May 2023

• Global markets delivered mixed performance in May as enthusiasm surrounding artificial intelligence boosted technology stocks while broader economic concerns persisted.
• U.S. technology companies significantly outperformed following strong earnings and growing investor interest in AI-related industries.
• Debt ceiling negotiations in the United States created temporary volatility late in the month.
• Central banks maintained restrictive policy guidance as inflation remained above target levels.
• Chinese economic recovery momentum weakened, increasing concerns regarding global growth prospects.
• Commodity prices softened overall due to slowing manufacturing activity and weaker Chinese demand expectations.

Asia (ex. Japan)

Asian markets outside Japan delivered mixed performance during May as weaker-than-expected Chinese economic data raised concerns regarding the strength of the post-reopening recovery.

Technology-oriented markets such as Taiwan benefited from strong global enthusiasm surrounding artificial intelligence and semiconductor demand, while broader regional markets faced pressure from slowing trade activity and weaker manufacturing conditions.

Europe

European equities delivered mixed results during May as slowing manufacturing activity and persistent inflation concerns offset support from resilient labour markets and declining energy prices.

The European Central Bank continued signalling additional interest rate increases ahead as inflation remained elevated despite gradual moderation in some economic indicators.

United States

U.S. equities advanced during May primarily due to strong gains among large-cap technology companies benefiting from artificial intelligence optimism. Semiconductor and software-related stocks significantly outperformed broader markets.

However, concerns regarding slowing economic growth, restrictive monetary policy and U.S. debt ceiling negotiations created increased volatility outside the technology sector.

United Kingdom

UK equities delivered relatively weak performance during May as persistent inflation and rising interest rate expectations weighed on domestic growth prospects.

The Bank of England faced increasing pressure to continue tightening monetary policy as wage growth and core inflation remained stubbornly elevated.

Japan

Japanese equities outperformed strongly during May as investors were attracted by accommodative monetary policy, improving corporate governance reforms and weaker yen conditions supporting exporters.

Foreign investor inflows into Japanese equities increased significantly during the month as confidence in the market improved.

Emerging Markets

Emerging markets delivered mixed performance during May as weaker Chinese economic data and stronger U.S. dollar conditions weighed on investor sentiment.

Technology-related Asian markets remained relatively resilient due to AI-driven semiconductor optimism, while commodity-exporting economies faced softer raw material prices.

Commodities

Commodity prices weakened overall during May due to concerns regarding slowing global manufacturing activity and softer Chinese demand. Oil prices remained volatile amid uncertainty regarding global growth and OPEC supply policies.

Industrial metals weakened further due to disappointing Chinese recovery momentum, while gold prices experienced modest volatility linked to U.S. debt ceiling negotiations and interest rate expectations.