In the United States, equity markets rose last week, reaching fresh highs on the back of technology gains despite elevated oil prices and higher-than-expected inflation data. Shares in NVIDIA, AMD, Broadcom, and Alphabet were among the key outperformers, as senior executives from major technology companies travelled to China to discuss potential trade agreements. The gains in the S&P 500 and NASDAQ came despite oil prices remaining above $100 per barrel. US inflation for April came in at 3.8% on Tuesday, which temporarily weighed on markets during the session. Uncertainty over the conflict in Iran pulled markets lower on Friday, reversing most of the weeks gains and, by the end of the week, the S&P 500 and NASDAQ had closed just above the flatline, up 0.03% and 0.09% respectively.
In corporate developments, GameStop — once on the verge of bankruptcy before becoming central to the “meme stock” phenomenon — reportedly offered to acquire the online retailer eBay for $55.5 billion. The video game and merchandise retailer has accumulated a 5% stake in eBay, a company valued at almost four times GameStop’s market capitalisation, and proposed an offer of $125 per share, split equally between cash and stock, to merge the two companies. This represented a 46% premium to eBay’s share price at the time GameStop began building its position. However, eBay rejected the proposal last Tuesday, citing concerns surrounding the financing structure of the deal, as well as GameStop’s governance standards. There is now speculation that GameStop CEO Ryan Cohen could attempt to bring the proposal directly to eBay shareholders, similar to the approach seen during Paramount’s takeover of Warner Bros.
In retail, Walmart is developing “last-mile” depots to improve delivery speeds as it continues to compete with Amazon for dominance in rapid retail delivery services. According to the Financial Times, Walmart is opening smaller depot-style facilities that will function as dark stores used exclusively by drivers operating through the company’s Spark delivery platform. The rationale behind these depots is the time required to fulfil grocery orders within Walmart Supercentres, which can span as much as 180,000 square feet. The new depots are reportedly closer to 20,000 square feet and will primarily stock high-demand household goods. E-commerce now generates approximately $100 billion in US revenue for Walmart and, while the company operates 4,600 stores across the country, Amazon’s recent expansion of 30-minute delivery services in dozens of US cities means the competitive battle is increasingly measured in minutes rather than hours or days.
In the technology sector, capital expenditure among some of the world’s largest technology companies continues to surge in response to AI demand. However, this spending has significantly reduced free cash flow generation at many of these firms. Wall Street forecasts estimate that, by the third quarter of 2026, the combined free cash flow of Amazon, Alphabet, Microsoft, and Meta could decline to just $4 billion, compared with an average of $45 billion during the COVID-19 pandemic in 2020, when capital expenditure slowed considerably. If realised, this would represent the lowest combined free cash flow for these companies since 2014. Amazon, in particular, is expected to spend more on capital expenditure in 2026 than it generates in cash flow. This presents a challenge for investor returns despite technology share prices remaining at all-time highs. Alphabet repurchased no shares during Q1 2026 — the first quarter without buybacks since the programme began in 2015 — while Meta maintained its pause on repurchases.
The surge in demand for semiconductors and AI-related investments is also evident in retail investor activity. The Roundhill Memory ETF has accumulated more than $6 billion in assets despite launching only five weeks ago, making it the fastest-growing ETF of its kind in history and surpassing the pace previously set by BlackRock’s Bitcoin ETF.
In Europe, markets declined last week, weighed down by persistently high oil prices and political uncertainty in the UK. As both the US and Iran rejected concessions, the Strait of Hormuz remained closed, keeping oil and natural gas prices elevated. However, AI-focused companies benefited from the rally in US technology stocks, with ASML rising 5% on Wednesday and Prosus gaining 4%. Markets also reacted positively to the bilateral meeting between the US and China. For the week, the Euro Stoxx 50 and STOXX 600 closed lower, declining by 1.35% and 0.95% respectively.
In earnings, reports came from companies across several major sectors. Bayer, one of Germany’s largest pharmaceutical and chemical companies, reported positive results, with revenues rising 9% quarter-on-quarter. One of the key drivers behind the stronger performance was the company reaching an agreement with US rival Corteva regarding access to the US soybean seed market. Bayer has endured a difficult period after becoming embroiled in a major US Supreme Court case relating to allegations that its Roundup weedkiller caused cancer. However, the company has begun to recover from the episode, with shares rising more than 50% over the past year.
In the United Kingdom, the FTSE 100 fell last week, despite gains in banking, mining, and energy stocks, as markets reacted to ongoing political uncertainty. Elevated oil prices pushed shares in Shell and BP higher earlier in the week, while banks advanced amid speculation surrounding potential changes in the country’s political leadership. Mining companies also benefited from gains in commodities such as copper and iron ore. For the week, the FTSE 100 closed 0.89% lower.
