Opening Bell Morning Commentary - 18 May 2026

Global Markets Retreat As Inflation Pressures Resurface

U.S. equities endured a volatile last week. AI-driven optimism lifted the S&P 500 and Nasdaq to fresh record highs early on, but a barrage of hot inflation data and escalating geopolitical anxiety triggered a sharp global sell-off on Friday, erasing nearly all weekly gains.

The week’s defining catalyst was a troubling inflation resurgence. April CPI climbed 0.6% month-over-month, lifting the annual rate to 3.8% the highest since May 2023. More alarming was the PPI print: wholesale prices surged 1.4% in April, the largest monthly gain since March 2022, pushing annual producer inflation to 6.0% a level unseen since December 2022. 

The bond sell-off accelerated sharply. The 10-year Treasury yield ended the week at 4.59%, up from below 4.00% as recently as late February. The 2-year yield settled at 4.08%, while the 30-year reached 5.12% its highest level since 2007.

Markets have abandoned hopes for near-term cuts. Rate futures now imply roughly a 50% probability of a quarter or half-point hike by December, with a ~49% chance of rates holding and less than 1% pricing in a cut. 

The nearly complete US Q1 earnings season has been robust. S&P 500 companies are on pace for revenue growth of 11.4% the strongest since Q2 2022 and earnings growth of 27.7%, the best since Q4 2021.

The Indian equity market also faced steep volatility during the last week, resuming its downward trajectory as global and domestic macro headwinds dented investor sentiment.

The primary market trigger was a sharp escalation in US-Iran hostilities, which drove Brent crude prices past the $100 per barrel mark. For import-dependent India, surging oil prices reignited structural inflation fears.

This macro strain immediately hit the currency market, forcing the Indian Rupee to a fresh historic low of over Rs 96 against the US dollar.

A hotter-than-expected US inflation print (both CPI and PPI) fueled global anxieties that the Federal Reserve would hold interest rates higher for longer, triggering a global risk-off environment that hit emerging markets hard. 

The Sensex settled 2.7% down while the Nifty shed 2.2% last week. The BSE 150 Mid-Cap index declined 2.65% and the BSE 250 Small-Cap dropped 3.81%.

Nifty is consolidating in a broad range between 23850 to 23250 range. A decisive breakout above 23850 level is needed to revive bullish momentum in the market. On the downside, the swing low of 23,262 continues to act as support for the index.

Indian markets are poised to open 100 points lower from Friday’s close near 23550 levels.