May was a good month to be invested in global stock markets. According to UBS, shares around the world rose almost 5% in a single month and are now up more than 10% since January. To put that in perspective, a decent full year used to mean returns like that.
So what’s going on?
The short answer, according to UBS’s latest global markets analysis, is technology and emerging markets. Tech stocks were on fire in May, rising more than 16% in a single month.
That is an extraordinary move for an entire sector. The boom is being driven by the same story that has dominated financial markets for the past two years: artificial intelligence, data centres, and the companies building the infrastructure for the digital economy.
Meanwhile, stock markets in Asia and the developing world are having a moment. UBS notes that Asian markets outside Japan rose 11% in May alone, while emerging markets as a whole were up nearly 10%.
Investors are chasing growth wherever they can find it, and right now a lot of it is coming from outside the traditional US and European powerhouses.
Not everything went up, though. Energy stocks fell 5.5% in May, and utility companies dropped nearly as much. That might seem odd given that oil-related geopolitical tension has been a constant backdrop this year.
But energy shares had already risen more than 26% earlier in 2026, so some of that was simply investors taking profits.
One of the most interesting shifts happening under the surface is what UBS describes as a rotation from low-risk to momentum strategies.
In plain English: defensive, boring stocks that tend to hold up well in bad times got hammered in May, falling as much as 12%. Meanwhile, the stocks that have been going up the most continued to go up the most. Markets are in a confidence phase, and investors are leaning in rather than sheltering.
Valuations, the measure of how expensive shares are relative to company earnings, keep climbing. UBS notes the US market is trading at around 21 times next year’s expected earnings, well above its long-run average, with technology stocks looking even pricier by historical standards.
That does not mean a crash is coming, but it does mean markets are pricing in a lot of good news.
The big picture driver behind all of this, UBS finds, remains the oil price and geopolitical tension in the Middle East, which continues to ripple through financial markets more than any other single variable.
The takeaway is straightforward. 2026 has so far rewarded investors who stayed in markets, leaned towards technology and emerging markets, and resisted the urge to play it safe. Whether that continues is another question entirely.
