Global equity markets bounced back strongly in May after a disappointing April, delivering the strongest monthly performance thus far in 2024 (MSCI World Index +4.5% MoM). A few mega-cap US tech stocks disproportionately skewed equity market performance. Nvidia’s share price (+27% MoM) has more than doubled in 2024 (+121% YTD) after rallying 240% in 2023, contributing one-fifth to the MSCI World’s performance in May. Between them, Apple (+13% MoM) and Microsoft (+7% MoM) were also responsible for one-fifth of May’s global equity index performance. Nvidia’s May rally followed its earnings update, which was ahead of analyst expectations and accompanied by a bullish sales forecast showing that AI computing spend remains strong. Energy shares were the only S&P 500 sector to experience a dip in May (-0.4% MoM), dragged down by the Brent crude oil price (-7.1% MoM) as rising US inventories, reduced anxiety over the ongoing Middle East conflict and concerns around China’s continued lacklustre economic performance weighed on the oil price. Brent crude ended May at US$82/bbl after trading above US$90/bbl in April.
Emerging markets (EMs) also had a positive May (MSCI EM +2.5% MoM) with another decent month for Chinese stocks, particularly those listed offshore (Hong Kong-listed Chinese companies +2.2% MoM, US-listed Chinese companies +2.8% MoM). While China’s economic data still paints the picture of a struggling economy, Chinese government officials announced a raft of stimulus measures aimed at boosting the country’s troubled property sector, which should go some way to improving consumer and investor confidence. Brazilian shares (Bovespa -3.0% MoM) were a negative outlier in EMs and are now down 9% YTD following 2023, where they were the star EM performers (+22% YoY).
Positive investor sentiment in May was at least partially driven by fading pessimism around the longevity of elevated US inflation and interest rates, as the latest US inflation data showed a resumption of the decline in the pace of core inflation (+3.6% YoY from +3.8% YoY in the prior month). The US government’s 10-year borrowing rate fell in May (to 4.5% p.a.), dragging the US dollar down. The US Dollar Index (-1.5% MoM) fell for the first time in 2024, with the US dollar weaker against most major currencies in May.
