Global Market Overview – May 2021

The media found a new worry in May as the Indian variant took over newspapers. With all headlines, especially COVID-related ones, it’s important to remember that the goal of a journalist isn’t always to produce useful and informative news; it might be to write something that will sell. We can’t be sure that new COVID variants won’t jeopardise lifting of UK restrictions, but they’re unlikely to cause anywhere near the destruction that the first wave did, both in an economic and a humanitarian sense.

Unfortunately, not every country is as far along their journey to immunisation as the UK and recent outbreaks illustrate that. India, Taiwan, and Brazil know this too well. Luckily, there are still reasons to be positive. Since the beginning of May, daily COVID cases in India have fallen from well over 400,000 to around 120,000. This illustrates how much better the world is getting at controlling the disease, even in third world countries where healthcare infrastructure is more limited.

May was also full of inflation talk. One of the many reasons for this was that the Euro-area inflation rate hit 2% (annual) for the first time since 2018. In the grand scheme of inflation, these are not big numbers at all; economists generally consider inflation around 2% to be optimal for growth.

Things are returning to normal, and the conditions for a strong period of global growth are in place. Once growth becomes really embedded, attention will turn to the low level of interest rates. At some point, central banks will have to begin a hiking cycle, despite the signals they are giving currently. That day is still some way off as though.

May was a good month for equity markets. Europe led the way as positive economic data and the European Central Bank’s commitment to expansionary policy helped feed growing positive sentiment. The US and UK also had good months as the vast majority of major indices ended the month up. The result of this was that higher risk profiles performed well over the month.

Core views

Policymakers will stay supportive… The world has never seen as much coordinated stimulus as in the past year – and the impact is yet to come. We believe this sets the stage for a strong economic recovery across the world in 2021. The return to growth will occur at slightly different paces in different places – much of Asia is already back on track, the US should have a vibrant start to the year, with Europe finishing strongly.

The post-COVID consumer will make up for lost time… Vaccination rollouts make the end of lockdowns real, and people are making big plans. Through a combination of savings, government support and job growth, consumers have never had more firepower following a crisis.


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.


June 2021

With thanks to Seven Investment Management LLP for their views and market thoughts.

RiverPeak Wealth Limited

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