Market insight - global monthly outlook - June 2026

Global Outlook

US equity markets continued to perform strongly, with major indices reaching new highs, supported by robust AI driven earnings and improving sentiment as geopolitical tensions eased. S&P 500 and NASDAQ index returned 5.3% and 8.4% respectively within the month.

European equity markets edged higher, MSCI Europe Index returned 3.3% which supported by falling oil prices and easing geopolitical concerns. Gains were led by technology stocks amid continued AI‑driven optimism, while energy and utilities lagged as oil prices declined.

Asia equity markets delivered strong gains in May, outperforming developed markets, although performance remained highly concentrated in a small number of technology and semiconductor stocks.

United States

• US equity markets built on the previous month’s strong performance, delivering positive returns for May broadly in line with global equities. The S&P 500 and Nasdaq reached fresh record highs. However, sector performance was uneven, with index gains concentrated heavily in information technology, consumer discretionary, and healthcare.
• The inflation rate increased in April from 3.3% to 3.8%, largely driven by higher energy prices linked to the conflict in the Middle East.

Europe (including UK)

• European equity markets continue to tick higher, with the technology sector (up over 15%) the dominant driver amid ongoing AI euphoria.
• At the same time, the growth outlook weakened, with the European Commission downgrading its GDP forecasts, highlighting the ongoing economic impact of recent energy shocks.

Asia Pacific (ex Hong Kong ex China ex Japan)

• Asia Pacific equity markets delivered strong gains in May, though breadth remained narrow.
• Korea and Taiwan were the clear standouts, driven by demand linked to artificial intelligence and the semiconductor cycle, while returns elsewhere were more mixed.

Hong Kong and Mainland China (H-shares)

• The Hang Seng Index dropped by 1.7% in May, largely reflecting a consolidation after earlier gains amid a more uncertain external backdrop.
• Hang Seng China Enterprises index is also down by 2.6%, as markets navigated evolving geopolitical developments, and a still uneven domestic recovery.

Japan

• Japan also delivered strong gains, led by semiconductor and technology-related stocks as global enthusiasm around AI investment continued to build.
• First-quarter GDP growth of 2.1% annualised beat expectations, underpinned by domestic demand and net exports, providing a supportive economic backdrop.

Fixed Income

• Global bond markets recovered in May as improving sentiment and easing geopolitical risks supported demand.
• Government bond performance was led by UK gilts, which delivered a return of 1.98% in May. Euro area sovereign bonds also posted positive returns, with bunds returning 0.83%. In contrast, Japanese government bonds (JGBs) underperformed significantly in May, as surging wholesale price inflation and an impending Bank of Japan interest rate hike triggered a sharp sell-off. 

Emerging Markets

• Emerging market equities moved higher overall. Gains were driven primarily by North Asian markets, particularly Korea and Taiwan, where semiconductor demand remained strong.
• Across ASEAN, performance was more modest and mixed. Thailand led, supported by improving domestic sentiment and strength in financials. Singapore also advanced, while Indonesia lagged as tighter monetary policy weighed on risk appetite, though currency stability provided some offset.

From the perspective of Hong Kong pension investing. All data are sourced from Invesco dated June 17, 2026, unless otherwise stated.


Investment risks

The value of investments and any income will fluctuate (this may partly be the result of exchange-rate fluctuations), and investors may not get back the full amount invested.