May was a volatile month and equities fell to new lows for the year. Markets, however, rallied in the last week of May to end only slightly down for the month.
Inflation readings remained high. Food price inflation has become an increasing concern as exports from Ukraine have been disrupted by the war.
The EU announced an embargo on Russian oil and plans to reduce imports by 90% before year end. This contributed to a rise in the price of oil during May.
Economic data was generally weak. There were increasing concerns over the possibility of a recession in 2023.
The Fed raised interest rates by 50 basis points (bps) and indicated similar rises at the next two policy meetings.
The MSCI AC World equity index fell -0.2% (-1.3% in euros).
European equities underperformed, falling -0.6% (-0.8% in euros), as the European Central Bank (ECB) has become increasingly focused on tackling inflation, guiding to an earlier and faster pace of interest rate rises.
UK equities outperformed, rising 1.3% (0.2% in euros), benefitting from their relatively large weight in materials and energy stocks.
Japan rose 0.9% (0.1% in euros) as, in contrast to most other global central banks, the Bank of Japan has committed to maintain interest rates near zero.
The Pacific Basin fell -1.1% (-1.9% in euros), as concerns over Chinese growth weighed on the region.
The Eurozone >5-year bond index fell -2.7% as yields rose on higher-than-expected inflation and more aggressive policy guidance from the ECB.
The euro rose 1.8% against the dollar to 1.0731.
Commodities rose 5.1% (3.5% in euros), bringing their year-to-date return to 47.0% (56.1% in euros).
Crude oil was up 9.5% as the EU announced an embargo on Russian oil imports.
Gold fell -2.7% as US real yields moved back into positive territory with inflation expectations easing.