TXEDUGROUP * May 2026
Oil Crashes, Stocks Party, AI Goes Crazy:
The Month Everything Flipped!
The “Mamak” Guide to May 2026 — Where Peace Talks Move Markets
What happens when the world’s biggest oil crisis starts to unwind? Everything flips.
In May, the US and Iran nearly agreed on a 60-day ceasefire extension. Oil had its worst month since COVID, crashing 19%. Meanwhile, the S&P 500 hit record after record — nine straight weeks of gains. AI spending hit insane levels. And in Malaysia, fuel prices finally came down… but the subsidy debate got spicier than your mamak curry.
Oil: The Biggest Monthly Crash Since COVID
Remember $119/barrel in March? Yeah, that’s ancient history now.
The Crash: Before the Iran war, Brent crude sat at around $63/barrel. It spiked to $119 in March — nearly doubling. In May, it crashed 19% to around $92-93/barrel. That’s the biggest single-month drop since COVID in March 2020. Still 47% above pre-war levels, but the worst of the crisis appears to be easing.
Why? The US and Iran “mostly agreed” on a 60-day ceasefire extension deal. Markets started pricing in the Strait of Hormuz reopening — meaning 20% of global oil supply could come back online.
But wait: Despite the deal, Iran fired missiles at Kuwait and sent drones toward the Strait. UBS says there’s “little evidence” of actual shipping recovery yet. The deal still needs Trump’s sign-off.
The Logic: Markets are trading on hope, not reality. Oil is down because traders believe peace is coming — but ships still aren’t moving through Hormuz. If talks collapse, oil rockets back up.
Stocks: Records, Records, Records
Nine straight weeks of gains. S&P 500 profit margins at all-time highs. AI is eating the market.
The Numbers: The S&P 500 had fallen 8% during the March war panic. Since the April 8 ceasefire, it has rebounded over 10.5% — wiping out the losses and pushing to new all-time highs. The Nasdaq rose 8% in May alone, closing at 26,972. That’s nine consecutive weeks of gains — a streak not seen since late 2023.
Earnings Blowout: Normally, about 78% of S&P 500 companies beat earnings estimates. This quarter? 84%. And they didn’t just beat them — they crushed them by 18.2% on average, more than double the usual 7.1%. Profit margins hit a record 13.4%, meaning companies are keeping more of every dollar they earn than ever before.
AI Spending Goes Nuclear: The Magnificent Seven collectively plan to spend $725 billion on AI infrastructure in 2026. Meta raised capex to $125-145B. Alphabet: $180-190B. Microsoft: $190B. Amazon: $200B. Semiconductors are the runaway leader.
The question everyone’s asking: Is $725 billion in AI spending justified? These companies need to prove AI generates revenue, not just costs. If the payoff is real, this is the beginning. If not, it’s the biggest bubble since dot-com.
Gold & Dollar: Stuck in No-Man’s Land
Gold is up 43% this year but couldn’t decide where to go in May. The dollar? Same story.
Gold: Gold started 2026 around $3,200, hit an all-time high of $5,602 in January, then crashed 25% to $4,100 in March when the dollar surged. In May, it traded sideways between $4,540-$4,750 — down 1.8% for the month, but still up a remarkable 43% year-to-date. Central banks continue buying at 585 tonnes/quarter, keeping the floor solid.
Dollar (DXY): The Dollar Index surged from 96 to above 100 during the March war panic as investors fled to safety. In April, it pulled back to 98.5 as fear eased. May? Barely moved — ending at 98.9, up just 0.9% for the month. The dollar is no longer the “panic trade” it was in March, but the Fed holding rates steady keeps it supported.
Why sideways? Gold is caught between two forces — ceasefire hopes (bearish for gold) vs. central bank buying + inflation fears (bullish). Result: it goes nowhere. Watch for a breakout when the Iran deal is either signed or collapses.
ECB: About to Raise Rates (Yes, Really)
While the Fed holds, Europe is about to do the opposite. First rate hike in years.
Europe’s inflation problem: Before the war, Eurozone inflation was trending toward the ECB’s 2% target. Now? France hit 2.8%, and the ECB’s “Big Four” (Germany, France, Italy, Spain) all reported stubbornly high readings in May. Even though oil dropped 19% this month, the energy price shock from earlier months is still flowing through to consumer prices — there’s always a lag.
June hike is locked in. Markets are fully pricing a 25bps hike at the June meeting, with a second hike expected by September and 92% chance of a third before year-end. ECB board members publicly admitted April’s “hold” was a very close call.
