction at all. Investors with lots of cash might look at trying to capture the range, such as it is. I mean, the range is very tight, but nonetheless volatility being so low also suggests there's not much happening. But I do think the levels are getting a bit tight, so I just think we stay blocked in range bound. So I think if you're going to try and play ranges, it's good to do them in such a way that you're not going to get somehow stuck on a position because you know, it was a bit maybe bigger than what you intended. So yeah, look, there's not a million opportunities out there. It's definitely a pretty tough market.

[A]

Thank you, Tim. Great to speak to you as always. So that is all for today. Thank you again to my guests this morning and thank you all for tuning in. Please subscribe to our show if you enjoy it and you can of course also leave us a review on whichever platform you like to listen on. So we'll be back again on Monday morning. Do join us then. Jan will be back as your host and he'll be joined, as always, by more of our colleagues to talk about what is moving markets. But until then, I wish you all a great day and then a great weekend. Bye for now.

[D]

The information and opinions expressed in this podcast constitute marketing material and are not the result of independent financial or investment research. Please refer to www.juliusbear.com legal podcasts for further other important legal information.