Trading update : 22 May 2026

The contrasting dynamics in global markets remain stark. Tech and AI stocks continue to defy global headwinds, with companies in the S&P 500 reporting record earnings despite oil price and supply shocks, as well as rising inflation. Hyperscalers like Google continue to invest heavily to gain a competitive advantage, with investors worldwide remaining bullish on megacap tech and AI stocks.

While China’s economy continues to fall short of expectations, investors are still backing the country’s tech sector. It’s a theme that’s hard to ignore amid all the other noise in the market.  

Record profits

According to data compiled by Bloomberg Intelligence going back to 2004, US corporate profit margins for the S&P 500 (VOO-NASQ) are the highest they’ve been, driven largely by tech stocks and AI. However, the cushion is still too thin, with past energy shocks suggesting companies lack enough room to absorb a prolonged hit.

Oil stock shock

Global oil inventories have fallen at a record pace since the start of the war, plunging by 250 million barrels over March and April, according to the International Energy Agency (IEA). The Wall Street Journal explained that is equal to around 2½ days of global oil use. U.S. stocks of diesel are likely to fall below 100 million barrels, the lowest level since 2003, by the end of May, according to consulting firm Eurasia Group. Even sharper declines are hitting Asia. Nearly 80 countries have now introduced emergency measures to protect their economies as the world approaches a new, more dangerous phase in the energy crisis driven by the Iran war.

Cloud formation

Google (GOOG-NASQ) is forming a joint venture with Blackstone to create a US-based AI cloud business, backed by an initial $5 billion equity commitment from the private equity firm. The new company will offer efficient data centre capacity, operations, networking, and Google Cloud’s Tensor Processing Units (TPUs) as a compute-as-a-service offering.

Bullish sentiment

Following interviews with 32 investment managers across the US, Asia and Europe, including at Wells Fargo Investment Institute, Amundi SA, and BMO Global Asset Management, an assessment from Bloomberg News suggests overall sentiment is bullish. The top investment choice for about half of these buy-side professionals is the megacap tech and AI stocks.

Don’t count on a cut

Founder of DoubleLine Capital, Jeffrey Gundlach, says investors won’t see a rate cut out of the next Federal Reserve policy meeting. Bloomberg reported that the upward trend in inflation will continue, with the investment firm’s models suggesting the next headline CPI print will start with a four.

Inflation wave

The post-pandemic era showed how supply-chain disruptions can generate large and persistent inflation pressures, and early signs suggest those dynamics may be emerging again. An analysis by Bloomberg indicates supply-chain strains building today may feed into inflation in the second half of 2027. For central banks, that may mean raising rates now to head off a new inflation wave.

AI displacement 

Standard Chartered Plc plans to cut more than 15% of its support staff by 2030 through building up its use of AI to streamline operations. Quoted in a Bloomberg article, CEO Bill Winters said the bank is replacing “lower-value human capital” with technology, and affected staff would receive “good, clear notice” ahead of time.

The bank’s move is part of a growing trend among global financial leaders to acknowledge the realities of automation, with other CEOs comparing AI’s disruptive potential to significant historical inventions.

Growing pains

China’s growth slowed across the board in April, with investment resuming declines while retail sales (+0.2% yoy versus an estimated +2%) and industrial output (+4.1% yoy versus an estimated +6%) fell short of forecasts, underscoring the economy’s vulnerability in the face of a global energy crisis.

Fund flows

According to a Bloomberg report, the $7.3 billion KraneShares CSI China Internet Fund (KWEB-NASQ) recorded $754 million in fresh cash last week, its biggest weekly inflow since October 2024.

Pay to play

Naspers (NPN-JSE) and Prosus (PRX-JSE)-owned Tencent’s shares rose as much as 4.4% in Hong Kong, the most since March 11, after the company said some of its AI models will be commercialised and offered as paid services.

A Tencent Cloud announcement carried by Bloomberg stated that the Hy3 preview and DeepSeek-V4-Pro models available on its intelligent agent development platform will end their limited-time free public beta and transition to formal commercial services, with usage-based charges according to model invocation volume.

Burn, baby, burn

Countries around the world are returning to coal for reliable power generation after the Iran war effectively shut the Strait of Hormuz and cut off around 20% of global liquefied natural gas supplies.

The Wall Street Journal reports that Taiwan is restarting idled coal-fired power plants and South Korea boosted the amount of electricity it generated from coal by more than a third last month. In Europe, Italy has put its coal plants on standby as it girds for a prolonged energy shock.

India has issued an emergency coal directive, essentially forcing power plants that run on imported coal to maximise output ahead of what is forecast to be a hotter-than-normal summer.

Steel deal

Miner Anglo American (AGL-JSE) has agreed to the sale of its steelmaking coal (SMC) business in Australia for up to $3.875 billion. The deal comprises an upfront $2.3 billion payment and a price-linked earn-out of up to $1.575 billion.

Stock focus: Santam

Santam (SNT-JSE) has shown strong operational resilience despite a heavy season for climate-related claims. The conventional insurance business posted robust 9% growth in gross written premiums (GWP), spearheaded by double-digit gains at MiWay and Santam Direct.

While net earned premium (NEP) growth slowed slightly due to late-2025 pressure on Specialist Solutions and a slow start at Santam Re, underwritings remained highly profitable.

Despite absorbing significant claims from Western Cape wildfires and northern South Africa floods, Santam’s net underwriting margin landed safely above the midpoint of its 5% to 10% target range. Watch out for short-term margin volatility ahead.

While Santam escaped significant exposure from the April 2026 Western Cape floods, management expects a heavy influx of claims following the severe May storms. Exact figures aren’t locked in yet, but Santam’s strong underwriting discipline makes it a high-quality defensive pick for long-term portfolios.