Investment Traffic Lights

The DWS May 2026 report highlights a decoupling between surging equity markets, driven by AI investment and earnings, and a struggling bond market pressured by an oil supply shock from the Strait of Hormuz blockage.

Key Takeaways

• 1.Equities saw a strong April rebound driven by robust Q1 earnings and an unabated AI rally, despite geopolitical tensions.
• 2.The closure of the Strait of Hormuz by both Iran and the U.S. has created a major supply shock, pushing Brent crude to $126 and pressuring bond yields.
• 3.DWS has upgraded U.S. equities to neutral due to the AI capex boom and downgraded European equities to neutral due to energy supply worries.

Table of Contents

• Market overview
• The fog of war versus the force of earnings
• A tale of two cities: equities surge ahead, bonds and commodities tell a different story
• Outlook and changes
• Fixed Income
• Equities
• Alternatives
• Past performance of major financial assets
• Tactical and strategic signals
• Glossary

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