Global equity markets experienced a strong rebound in May following the sharp sell-off that occurred earlier in the previous month. This recovery was partly fuelled by the announcement of a 90-day pause in tariffs between the US and China, which began on May 12. The market views this as a potential easing of trade tensions for the time being. Conversely, global bond markets faced negative performance throughout the month as Moody’s downgraded its credit rating for US government bonds, citing concerns over the continually rising US budget deficit. A disappointing 20-year Treasury auction in May, coupled with the progress of Donald Trump’s “big beautiful bill” in the Senate, indicates a waning appetite among investors to continue funding the U.S. deficit. This concern is especially significant as the deficit is expected to rise due to the proposed tax bill.
South African equities have outperformed their emerging market peers in Rand terms for the fifth consecutive month, with all major sectors reporting strong returns. South African bonds defied global trends and delivered gains as the local market dismissed some concerns regarding GNU stability after the long-awaited Budget 3.0 was agreed upon and passed. Additionally, market sentiment became increasingly optimistic that the Monetary Policy Committee (MPC) would provide some consumer relief through a 25 basis point rate cut at the end of May, which ultimately occurred in line with market expectations.
- The JSE All Share traded higher in May, up 3.1%.
- Industrials (up 3.9%) gained sharply in May, Financials (up 2.5%) and Resources (up 2.6%) also trended higher.
- Small-caps (up 3.3%), Mid-caps (up 5.5%) and Large-caps (up 2.9%) delivered strong gains across the board.
- South African property markets were also positive in May, with the ALPI gaining 2.3%, while the S&P SA REIT Index rose 4.6% over the month.
- SA Nominal Bonds (up 2.7%) delivered some strong returns as a consequence of improving sentiment surrounding the GNU, while Inflation-Linked Bonds were slightly positive, up 0.4.
- Emerging Market equities underperformed the Developed Market Equities in US Dollar term in May. The MSCI World Index rose 6.0% and the MSCI Emerging Market Index rose 4.3%.
- Relative to the U.S. Dollar (Rand appreciated 2.9%), the Euro (Rand appreciated 3.1%) and the Pound Sterling (Rand appreciated 2.0%).
- Gold prices showed slowing momentum and slightly contracted 0.5% in May, while Platinum rose sharply by 9.1%. Brent Crude experienced a small gain of 1.2% over the month.
Source: Factset
Please note that any information in our posts, documents, infographics, emails etc is general information and should not be considered as providing financial advice. We therefore disclaim all liability and responsibility arising from any reliance placed on such information by any reader, client or visitor to our website. Though we make every effort to ensure the accuracy of the information provided we accept no liability for any inaccuracies.