DailyBrief: May 31
Eurozone PMI hits 31-month low, ECB June hike, Dell AI surge
Markets & Economics
Eurozone PMI Falls to 31-Month Low as Middle East Conflict Weighs on Growth
The eurozone composite PMI dropped from 48.8 in April to 47.5 in May, its lowest reading in 31 months, signaling an accelerating contraction in economic activity. Output fell at the steepest rate in two and a half years, consistent with a modest decline in real GDP growth in Q2. Economists attribute the deterioration largely to the ongoing Middle East conflict, which has driven energy prices sharply higher and dampened business confidence across the bloc's largest economies. The IMF has trimmed its 2026 global growth forecast to 3.1%, down 0.3 percentage points from January, citing the energy shock and heightened geopolitical uncertainty. Source: S&P Global, Deloitte Insights
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ECB June Rate Hike Now Fully Priced In as Eurozone Inflation Hits 3%
Rate markets are fully pricing a 25-basis-point hike at the European Central Bank's June 11 meeting, with two additional hikes expected before year-end. The flash estimate for April showed eurozone headline HICP inflation rising to 3.0% year-on-year, up from 2.6% in March, driven largely by surging energy costs tied to the Middle East conflict. A survey of economists by Bloomberg projects the ECB will hike rates twice in 2026, in June and September. Euronews reported this week that inflation picked up across the EU's four largest economies in May, reinforcing the case for tightening. Source: Euronews, Bloomberg, ING Think
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Kevin Warsh Sworn In as Fed Chair; Markets Price No Rate Cuts in 2026
Kevin Warsh was sworn in as the new Federal Reserve Chair on May 22, succeeding Jerome Powell after a Senate confirmation vote of 55 to 45, the narrowest margin in Fed history. Warsh, a former Fed governor and investment banker, is the first Fed chair with an openly pro-crypto stance. With the new leadership in place, futures markets are pricing a 74.5% probability that the Fed's benchmark rate will remain unchanged through the rest of 2026, while the probability of a rate hike this year has risen to 14.9%, up from just 0.8% a month ago. Powell remains on the Fed's board of governors. Source: CBS News, Kiplinger, Al Jazeera
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China Fixed-Asset Investment Posts Worst Performance Since December 2025
China's fixed-asset investment fell 1.6% year-on-year in the first four months of 2026, the worst performance since December 2025, with investment declining 2.4% from March to April alone. The data underscores persistent domestic demand weakness in the world's second-largest economy, complicating Beijing's efforts to sustain recovery momentum. The slowdown comes alongside a broader global growth deceleration and continued pressure from trade policy uncertainty following the US-China deal struck in May. Source: Deloitte Insights, Crestwood Advisors
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Tech & AI
Dell Stock Surges 32% After AI Server Revenue Jumps 757%, Raises Annual Outlook to $60B
Dell Technologies posted its strongest quarterly results since returning to public markets, with Q1 FY2027 revenue of $43.8 billion against expectations of $35.8 billion. AI server revenue alone hit $16.1 billion, up 757% year-on-year, and the company exited the quarter with an AI server backlog exceeding $51 billion. Dell raised its fiscal 2027 AI server revenue forecast to $60 billion, up from a prior estimate of $50 billion, and lifted its adjusted EPS guidance to $17.90 from $12.90. Shares closed up 32.76% on Friday, their best single-day gain ever, extending a 234% year-to-date run. The results signal that enterprise demand for AI infrastructure remains far stronger than Wall Street had anticipated. Source: CNBC, Bloomberg
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US Government Launches Pre-Release AI Model Testing Regime; Microsoft and xAI Agree to Comply
The United States government has formalized an aggressive push to evaluate AI models before they reach the public, with major AI companies including Microsoft and xAI reportedly agreeing to provide regulators with early access to their models ahead of release. The move marks a significant escalation in US AI oversight and reflects growing concern among policymakers about the pace of capability advances. The testing regime mirrors approaches taken in the EU under the AI Act but applies US-specific safety and national security criteria. The development could slow commercial release timelines for frontier models and set a precedent for how governments worldwide engage with AI developers. Source: imfounder.com, Mean CEO Blog
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