Market update: 19 May 2026
Australian shares moved lower this week, with the ASX 200 falling 1.3% following the release of the Federal Budget. Investor sentiment was weighed down by proposed changes to negative gearing and capital gains tax rules, which are designed to encourage investment into new housing and startups rather than established properties. Bank stocks came under pressure as markets assessed the potential impact of the reforms.
US markets navigated a volatile week, with the S&P 500 inching up 0.1% to a fresh record high, while the Dow Jones and Nasdaq finished slightly lower. Sentiment was supported by the conclusion of the Trump-Xi summit, which signalled a more “business-first” tone and included a tariff swap and Boeing order. Nvidia continued its strong rally, helping support broader market gains, although rising inflation and higher oil prices reignited concerns around the outlook for interest rates. IPO activity also remained strong, reflecting continued investor confidence.
European equities weakened, with the Euro Stoxx 600 down 0.9% as renewed US tariff threats and rising energy costs weighed on sentiment. Eurozone producer inflation recorded its biggest monthly increase in more than four years, prompting the European Central Bank to flag the possibility of a rate hike in June. While German factory orders improved strongly, ongoing geopolitical uncertainty and weaker construction activity kept markets cautious.
Japanese markets softened in a holiday-shortened week, with the Nikkei 225 down 2.1%. Despite the weaker market performance, macroeconomic fundamentals showed signs of improvement, with real wages rising year on year for the third consecutive month, marking the strongest run since 2021.
Chinese equities also moved lower, with the Shanghai Composite down 1.1% and the Hang Seng falling 1.6%. However, domestic demand remained relatively resilient, with services PMI expanding to 52.6. Investors continue to watch developments from the Trump-Xi trade truce closely, particularly around AI safeguards and agricultural trade agreements.
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This blog has been issued by Instreet Investment Limited (ACN 128 813 016 AFSL 434776) as Responsible Entity of the Raiz Invest Australia Fund (ARSN 607 533 022) and has been prepared without taking into account your objectives, financial situation or needs. Before acting on such information, you should conduct your own review or consult a financial advisor before making a decision to invest. Please read the relevant Product Disclosure Statement and any associated reference documents before making an investment decision. In accordance with the Design and Distributions Obligations, we maintain Target Market Determinations for our Funds. All documents can be found on the Raiz website www.raizinvest.com.au, or calling the Customer Support team on 1300 754 748. Please note that past performance is not a reliable indicator or guarantee of future performance. Historical returns, forecasts, and market commentary are provided for general informational purposes only. All investment carries risk and may result in loss of capital.
