Cleveden Park Wealth Monthly Markets Update: May 2026 Summary

This monthly markets update was marked by a strong recovery in global equity markets after a ceasefire eased immediate geopolitical fears around Iran. Investors largely looked past ongoing oil price volatility and instead focused on strong corporate earnings, particularly in US technology. At the same time, bond markets were more cautious, with yields remaining elevated as inflation risks persisted.

Key Market Themes for this Monthly Markets Update

Three main themes shaped the month. First, the ceasefire helped trigger a sharp market rebound, with the S&P 500 recording its strongest month since November 2020. Second, Asia ex-Japan and Emerging Markets led the recovery as sentiment improved and the US dollar weakened. Third, bond markets stabilised but did not provide much relief, as gilt yields remained high and central banks continued to signal a cautious stance on rates.

Equities

Global equities performed strongly in April, rising 7.57% over the month. Asia ex-Japan was the standout performer, up 14.33% month to date and 20.83% year to date, while Emerging Markets rose 11.58% over the month. US equities also rebounded sharply, supported by strong earnings from major technology companies. UK equities rose as well, although they lagged behind some international peers. The report notes that markets appeared willing to look through inflation and oil price concerns, with earnings strength once again driving the equity story.

Bonds and Interest Rates

Bond markets were steadier than in March, but yields remained elevated. UK 10-year gilt yields rose from 4.92% to 5.01%, while US 10-year Treasury yields edged up from 4.32% to 4.37%. Inflation expectations also rose in both the UK and US, reflecting the continued disruption in energy markets. The Bank of England held rates at 3.75%, while both the ECB and Fed also kept rates unchanged, though all remained cautious about inflation and signalled that rate cuts were not imminent.

Currency and Alternatives

Sterling strengthened against the US dollar during April, rising 2.85% as safe-haven demand for the dollar eased after the ceasefire. In alternatives, Clean Energy was the strongest performer, up 11.79% over the month, supported by the longer-term energy security theme. Global Property and Private Market Managers also posted gains. Gold fell back slightly during the month, while commodities were broadly flat, with oil prices remaining volatile as the Strait of Hormuz stayed effectively closed. The charts on page 2 reinforce this broad split between stronger equity and alternative asset performance and weaker bond returns.

Economic Backdrop

The broader economic picture remained mixed. In the US, GDP growth held up reasonably well, supported by business investment and AI-related spending. In the UK, growth was more uneven, with monthly GDP flat despite some resilience in construction. Inflation increased in both economies, largely driven by higher energy prices. UK CPI rose to 3.3%, while US CPI also reached 3.3%, showing that inflation risks remain a key concern for markets and policymakers.

What This Means for Portfolios

The main message of the update is that while the worst-case geopolitical fears eased in April, markets are still operating in a difficult environment. Equities have recovered strongly, driven by earnings and structural themes such as AI, defence and clean energy. Bonds, however, remain under pressure from persistent inflation concerns and the risk that central banks may need to stay hawkish for longer. The report’s conclusion is that diversification remains essential, and that portfolios should continue to combine long-term strategic allocation with flexibility to respond to changing market conditions.

Conclusion

This was a month of strong equity market recovery, led by the US, Asia and Emerging Markets, as ceasefire optimism eased recession fears. However, inflation risks and elevated bond yields remained a concern, especially as energy disruption continued to affect the outlook. The overall takeaway is that markets are once again rewarding growth and resilience, but investors still need a diversified approach to manage ongoing uncertainty.

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