Global shares rose in May with developed markets outperforming emerging markets. Investors continued to anticipate interest rate cuts, albeit with US cuts likely to come later than in some other regions such as the Eurozone.

US shares posted solid gains in May, supported by some strong corporate earnings and hopes that interest rate cuts are still on the way later this year. The Dow Jones, S&P500 and Nasdaq Composite indexes gained 2,30%, 4,80% and 6,88% respectively throughout May. The Dow Jones also shortly broke above the $40,000 level – its all-time-high. On the other hand the dollar lost 1,65% against the Euro to close the month at $1,0841/EUR.

Inflation remained sticky at levels above the Fed's 2% target rate. Fed chair Jay Powell said that there had been a lack of progress on bringing inflation down, but that interest rate rises were unlikely. The PCE index, which is the Fed's preferred measure of inflation, came at 2.8% for April. The consumer price index (CPI) dropped slightly to 3,4% in April from 3,5% in March. Another sign of growth slowing down were the non-farm payrolls data showed that 175,000 jobs were added in April, below expectations.

Eurozone shares booked mixed gains in May. The Eurostoxx 50, DAX and CAC indices gained 1,27%, 3,16%, while the French CAC index narrowly gained 0,10% throughout the month. French stocks, and particularly French banks have been underperforming other European markets as of late.

The real estate and utilities sectors were among the top gainers as investors widely anticipate the European Central Bank (ECB) to cut the rate in June.

Eurozone annual inflation increased to 2,6% in May from 2,4% in April. Nevertheless, investors continued to expect a 25 basis point rate cut.

In Germany wages grew at the fastest pace in nearly a decade, increasing 6,3% in Q1 2024.

The Japanese equity market experienced a rebound in May. However, the Nikkei 225 index continued to underperform,  adding only 0,21% while the Yen continues to lose ground against the dollar and Euro. Although there are no clear signs of a recovery in consumer sentiment, gradual wage increases are expected to support consumption in the coming months.

In the commodities market gold gained 1,86% to close at 2345,8$ per ounce. During the month it reached an all-time-high of $2464 per ounce. The big gained was natural gas which added 29,93% to close at 2,587 MMBTU. Also silver gained 14,20%.

Rudy Marchant
Fund manager Primorski skladi

Monthly reports - May 2024