May 2026 Market Update: Navigating a Changing Global Landscape
Global economic conditions remain uncertain, with growth expected to slow over the coming year. This is largely driven by ongoing geopolitical tensions in the Middle East, which continue to disrupt energy supply and push up costs worldwide. As a result, both businesses and consumers are likely to feel the effects through rising prices and increased market volatility.
The Global Picture
Across major economies, conditions remain mixed:
- United States: Economic activity is holding up, particularly in the services sector, but businesses are preparing for supply shortages and rising costs.
- China: Growth continues, although at a slower and more moderate pace.
- United Kingdom and Europe: Growth is expected to soften as higher energy prices put pressure on consumers and businesses.
In response to these shifting dynamics, global companies are re-evaluating where they invest. There is a growing focus on:
- The United States for its strong financial markets
- India for its growth potential
- South-East Asia for supply chain opportunities and diversification
This reflects a broader trend of businesses adapting to a changing global environment.
South Africa in Focus
Locally, the impact of global pressures is becoming more evident. Inflation has started to rise, mainly due to higher fuel costs, prompting the South African Reserve Bank to increase interest rates to 7%.
This has practical implications for households:
- Borrowing costs, including home loans, are likely to increase
- Everyday expenses may continue to rise
- Financial pressure on consumers may intensify
In this environment, careful budgeting and ongoing financial planning are becoming increasingly important.
Market Performance
Investment markets delivered a mixed performance in May, with notable differences across regions and asset classes.
- Global equities: Delivered solid gains, largely driven by technology and artificial intelligence-related companies
- Emerging markets: Experienced a particularly strong month, outperforming many developed markets
- South African equities: Slightly negative for the month, but still marginally positive year to date
More stable asset classes also played an important role:
- Bonds: Continued to provide steady, positive returns
- Cash: Delivered modest but consistent gains
- Rand: Strengthened against major global currencies, offering some local support
This highlights the value of diversification during periods of uncertainty.
Key Risks to Watch
Looking ahead, several risks remain important to monitor:
- Ongoing Middle East conflict, which could further disrupt oil supply and global trade
- Rising fuel and food prices, placing pressure on inflation
- Potential climate-related risks, such as drought conditions affecting food supply
These factors may continue to influence both economic conditions and market performance in the months ahead.
Staying on Track
While short-term uncertainty may create market fluctuations, maintaining a long-term perspective remains key. A well-diversified investment strategy can help manage risk and position portfolios to benefit from future opportunities.
It is also important to:
- Regularly review your financial plan
- Ensure your investments remain aligned with your long-term goals
- Stay informed, but avoid reacting to short-term market movements
If you would like to understand how these developments may impact your personal financial plan or investments, we encourage you to get in touch. Ongoing guidance and informed decision-making can help you stay on track, even in uncertain times.
Graviton Financial Partners (Pty) Ltd and Sanlam Multi Manager International (Pty) Ltd are authorised financial services providers in terms of the Financial Advisory and Intermediary Services Act,2002. While every effort has been made to ensure the reasonableness and accuracy of the information contained in this document (“the information”), the FSPs, their shareholders, subsidiaries, clients, agents, officers and employees do not make any representations or warranties regarding the accuracy or suitability of the information and shall not be held responsible and disclaim all liability for any loss, liability and damage whatsoever suffered as a result of or which may be attributable, directly or indirectly, to any use of or reliance upon the information. The information in this document has been recorded and arrived at by Graviton Financial Partners (Pty) Ltd (FSP) Licence No. 4210 in good faith and from sources believed to be reliable, but no representation or warranty, expressed or implied, is made as to its accuracy, completeness or correctness. The information is provided for information purposes only and should not be construed as rendering investment advice to clients.