Daily Market Outlook, May 21, 2026 

Patrick Munnelly, Partner: Market Strategy, Tickmill Group

Munnelly’s Macro Minute — AI and Hormuz Relief Lift Asia, But Fed Hawkishness Lingers

Asian equities staged a sharp relief rally as two pressure points eased at the same time: some vessels resumed passage through the Strait of Hormuz, and Nvidia’s results kept the AI earnings story intact. MSCI Asia ex-Japan jumped 2.7%, snapping a four-day losing streak, while South Korea’s Kospi surged more than 8% and Taiwan rose almost 4% as chipmakers led the rebound. Japan’s Nikkei gained 3.2%, helped by the global tech bid and firmer domestic data. China was the exception, with CSI 300 blue chips down 0.5%, underlining that the rally is still more about AI supply chains and geopolitical relief than a broad regional growth upgrade.The semiconductor complex got two important supports. Nvidia delivered a better-than-expected revenue forecast, with Jensen Huang seeking to reassure investors that demand for its flagship AI chips remains robust. The message remains that the AI infrastructure cycle has legs, even if Nvidia’s own after-hours share reaction was muted. The absence of China sales in the outlook and guidance, which only modestly exceeded elevated expectations, left some investors wanting more. Still, for Asian suppliers, the read-across was positive. Samsung Electronics surged more than 8% after its union suspended industrial action following a tentative pay deal, averting a strike by nearly 48,000 workers that could have disrupted Korea’s economy and global chip supply. The caveat is that a shareholder group has challenged the legality of the deal and may seek an injunction, so this risk has not disappeared completely.

The geopolitical relief is also conditional. Brent rose 0.9% to around $106/bbl in Asia, retracing some of its earlier decline, after three supertankers passed through Hormuz and Iran consolidated control of the waterway. That is better than a full blockade, but it is not normalisation. Supply concerns remain, especially after a US inventory drawdown, and Trump’s message is still coercive: Washington is prepared to resume attacks if Tehran does not accept a peace deal, even if it can wait a few days for the “right answers”. Markets have therefore moved from panic to tentative relief, not from crisis to resolution. European futures are softer despite Asia’s rally, reflecting the region’s greater exposure to imported energy and smaller direct participation in the AI upside. Japan’s backdrop is becoming more captivating. The Nikkei’s rally was helped not only by tech enthusiasm but also by S&P Global’s flash manufacturing PMI moving into expansion and exports rising 14.8% y/y in April. External demand has held up better than expected despite the US-Iran conflict, which could give the BoJ more confidence to hike in June if fiscal politics do not interfere. Dollar-yen remains around 159, with the dollar slightly firmer, but stronger domestic data and a more confident BoJ would argue for yen support if policy normalisation becomes more credible.

The Fed minutes are the main macro restraint on the relief rally. April’s minutes confirmed that Kevin Warsh will inherit an FOMC whose hawkish instincts are broadening in response to the Middle East inflation shock. The statement already showed three voters wanted language implying a more two-sided rate outlook, but the minutes were stronger: the “vast majority” saw increased risk that inflation would take longer to return to target, “many” wanted to remove easing-bias language, and a “majority” judged policy firming appropriate if price growth stayed persistently above 2%. In other words, the hawkish tilt is not confined to the dissenters. Markets have already adjusted — moving from pricing broadly unchanged Fed Funds through 2026 at the April meeting to roughly a 70% chance of a 25bp hike by year-end — but the minutes validate the move rather than challenge it. That matters because the energy shock is shifting from price action to logistics. Even if oil is off the highs and some Hormuz traffic resumes, the Strait remains constrained, and there is no clean pathway to resolution. NATO’s reported willingness to consider escorting ships if the blockade persists into July points to the lengthening nature of the disruption. Even a deal would leave transit, production,, and refining delays that price subsidies cannot solve. Gas most exposes Europe and Asia. European inventories ended winter at low levels, restocking is lagging, German storage is following a 2021-style profile, and Asian LNG prices are moving in a way that may eventually pull European gas prices higher. Refined products, urea, sulphur, helium and other supply chains face similar frictions.

