May in review

After a temporary correction in April, global equities resumed their upward march in May. Slowing US inflation and weakening labour data boosted hopes of a soft landing for the world’s biggest economy. The S&P 500 and Stoxx 600 reached new all-time highs mid-month; UK stocks also rose on the positive sentiment as did the Nikkei. Although markets were more challenged towards the end of the month due to stickier-than-expected inflation data – particularly in Europe - investors grew more confident that rate cuts would still happen this year. This was supported by the Swedish Riksbank, which delivered its first rate cut since 2016, leading to an increased expectation that other central banks would follow.

Developed markets outperformed emerging markets. After experiencing something of a renaissance this year, Hong Kong and Chinese mainland stocks fell back in May as supportive economic data was partially offset by the prospect of more US trade tariffs on various industries.

At the sector level, 2024’s standout IT sector continues to deliver returns, followed by utility stocks. The Fed’s outlook for interest rates, coupled with AI’s insatiable demand for electricity, has made the sector more attractive. Energy stocks, although positive for the month, underperformed as WTI crude prices hit a 3-month low, falling more than 2%.

Source: Bloomberg, for the month ending 31 May, 2024.