The week ahead 11 May 2026 - US techs dominate stock market rally
What to watch out for in the UK economy and property market this week.
One of the surprises of recent weeks has been the resilience of equity markets, particularly in the USA, despite the impact of the Middle East war on the global economy. Since the start of April, the S&P 500 benchmark US shares index has increased by more than 12%, something that cannot just be dismissed as driven by oil and gas companies. According to analysis from UBS, half of the price growth has come from five tech firms – Alphabet (the owner of Google), Amazon, Apple, Broadcom and Nvidia. This shows the ongoing confidence investors have in the prospects of the technology sector. It also in our opinion suggests that investors have not turned completely risk averse in the face of the war, but instead are becoming more selective on where they deploy funds.
Last week saw a rally for UK gilts, with the 10-year yield declining to 4.89% on Friday afternoon, down from its 23rd April peak of 5.20%. While some commentators have attributed this to Prime Minister Starmer pledging not to quit in the aftermath of the government’s poor showing in the local and devolved assembly elections, it may also be a case of gilts rallying after having become oversold. April saw a lot of gloomy commentary on the UK economy, although subsequent statistics have shown a level of resilience. For instance, we have just seen the strongest April for new car sales since 2019, according to SMMT. Also, there was an upwards revision for the UK PMI business activity index for April, from 52.0 to 52.6 – a reading of above 50.0 for the index points to growth for the commercial side of the economy.
Across the Atlantic, there was good news on the US jobs market, with non-farm payrolls rising by 115,000 in April, beating Wall Street forecasts of 67,000 by a significant margin. The unemployment rate was unchanged at 4.3%, pointing to a stable labour market, despite the war.
This week sees the publication of data on US inflation and UK GDP growth.
That US inflation rose higher in April is widely predicted, but what will be interesting to see is whether this adds to the political pressure on the Trump White House to end the war against Iran. Opinion polls show the conflict is unpopular with the electorate, and US Midterm elections are scheduled for November.
Turning to UK economic growth, the monthly GDP figures have already shown output grew in January and February. However, March was the first full month impacted by the war. So, the question is: how greatly did the conflict and resulting energy price spike impact activity in March? We believe that it will take time for the war to slow growth, so overall we expect the Q1 figure to report higher growth, at least compared to the weak preceding quarter.
This week’s figures
TUESDAY 12 May
US CPI Inflation, y-on-y, April
3.3% PREVIOUS
3.6% FORECAST
A rise in inflation driven by higher petrol prices is a near certainty for April. The markets will be watching to see if the increase is stronger than expected, which might step up pressure on President Trump to conclude the Middle East war.
THURSDAY 14 May
UK GDP Growth, q-on-q, Q1
0.1% PREVIOUS
0.3% FORECAST
We believe growth probably weakened in March, due to the war, but the momentum seen in January and February persuades us to forecast higher growth in Q1 compared to the final quarter of last year.
