Global Market Overview

Global equities continued to advance in May as investors responded to the resumption of economic activity with an increasing number of countries starting to ease lockdown measures.  The announcement of further economic stimuli also provided a boost to risk appetite.

The MSCI World generated a return of 6.95% in sterling terms.  Sterling weakened versus the dollar and euro which flatters the sterling denominated returns of overseas markets.  The best performing markets for sterling investors were Japan (+8.17%) and Europe (+8.28%) although in local currency terms the US fared marginally better than Europe as the euro strengthened more versus sterling than the dollar.  Growing tensions between the US and China pared back returns from Emerging Markets (2.81%) and Asia Pacific ex Japan (0.84%).

Although a “growth” investment style outperformed “value” in May, there was a marked shift towards the end of the month when value shares rallied strongly.

In this risk-on environment corporate bonds outperformed government bonds. Speculation that the Bank of England might consider negative interest rates for the first time ever resulted in some shorter-dated bonds trading with a negative yield.

The oil price rose 41% in April following both a reduction in supply and an increase in demand as economies started to open again.

Market Returns Summary – May 2020

GBP Local Currency
Equities FTSE 100 3.34 3.34
FTSE 250 3.67 3.67
Europe 8.28 4.54
Asia ex Japan 0.84 -0.72
Emerging Markets 2.81 0.63
MSCI World 6.95 4.72
S&P 500 6.81 4.69
Japan 8.17 6.81
Bonds Gilts 0.04 0.04
UK Corporate Bonds 1.00 1.00
US Treasuries 1.71 -0.31
Property -0.61 -0.61
Oil Price 41.39 38.58
Currencies USD 2.03 0.00
Euros 3.61 0.00
Yen 1.27 0.00

Source: FE Analytics.  Europe: FTSE World Europe ex UK, Asia ex Japan: MSCI AC Asia ex Japan, Japan: TSE TOPIX, Emerging Markets: MSCI Emerging Markets, Gilts: FTSE Actuaries UK Conventional Gilts All Stocks, UK Corporate Bonds: ICE BofAML Sterling Corporate, US Treasuries: ICE BofAML US Treasury, Property: IA UK Direct Property, Oil Price: Brent Crude.  All indices are total return in currency indicated. Past performance is not an indicator of current and future results.  Data as at 31st May 2020.

Economic Data

GDP Growth Rate Unemployment Rate Interest Rates Inflation
Most recent Previous Most recent Previous Most recent Previous Most recent Previous
UK -2.00 0.00 3.90 4.00 0.10 0.10 0.80 1.50
US -5.00 2.10 13.30 14.70 0.25 0.25 0.30 1.50
Euro Area -3.60 0.10 7.30 7.10 0.00 0.00 0.10 0.30
Japan -0.60 -1.90 2.60 2.50 -0.10 -0.10 0.10 0.40
China -9.80 1.50 6.00 5.90 3.85 3.85 3.30 4.30

*In the Euro Area, the main refinancing rate is 0 and the deposit rate is -0.5 percent

It is important to note that much economic data is lagging. Variation in the reported numbers from month to month represent intra-month revisions and not all countries report their data at the same time or use the same metrics, so these tables offer a rough guide only.

Manufacturing PMI Services PMI Business Confidence Consumer Confidence
Most recent Previous Most recent Previous Most recent Previous Most recent Previous
UK 40.70 32.60 29.00 13.40 -87.00 23.00 -36.00 -34.00
US 39.80 36.10 37.50 26.70 43.10 41.50 72.30 71.80
Euro Area 39.40 33.40 30.50 12.00 -2.43 -1.99 -18.80 -22.00
Japan 38.40 41.90 26.50 21.50 -8.00 0.00 24.00 21.60
China 50.70 49.40 55.00 44.40 50.60 50.80 116.00 122.00

Source: 9th June 2020


The bullish returns from the equity markets have caught many by surprise.  Whilst the response of Central Banks and governments around the world to the crisis have been extraordinary, many uncertainties remain, not least the full extent of the economic fallout from the lockdown and the risks of lifting the lockdown in areas where the virus persists.  If there is a second wave of infections or if unemployment become entrenched, then equities may retest the lows.   However, if the number of infections and deaths continue to fall and economies return to growth then there is justification for the rally to continue.  Another important point is that with the yield on other asset classes either low or negative, equities continue to offer the potential for attractive returns so long as investors can stomach the greater volatility.


Investors should try to focus on the fact that investing in the stock market over the long term, is a powerful tool to preserve the purchasing power of their wealth and on ensuring that they have an appropriate asset allocation for the level of risk with which they feel comfortable.  A disciplined approach to asset allocation and identifying good active managers who can navigate these conditions successfully remains of the utmost importance.


10th June 2020


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