Global equity markets performed strongly in May as they continued to recover from the turbulence caused by President Trump’s tariff announcements. The MSCI World index, which tracks global developed market equities, gained nearly 6% during the month – its biggest rise since November 2023 – as trade tensions and fears of a recession were eased by further tariff delays and advanced talks between the US and the EU.
In the UK, inflation measured by the Consumer Prices Index jumped nearly one whole percentage point to 3.5%, driven by rises in household bills and energy costs. Earlier in the month, the Bank of England had implemented its fourth rate cut since last August, bringing the base rate to 4.25%. Despite the larger than anticipated inflation print, the market is still pricing in a further one or two rate cuts for the rest of the year.
Full round-up of May market performance
In the UK, the FTSE 100 index gained 3.83% while medium and smaller companies, measured by the FTSE 250 ex IT index and the FTSE Small Cap ex IT index respectively, amassed 7.10% and 7.77%. In the US, the S&P 500 USD index rose 6.29% while in Europe the Eurostoxx 50 EUR index gathered 5.42%. Japanese stocks measured by the Topix JPY index grew 5.10%.
Emerging markets returns were also positive, with the MSCI Emerging Markets index returning 3.17% in local currency terms. Latin American equities, measured by the MSCI Latin America local currency index, climbed 1.98% and Indian stocks measured by the Nifty 50 INR index picked up 1.71%. Chinese stocks measured by the MSCI China CNY index rose 3.54%.
In the fixed income market, UK government bonds, measured by the FTSE Gilts All Stocks index, slipped 1.19% with long dated (over 15 years to maturity) gilts declining 2.49%. Sterling denominated corporate bonds, measured by the Markit iBoxx Sterling Corporates index, fell 0.07%. In the high yield market, the ICE Bank of America Sterling High Yield index increased 0.86%.
In the commodities market, the S&P GSCI USD index, which consists of a basket of commodities including oil, metals and agricultural items, gained 1.59%. Brent crude oil futures rallied 4.43 during the month. In the precious metals markets, the S&P GSCI Gold and Silver indices returned -0.61% and 0.97% in USD respectively, while in the agricultural markets corn and wheat futures returned -4.98% and 4.09% in USD respectively.
In currency markets, it was a strong month for the pound as it appreciated 0.98% versus the US dollar, 0.81% against the euro and 1.70% versus the Japanese yen.
Another hearty congratulations goes to James for winning Best Fund Group Award for Mixed Assets – Aggressive GBP last week in the Citywire UK Portfolio Manager & Group Awards 2025. You can read our write up about the award here.