May 2019

• Global markets weakened in May as trade tensions between the United States and China escalated sharply, increasing fears of slower global growth.
• Equity markets globally experienced heightened volatility, with export-oriented and technology sectors under significant pressure.
• Bond yields declined sharply as investors sought safe-haven assets and central banks signalled greater willingness to support growth.
• Emerging markets weakened amid concerns over trade disruptions and slowing global demand.
• Oil prices declined due to fears of weaker economic activity and lower demand expectations.
• Gold prices strengthened as market uncertainty and risk aversion increased.

Asia (ex. Japan)

Asian markets outside Japan declined significantly during May as trade tensions between the United States and China intensified following new tariff announcements. Chinese equities weakened as investors worried about the impact on exports, manufacturing and business confidence.

Technology-heavy markets such as Taiwan and South Korea experienced notable losses due to concerns surrounding semiconductor demand and supply chain disruptions. India remained relatively more resilient due to stronger domestic demand conditions, though overall regional sentiment deteriorated sharply.

Europe

European equities weakened during May as global trade tensions and slowing manufacturing activity weighed heavily on investor sentiment. Export-oriented sectors, particularly industrials and automotive manufacturers, experienced significant pressure.

Economic data across the eurozone continued softening, reinforcing expectations that the European Central Bank would maintain accommodative policies for an extended period. Political uncertainty surrounding Brexit and Italy also contributed to market caution.

United States

U.S. equities declined during May as escalating trade tensions with China increased concerns regarding global growth and corporate profitability. Technology companies and industrial exporters were among the weakest-performing sectors.

The Federal Reserve maintained a patient policy stance but increasingly acknowledged downside risks associated with trade disputes and slowing global activity. Treasury yields fell sharply as investors anticipated potential future interest rate cuts.

United Kingdom

UK equities weakened during May amid deteriorating global sentiment and renewed political uncertainty surrounding Brexit. Sterling remained volatile as political leadership uncertainty intensified following the resignation announcement of Prime Minister Theresa May.

Domestic economic conditions remained relatively stable overall, though business investment continued to suffer from prolonged political uncertainty. The Bank of England maintained a cautious approach toward monetary policy.

Japan

Japanese equities declined significantly during May as global trade tensions and weaker export expectations pressured manufacturers and technology-related sectors.

The stronger yen during periods of heightened risk aversion further weighed on exporters, while the Bank of Japan maintained its highly accommodative policy stance to support economic conditions.

Emerging Markets

Emerging markets weakened broadly during May as escalating trade tensions reduced investor appetite for risk assets. Export-oriented economies and commodity producers experienced particularly heavy pressure.

Chinese stimulus measures helped limit some downside in Asia, though capital inflows weakened and currencies softened across several emerging economies.

Commodities

Commodity prices weakened sharply during May due to concerns over slowing global growth and reduced demand expectations. Oil prices declined significantly as investors anticipated weaker economic activity and higher supply levels.

Industrial metals also weakened amid concerns surrounding Chinese manufacturing and global trade, while gold prices strengthened as safe-haven demand increased.