Most equity markets delivered positive returns in May, as economies around the world began to put the effects of the pandemic behind them. In the UK, there was a further easing of restrictions, with hospitality venues allowed to open indoors.
Retail sales grew 9.2% in April and the Consumer Prices Index (CPI), measured by the Office for National Statistics, returned to 1.5% for the first time since last March. The FTSE 100 index climbed a further 1.1% during the month while smaller UK companies measured by the FTSE Small Cap ex IT index enjoyed a 3.2% boost.
In emerging markets India was the standout performer, with equities rallying strongly on the Indian Stock Exchange. The Nifty 50 index surged 6.5% in its local currency (INR) during the month, pointing towards the possibility of a strong Indian rebound similar to the strong recovery seen in China last year.
Overall, emerging markets performed well during the month, with the MSCI Emerging Markets index rising 1.37% in local currencies. Chinese equities measured by the MSCI China local index returned 0.55%. Latin American equities, measured by the MSCI Latin America local currency index, gathered 5.47% and Indian stocks, measured by the Nifty 50 INR PR index, jumped 6.50%.
Meanwhile, it was a disappointing month for US tech stocks amidst inflation fears. In US dollars, Amazon and Apple declined 7.1% and 5.2% respectively, while Tesla slumped 11.9%. The S&P 500 index, which measures the largest companies in the US, saw one of the smallest gains among equity indices in May, with just a 0.7% return in USD, while the tech-heavy NASDAQ composite index ended the month down 1.5% in USD.
Looking at the performance of the world’s major stock markets in May, in the UK, the FTSE 100 index gained 4.08%, while medium and smaller companies, measured by the FTSE 250 ex-IT index and the FTSE Small Cap ex IT index respectively, rose 1.60% and 3.19% respectively. In the US, the S&P 500 USD index climbed 0.55% while in Europe the Eurostoxx 50 EUR index gained 2.53%. Japanese stocks measured by the Topix JPY index put on 1.38%.
In the fixed income market, UK government bonds, measured by the FTSE Gilts All Stocks index, lifted 0.43%. Long dated (over 15 years to maturity) gilts climbed 0.65%. Sterling denominated corporate bonds, measured by the Markit iBoxx Sterling Corporates index, rose 0.22%. In the high yield market, the Bank of America Merrill Lynch Sterling High Yield index picked up 0.19%.
Commodities had a positive month overall. The S&P GSCI USD index, which consists of a basket of commodities including oil, metals and agricultural items, increased 2.52%. The dollar price of a crude oil futures contract ramped up 4.31%. The precious metals both saw large gains as the S&P GSCI Gold and Silver indices surged 7.66% and 8.28% in USD respectively, but in the agricultural markets corn and wheat prices slumped 11.25% and 10.64% in USD respectively.
In the currency markets, the pound had a strong month as it appreciated 2.65% against the US dollar, 1.27% versus the euro and 3.20% against the yen.