Market Pulse - May 2024

Key themes

In May, global stock markets rallied to new all-time highs, supported by tech stocks and softer US inflation data.
Global economic data showed signs of improving activity, although US growth showed some signs of moderating as inflation in the country slowed, leaving the potential for the Federal Reserve (Fed) to cut rates in the coming months.
In Europe, while the European Central Bank (ECB) was set to ease policy in June, the rise in Eurozone inflation led to a slight reduction in the scale of expected rate cuts for 2024, and central-bank speakers played down the extent of future monetary easing. European bond prices declined slightly.

Markets snapshot

The MSCI All Country World index rose by 3.8% (2.6% in euros) over the month.
The MSCI USA rallied by 4.8% (3.2% in euros).
European ex-UK equities were up by 3.6% (3.9% in euros).
Small cap equities rallied by 4.1% (3.0% in euros) in May, supported by softer inflation data in the US.
Emerging market (EM) equities were up by 0.5% (-0.9% in euros).
Eurozone government bond prices were slightly lower in May as expectations for ECB rate cuts in 2024 were pared back, from 66bps to 55bps, amid sticky inflation. The ICE BofA 5+ Year Euro Government bond index returned -0.3% over the month as price falls due to higher yields offset gains from interest-rate carry.
European investment-grade (IG) corporate bonds returned +0.2% as yields rose marginally – by 1bp to 3.99% – with the income stream offsetting the rise in yield. Spreads also narrowed by 5bps to 106bps. Global high-yield bonds returned +1.1% as yields declined by 15bps to 7.02%, supported by lower US Treasury yields, while spreads narrowed by 7bps to 246bps over the month.

Latest