Overnight Headlines

• Trump: Negotiations With Iran In Final Stages, Warns Of Attacks If Deal Fails

• Goldman Says Global Oil Stockpiles Falling At Record Pace On War

• Koeda Says BoJ Should Keep Hiking Rate At Appropriate Pace

• BoJ To Sound Out Market On Bond Purchase Cuts As Yields Surge

• Australia’s Surprising Jump In Unemployment Trims Rate-Hike Bets

• Fed Minutes Reveal Support For Rate Hikes If Inflation Proves Persistent

• Fed Unveils Plan For New Payment Account For Clearing, Settling

• ECB June Hike Case Is Nearly Sealed But July Is Fully Open, Sources Say

• Nvidia Gives Disappointing Forecast As Chip Competition Mounts

• Citadel Securities Added 60 People In Asia, Half In Hong Kong

• S. Korea’s Early Trade Data Reflect Sustained Semiconductor Boom

• Trump Set To Sign AI Cybersecurity Directive As Soon As Thursday

• Anthropic To Pay SpaceX Nearly $45B For Computing Deal

• Musk’s SpaceX Sets Out Plans For Biggest IPO In History

• OpenAI Faces IPO Unknowns Even After Victory Over Elon Musk

FX Options Expiries For 10am New York Cut 

(1BLN+ represents larger expiries and is more magnetic when trading within the daily ATR.)

• EUR/USD: 1.1750 (EU631.9m), 1.1428 (EU560m), 1.1600 (EU549.8m)

• USD/JPY: 103.00 ($860m), 158.50 ($711m), 155.00 ($531.2m)

• USD/CNY: 6.8010 ($1.24b), 6.9500 ($1.21b), 6.7500 ($1.07b)

• EUR/GBP: 0.8700 (EU1.17b), 0.8800 (EU757.3m), 0.8640 (EU493.7m)

• USD/BRL: 5.0500 ($526.9m), 5.2500 ($466.1m), 4.9650 ($410.4m)

• USD/CAD: 1.3100 ($315m)

• GBP/USD: 1.3455 (GBP864.6m), 1.4000 (GBP682.8m), 1.2500 (GBP428.4m)

• USD/MXN: 17.36 ($1.03b)

• USD/KRW: 1450.00 ($305m)

CFTC Positions as of May 15, 2026: 

• Bitcoin's net long position is 1,259 contracts

• Swiss franc posts net short position of -36,197 contracts

• British pound net short position is -43,059 contracts

• Euro net long position is 40,200 contracts

• Japanese yen net short position is -75,102 contracts

• Speculators trim CBOT US 5-year Treasury futures net short position by 59,154 contracts to 1,362,145

• Speculators trim CBOT US 10-year Treasury futures net short position by 34,102 contracts to 781,167

• Speculators trim CBOT US 2-year Treasury futures net short position by 70,717 contracts to 1,602,612

• Speculators trim CBOT US UltraBond Treasury futures net short position by 20,441 contracts to 238,994

• Speculators trim CBOT US Treasury bonds futures net short position by 88 contracts to 172,854

• Equity fund speculators increase S&P 500 CME net short position by 28,764 contracts to 418,335

• Equity fund managers raise S&P 500 CME net long position by 42,501 contracts to 1,056,455

Technical & Trade Views

SP500

• Daily VWAP Bearish

• Weekly VWAP Bullish

• Above 7330 Target 7630

• Below 7330 Target 7250

DXY

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 98.85 Target 99.50

• Below 98.50 Target 96.12

EURUSD 

• Daily VWAP Bearish

• Weekly VWAP Bearish

• Above 1.1710 Target 1.18

• Below 1.1650 Target 1.1570

GBPUSD 

• Daily VWAP Bullish

• Weekly VWAP Bearish

• Above 1.3445 Target 1.3885

• Below 1.34 Target 1.33

USDJPY 

• Daily VWAP Bullish

• Weekly VWAP Bullish

• Above 160 Target 161

• Below 159.50 Target 152

XAUUSD

• Daily VWAP Bullish

• Weekly VWAP Bearish

• Above 4700 Target 4800

• Below 4500 Target 4386

BTCUSD 

• Daily VWAP Bullish

• Weekly VWAP Bearish

• Above 79.5k Target 81k

• Below 79.5k Target 74k