May 2022

• Global markets remained under heavy pressure in May as inflation continued accelerating and central banks intensified monetary tightening efforts.
• Equity markets globally experienced sharp volatility amid fears of recession and slowing corporate earnings growth.
• Technology and consumer discretionary sectors remained among the weakest performers.
• Energy and defensive sectors outperformed due to elevated commodity prices and economic uncertainty.
• Emerging markets faced continued pressure from stronger U.S. dollar conditions and slowing Chinese growth.
• Commodity prices remained elevated despite growing concerns regarding weakening global demand.

Asia (ex. Japan)

Asian markets outside Japan weakened further during May as prolonged Chinese lockdowns continued disrupting manufacturing activity, logistics and domestic consumption. Investors remained concerned regarding the broader impact on regional and global growth.

Technology-heavy markets such as Taiwan and South Korea experienced continued volatility as global growth concerns and rising interest rates pressured semiconductor and export-oriented sectors.

Europe

European equities experienced significant volatility during May as inflation pressures, rising energy costs and recession concerns intensified across the region.

Investors remained focused on the economic impact of the war in Ukraine, while the European Central Bank increasingly signalled that interest rate increases would begin later in the year.

United States

U.S. equities declined sharply during May as investors responded to persistently high inflation, aggressive Federal Reserve tightening expectations and weakening consumer sentiment. Technology and retail sectors experienced particularly heavy selling pressure.

The Federal Reserve implemented a large interest rate increase and confirmed plans for further tightening as inflation remained far above target levels. Treasury yields remained elevated throughout the month.

United Kingdom

UK equities delivered relatively resilient performance during May compared with several other developed markets due to strong exposure to commodity, energy and defensive sectors.

However, inflation reached multi-decade highs and consumer confidence weakened sharply as households faced rising energy and food costs.

Japan

Japanese equities remained volatile during May as weaker yen conditions supported exporters while global recession fears and rising commodity prices weighed on broader sentiment.

The Bank of Japan maintained accommodative monetary policies despite increasing pressure from currency weakness and imported inflation.

Emerging Markets

Emerging markets remained under pressure during May as rising U.S. interest rates and stronger dollar conditions tightened global financial conditions and reduced investor appetite for risk assets.

Commodity-exporting economies benefited from elevated raw material prices, though slowing Chinese growth and weaker global demand expectations limited broader gains.

Commodities

Commodity prices remained elevated during May despite increasing concerns regarding slowing global economic growth. Oil prices stayed high due to supply shortages, sanctions on Russia and limited spare production capacity.

Agricultural commodities also remained elevated due to disruptions caused by the war in Ukraine, while industrial metals weake