Record-breaking markets, oil, and geopolitics: when growth isn't enough.

A week ended with more questions than answers.

The second half of the week brought financial markets back to a fragile equilibrium: on the one hand, macroeconomic data still capable of positive surprises; on the other, the simultaneous return of three very concrete pressures: high oil prices, rising bond yields, and geopolitical risk in the Strait of Hormuz. The result was a movement typical of mature market phases: indices remain near their highs, but it doesn't take much to turn optimism into profit-taking.

The most interesting data came from the United Kingdom. In March, British GDP grew by 0.3% monthly, following a 0.4% increase in February and a stagnant January. In the first quarter of 2026, real growth was 0.6% , with services up 0.8% and construction recovering. This is a better-than-expected picture, but it's not enough to dispel doubts about the next quarter: an economy can grow, but if energy and interest rates remain high, the quality of that growth becomes more vulnerable.

Wall Street corrects: the problem is not just geopolitics

On Wall Street, the correction was sharp on Friday, May 15. The S&P 500 lost 1.2% , closing at 7,408.50 points ; the Nasdaq fell 1.5% to 26,225.14 ; the Dow Jones lost 1.1% to 49,526.17 ; and the Russell 2000 , more sensitive to interest rates and credit, lost 2.4% . On a weekly basis, however, the picture remains less dramatic: the S&P 500 remained slightly positive, around +0.1% , while the Nasdaq and Dow closed almost unchanged.

The message is clear: we're not facing a widespread collapse, but a revaluation of the risk premium. After weeks dominated by euphoria over technology and artificial intelligence, the market has begun to wonder how much future earnings will be worth if rates remain high for longer. The two-year Treasury note rose to 4.086% , the 10-year note to 4.599% , and the 30-year note to 5.131% . When the risk-free yield approaches or exceeds certain psychological thresholds, even the strongest stocks must better justify their valuations.

Europe is weak, Milan still close to history

Europe also followed the American movement. The STOXX 600 lost 1.5% on Friday, closing at 606.92 points , with the German DAX down 2.1% and the British FTSE 100 down 1.7% . Pressure came mainly from banks, materials, and cyclical sectors, i.e., the areas most exposed to a mix of more uncertain future growth and tighter financial conditions.

In Italy, however, the picture remains peculiar. The FTSE MIB corrected to the 49,000-49,500 point range, but only after reaching 50,050 on May 14, a level close to a 26-year high. The Italian market, driven in recent months by banks, industry, and capital returns, therefore continues to hover near a historical range. However, just when an index approaches symbolic levels, it becomes more sensitive to any news that could jeopardize margins, credit, or growth.

Italy: Rising Inflation and Energy Risk

Italian inflation data confirmed the underlying problem. In April, the consumer price index rose 2.7% annually, from 1.7% in March, with a monthly increase of 1.1% . The main driver came from energy: unregulated energy goods rose from -2.0% to +9.6% , regulated energy goods from -1.6% to +5.3% , while unprocessed food rose to 5.9% .

This is the key point for markets: it's not enough to simply look at headline inflation. We need to understand where it's coming from. If the increase is driven by energy and raw materials, the risk is twofold: on the one hand, it compresses purchasing power, and on the other, it reduces central banks' room to cut rates. It's a classic environment in which stock markets can remain strong through inertia, but become more vulnerable to sudden corrections.

Hormuz, oil, and diplomacy: the market looks to Beijing

Oil was the real thermometer of the week. WTI closed at $105.42 a barrel, up 4.2% on the day and about 10% on the week; Brent rose to $109.26 , up 3.3% on the day and nearly 7.9% on the week. Tensions in the Strait of Hormuz continue to limit the normalization of flows, fueling concerns about inventories, inflation, and corporate margins.

Diplomatically, the United States and China have found at least one common ground: Iran must not acquire nuclear weapons and Hormuz must remain open. But the Trump-Xi summit failed to produce a real breakthrough. Beijing appears interested in a mediating role, partly because it depends on the Gulf's energy stability, while Tehran has shown openness to diplomatic assistance, particularly from China. At the same time, Xi warned Washington that mishandling the Taiwan issue could push Sino-US relations into a dangerous zone.

Conclusion: the market has not lost strength, but it has lost tranquility

The week thus ends with a mixed picture. UK growth surprises, Milan remains near historic levels, Wall Street maintains positive performance since the beginning of the year, but the market has begun to price in a less comfortable scenario: expensive energy, long-term rates above critical levels, and geopolitical tensions still unresolved. Under these conditions, the question is not just whether earnings will grow, but how much it will cost to finance them and how much volatility will have to be endured to get there.