Inflation concerns pressure global equities, while earnings and news momentum still provide support
AI summary card
Inflation concerns pressure global equities, while earnings and news momentum still provide support
BofA's high-frequency monitor shows global equities fell 0.6% last week, with the U.S. holding up relatively better and Energy and Tech Hardware leading; however, rising inflation could prompt central banks to hike rates, which is the main risk.
- Global equities fell 0.6% last week, while the equal-weighted ACWI fell 2.2%, indicating that large-cap names were relatively more resilient.
- Regionally, the United States rose 0.2% and was the best performer, while Emerging Markets fell 2.5% and were the weakest.
- By sector, Energy rose 4.2% and Tech Hardware rose 2.0% to lead the market; Utilities, Materials, and Real Estate fell about 3.0%, 3.0%, and 2.9%, respectively.
- Among the 12 themes, Space rose 4.3% and Renewable Energy rose 1.5% to lead; Nuclear Energy fell 7.2%, Gold fell 6.8%, and Luxury Lifestyle fell 5.4% to rank among the weakest.
- Triple Momentum still shows Gold, Rare Earths, and Robotics as the strongest, while SaaS and Luxury Lifestyle remain the weakest; within global sectors, Semis, Energy, and Tech Hardware have the strongest momentum.
Report interpretation
Overview
This report is BofA Securities' global quantitative high-frequency monitor released on 2026-05-18. It focuses on price momentum, earnings momentum, and news momentum across global equities, regions, sectors, styles, and themes. The core conclusion is that global equity markets pulled back on inflation concerns, but the earnings cycle remains solid, Global News Pulse has improved, and AI- and technology-related themes continue to provide support.
Core views
Global equities fell 0.6% last week, mainly because inflation worries offset optimism from earnings and AI themes. Regionally, the United States rose 0.2% and led, while Emerging Markets fell 2.5% and lagged. At the sector level, Energy and Tech Hardware performed best, while Utilities, Materials, and Real Estate saw larger declines. At the theme level, Space and Renewable Energy led last week, but the Triple Momentum composite ranking still shows Gold, Rare Earths, and Robotics as the strongest, with Luxury Lifestyle and SaaS the weakest. The report warns that if inflation pushes central banks to resume rate hikes, it could become the main headwind for the market.
Analysis framework
The report uses a high-frequency quantitative monitoring framework that combines market performance, breadth, earnings revisions, news pulses, style, region, country, sector, and theme rankings to assess global equity markets. The Triple Momentum framework cross-checks earnings momentum, price momentum, and news momentum to evaluate the relative standing of themes, sectors, regions, and individual stocks.
Methodology notes
Composite ranking of earnings momentum, price momentum, and news momentum
The report uses Triple Momentum to compare global themes, sectors, regions, countries, and individual stocks. Charts typically place earnings momentum on the y-axis and price momentum on the x-axis, while color or bubble size represents news momentum, allowing identification of the assets with the strongest or weakest composite momentum.
Ratio of the number of stocks with upward earnings revisions to those with downward revisions
Using IBES consensus estimates, the report measures on a monthly basis, or month-to-date, the ratio of stocks with upward revisions to those with downward revisions in earnings forecasts, in order to track earnings expectation trends across global regions, sectors, and styles.
High-frequency indicator based on news mentions and news momentum
The report uses Global News Pulse as an indicative measure to track changes in the news backdrop across regions, sectors, countries, and themes. It is not designed as a benchmark and should not be used as a performance benchmark for financial instruments.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- Global equitiesCore tracked asset
- Strengths
- The earnings cycle remains strong, Global News Pulse has improved, and AI themes continue to support risk appetite.
- Weaknesses
- The market fell 0.6% last week, the equal-weighted index fell more sharply, and market breadth weakened.
- Comparison
- The market-cap-weighted ACWI outperformed the equal-weighted ACWI, showing that large-cap names were more resilient.
- Risks
- Rising inflation could prompt central banks to hike rates, pressuring valuations and risk assets.
- US equitiesRelatively leading region
- Strengths
- Rose 0.2% last week and was the best-performing major region.
- Weaknesses
- Still affected by global inflation and rate expectations.
- Comparison
- Outperformed global equities, Emerging Markets, Japan, Europe, and Asia Pacific ex Japan.
- Risks
- If rising rates again pressure growth-stock valuations, the US market could also come under pressure.
- Emerging marketsRelatively lagging region
- Strengths
- Some long-term charts show that Asia Pacific ex Japan and GEM have delivered higher returns in certain periods.
- Weaknesses
- Fell 2.5% last week and was the weakest among the major regions.
- Comparison
- Significantly lagged the US and global indices.
- Risks
- Changes in the dollar, rates, risk appetite, and capital flows could amplify volatility.
- EnergyStrong sector
- Strengths
- Rose 4.2% last week, making it the best-performing global sector; Triple Momentum also remains strong.
- Weaknesses
- Highly sensitive to energy prices and the macro cycle.
- Comparison
- Clearly outperformed Utilities, Materials, and Real Estate in the short term.
- Risks
- Falling commodity prices, policy changes, or slower demand could weaken performance.
- Tech hardware and semiconductorsStrong sector
- Strengths
- Tech Hardware rose 2.0% last week, Semiconductors rank near the top in Triple Momentum, and optimism around AI-related themes continues to provide support.
- Weaknesses
- Sensitive to valuations, the cycle, and supply-chain changes.
- Comparison
- Outperformed most traditional defensive and rate-sensitive sectors.
- Risks
- If inflation pushes rates higher, high-valuation tech assets could face pressure.