Why it matters to you: When the ECB raises rates, the Euro strengthens vs. other currencies. Borrowing in Europe gets more expensive. European stocks could face headwinds. And it signals that globally, the “easy money” era is definitely over.
Malaysia: Relief at the Pump, Drama in Parliament
Fuel prices finally dropped. But the subsidy debate is getting hotter than ever.
THE RELIEF
Fuel prices came down significantly. Diesel peaked at a record RM6.72/L in mid-April (up from RM3.92 before the war). By end of May, it dropped to RM4.87/L — a 27% relief from the peak, though still 24% above pre-war levels. RON97 followed a similar path: from RM3.85 pre-war, spiking to RM5.15, now back to RM4.65. The direction is right, but we’re not back to “normal” yet.
GDP revised UP to 5.4% (Q1). Initially reported at 5.3%, the final figure came in at 5.4% — beating market expectations despite the war. For context, Q4 2025 was 6.3%, so growth has moderated but remains healthy. The IMF was impressed enough to raise Malaysia’s full-year 2026 forecast from 4.3% to 4.7%.
Ringgit holding strong at ~RM3.97/USD. A year ago, the ringgit was around RM4.27 per dollar — so it has strengthened over 7% since then, now trading at levels not seen since June 2018. Malaysia’s growing role in the global AI chip supply chain is a key driver, attracting fresh foreign investment into data centres and tech exports.
Inflation edged up to 1.9% — the highest reading since October 2024, up from 1.6% in Q4 2025. Sounds concerning, but compare it to the region: Vietnam is at 4.7%, the Philippines at 4.1%, and the OECD G-20 average is 4.0%. Malaysia’s subsidies are keeping a lid on prices — at enormous fiscal cost.
THE DRAMA
The subsidy bill hit ~RM5 billion/month. Before the war, the monthly fuel subsidy was around RM700 million. It jumped to RM3.2B in March, RM4B in April, and now RM5B in May — a 7x increase. Annualised, that’s RM60 billion, which is roughly 15% of the entire federal budget. Unsustainable is an understatement.
Government floated cutting BUDI95 from 200L to 150L. Deputy Finance Minister Liew Chin Tong mentioned it, then walked it back saying he was “taken out of context.” The public reaction? Furious.
T15/T20 subsidy removal debated. The idea: strip subsidised RON95 from higher-income Malaysians. But Energy Minister Yeo Bee Yin warned it could trigger inflation and an economic slowdown.
Palm oil softened to ~RM4,470/ton, down about 3% from April’s RM4,597. To put it in perspective: pre-war CPO was around RM4,200, so it’s still above that. But short-term headwinds are real — Malaysian exports fell 14-18% in May, and India (the world’s top buyer) cut palm oil imports by 26%. The B15 biodiesel mandate is a long-term positive, but near-term demand is shaky.
Bottom line: The oil crash is good news for Malaysia — cheaper fuel, less subsidy pressure. But RM5B/month is still unsustainable. The real question isn’t IF subsidies get cut further, but WHEN and WHO gets affected. The B40 vs T20 debate will define the rest of 2026.
May 2026 Cheat Sheet
| What |
What Happened |
| Iran Ceasefire | 60-day deal “mostly agreed” |
| Strait of Hormuz | Still blocked, but hope rising |
| Brent Crude | $93 (19% in May!) |
| S&P 500 | All-time highs (9 weeks!) |
| Nasdaq | +8% 26,972 |
| AI Capex (Mag 7) | $725 BILLION planned |
| Gold | ~$4,541 (flat, +43% YTD) |
| Dollar (DXY) | ~98.9 (sideways) |
| ECB | June rate HIKE locked in |
| Bitcoin | $73K (6.5% in May) |
| GDP (Q1 revised) | 5.4% (beat expectations) |
| Ringgit | RM3.97 (near 8yr high) |
| Diesel (end May) | RM4.87/L (from RM6.72) |
| RON97 (end May) | RM4.65/L (from RM5.15) |
| Palm Oil | ~RM4,470/ton (softening) |
What to Watch in June
The 60-day deal — Does Trump sign? If yes, Hormuz could reopen and oil drops toward $70-80. If no, brace for another spike.
ECB rate hike (June meeting) — First hike in years. Could rattle European markets and strengthen the Euro vs. everything else.
Malaysia’s subsidy showdown — Will the 200L cap drop to 150L? Will T20 lose access to BUDI95? The political pressure is immense on both sides.
AI bubble or boom? — $725B in capex needs to produce revenue. If Q2 earnings show AI actually making money, stocks stay. If not, the “dot-com 2.0” narrative takes over.
TXEDUGROUP * May 2026
This is for learning only, not financial advice. Stay smart with your money!