- GoldStrong thematic momentum but short-term price pressure
- Strengths
- Still one of the strongest themes in Triple Momentum, with a high composite ranking across earnings, price, and news momentum.
- Weaknesses
- The theme fell 6.8% last week, indicating a pronounced short-term pullback.
- Comparison
- Composite momentum is stronger than SaaS and Luxury Lifestyle, but short-term performance is weaker than Space and Renewable Energy.
- Risks
- Changes in real rates, the dollar, and risk appetite can affect gold-related stock performance.
- Rare earthsStrong thematic momentum
- Strengths
- Ranks near the top in Triple Momentum and sits in the strongest thematic momentum group.
- Weaknesses
- The report does not provide a specific return figure for last week.
- Comparison
- Belongs with Gold and Robotics as one of the strongest composite-momentum themes.
- Risks
- Policy shifts, supply-chain issues, and commodity-price volatility can create high volatility.
- Renewable EnergyRelatively strong short-term performance but weaker earnings momentum
- Strengths
- Rose 1.5% last week and was one of the better-performing themes among the 12.
- Weaknesses
- Charts show weaker earnings momentum, while price momentum is relatively better.
- Comparison
- Outperformed Gold and Nuclear Energy in the short term, but composite momentum is still below Gold, Rare Earths, and Robotics.
- Risks
- Higher rates, changes in policy subsidies, and project-financing costs may affect valuations.
- SaaSWeak thematic momentum
- Strengths
- Charts show that earnings momentum is not the weakest.
- Weaknesses
- Price momentum is weak, and Triple Momentum places it among the weakest themes.
- Comparison
- Composite momentum is weaker than Gold, Rare Earths, Robotics, and most stronger cyclical and tech-hardware-related themes.
- Risks
- High-valuation growth stocks may remain under pressure in a rising-rate environment.
- Luxury LifestyleWeak theme
- Strengths
- No clear evidence of strength.
- Weaknesses
- Fell 5.4% last week and sits in the weakest group in Triple Momentum.
- Comparison
- Both short-term and composite momentum are weaker than most monitored themes.
- Risks
- A slowdown in consumption, weaker wealth effects, and volatility in premium-spending demand may continue to weigh on performance.
Key data
- Global equities performance last week-0.6%Global equity markets fell last week as inflation concerns offset optimism around earnings and AI themes.
- ACWI equal-weighted index performance last week-2.2%The equal-weighted index fell more than the market-cap-weighted ACWI, indicating weaker market breadth.
- US performance last week+0.2%The United States was the best-performing major region mentioned in the report.
- Emerging markets performance last week-2.5%Emerging Markets lagged.
- Energy sector performance last week+4.2%The best-performing global sector.
- Tech hardware performance last week+2.0%One of the top-performing global sectors.
- Utilities performance last week-3.0%One of the sectors with the largest declines, along with Materials.
- Materials performance last week-3.0%Performance was pressured in the context of inflation and rate concerns.
- Real estate performance last week-2.9%Interest-rate-sensitive sector performance was weak.
- Space theme performance last week+4.3%The best-performing theme among the 12 monitored themes.
- Renewable Energy theme performance last week+1.5%A top-performing theme.
- Nuclear Energy theme performance last week-7.2%The worst-performing theme among the 12.
- Gold theme performance last week-6.8%Weak in the short term, but still in a strong position in Triple Momentum.
- Luxury Lifestyle theme performance last week-5.4%Weak in the short term, and also weak in Triple Momentum.
- ACWI year-to-date performance+8.3%Charts show that ACWI has outperformed the equal-weighted index year to date.
- ACWI equal-weighted index year-to-date performance+5.9%Below the market-cap-weighted ACWI, indicating that large-cap names contributed more.
Impact & implications
The key investment takeaway is that the market is not broadly deteriorating: the earnings cycle and news backdrop still offer support, but the advance has become more concentrated, breadth has weakened, and inflation and rate risk have again become the key variables pressuring valuations and risk appetite. In the near term, investors may want to focus on Energy, Tech Hardware, Semiconductors, and the stronger Triple Momentum themes of Gold, Rare Earths, and Robotics, while watching for downside risk in high-valuation, rate-sensitive, and weaker-momentum themes.
Risks
- Continued inflation upside and the resulting risk of central-bank rate hikes is the main market risk explicitly highlighted in the report.
- Weaker market breadth, with the equal-weighted index lagging the market-cap-weighted index by a wide margin, suggests that the rally may be overly concentrated.
- Quantitative screens and news pulses are indicative measures only and should not be treated as benchmarks or as measures of financial instrument performance.
- Short-term trading ideas and quantitative rankings may not be suitable for all investors, and related strategies may incur significant losses.
- The securities or financial instruments discussed in the report may be subject to market risk, liquidity risk, foreign-exchange risk, and derivative risk.
- BofA Securities and its affiliates may have business relationships or potential conflicts of interest with the issuers discussed in the report.
What to watch
- Whether inflation data continues to reinforce expectations for central-bank rate hikes.
- Whether the global earnings revision ratio keeps improving, and in particular whether the recent three-week improvement in the Value style can continue.
- Whether the performance gap between the ACWI market-cap-weighted index and the equal-weighted index continues to widen.
- Whether Triple Momentum leadership in Energy, Tech Hardware, and Semiconductors remains intact.
- Whether the composite momentum in Gold, Rare Earths, and Robotics can translate into subsequent price performance.
- Whether weak-momentum themes such as SaaS and Luxury Lifestyle continue to lag.
- Changes in Global News Pulse at the country, sector, and theme level, especially in regions with elevated news pulse such as Mexico and Taiwan.