May’s investment market commentary

Despite ongoing uncertainty, riskier assets performed well during May, as Andrew Yeadon’s update explains.
Share on facebook
Share on linkedin
Share on twitter
Share on email
Published 9 June
4 mins

Despite ongoing uncertainty, risk assets performed well during May. The key positive many investors latched onto was that the growth of COVID-19 cases in advanced economies continued to slow.

In the hope that the worst of the pandemic may now have passed, many countries began to ease lockdown restrictions, and we saw some tentative signs of an improvement in economic activity, albeit from a very low base. However, as the pandemic eased in the US and Europe, COVID-19 cases grew rapidly in a number of significant emerging economies, including Brazil, India, Mexico, South Africa and Russia.

On the political front, tensions between China and most other countries increased, with accusations that it was responsible for creating the virus and concealing its deadly nature. Australia led calls for an independent investigation, with China retaliating with punitive tariffs on some Australian exports. The United States also upped the ante with various trade and sanction threats, which led many to talk of the emergence of a new cold war. Tensions in Hong Kong over new China imposed laws against sedition fanned the flames further, with the US threatening to remove Hong Kong’s special trading status.

Towards the end of the month, the death of George Floyd, while in the custody of the Minneapolis Police Department, saw impassioned protests break out across US cities and beyond, as it reignited the “Black Lives Matter” campaign. With the race for the presidency now in its final six months, Trump’s poor handling of both the pandemic and the racial unrest saw his popularity slump, allowing Democrat nominee Biden to take a meaningful lead in the election polls. While a Biden presidency would probably help ease global political tensions, financial markets would probably not be so welcoming of the change.

European markets were buoyed by the unveiling of a plan from President Macron and Chancellor Merkel for a new jointly funded EU recovery fund that could provide fiscal support to some of the economically weaker countries. If agreed, this would be a significant step towards greater fiscal cooperation across the euro area. Prior to this announcement, Italian government bond yields had been rising as investors worried that the costs of dealing with the pandemic could spark a second euro crisis.

The first quarter corporate earnings season concluded in May, and there was little to cheer as the majority of companies reported falling earnings and a weak outlook for the coming quarters. Even so, some investors took heart that the results were generally better than expected.

Central bank quantitative easing programmes helped ‘oil the wheels’ of financial markets, boosting liquidity and keeping bond yields low. While equity issuance has been relatively modest over recent months, companies have issued near record levels of corporate bonds. This has been partly opportunistic, because interest rates are very low, but it also reflects the need for additional liquidity to help weather the economic crisis.

The recovery of equities continued, with most major markets and sectors delivering gains. Over the month, the MSCI AC World Index rose +6.6% in sterling terms. At the country and regional level, Japan (+8.2%), Europe ex UK (+7.9%) and the US (+7.4%) did well, while the UK (+3.2%), Emerging Markets (+2.9%) and Asia ex Japan (+1.0%) struggled. At the sector level, economically sensitive areas picked up a bit. Information technology (+9.1%) was the top performer, although industrials (+8.4%), materials (+8.2%) and consumer discretionary (+8.1%) also did well. In contrast, real estate (+2.6%), financials (+3.6%) and consumer staples (+4.2%) lagged the average. In terms of style, growth (+8.3%) continued to outpace value (+4.7%), while smaller companies (+8.9%) did better than larger companies (6.6%).

Fixed income markets also took on a more positive tone. While safe haven government bonds saw a slight rise in yield (fall in price), investment grade corporate and high yield bonds clawed back some more of the ground they lost in the late February / March drawdown. Over the month, the JP Morgan Global Government Bond Index slipped -0.2%, while the ICE Merrill Lynch Global Corporate Investment Grade Bond Index rose +1.3%, the ICE Merrill Lynch Global High Yield Bond Index rose +4.5%, and the JP Morgan Global Emerging Market Bond Index advanced +5.7% (all hedged to sterling).

The Bloomberg Commodities Index rose +6.6%, mainly driven by the substantial rebound in crude oil (+52.8%). industrial metals (+5.0%) and gold (+4.9%) also drifted higher, in part because the US dollar gave up ground against most other currencies.

Finally, in the foreign exchange markets the pound was relatively weak, losing ground against most currencies. For example, against the pound the US dollar rose by +1.9%, the euro by +3.3%, the Mexican peso by +10.1%, and the South African rand by +7.1%.

FTSE 1005901.216076.60
DJ Ind Average24345.7225383.11
S&P Comp2912.433044.31
£ Base Rate0.100.10
Brent Crude26.4837.84

Clients of Nedbank Private Wealth can get in touch with their private banker directly to understand how their portfolios are responding to market events, or call +44 (0)1624 645000 to speak to our client services team.


If you would like to find out more about how we manage clients’ investments, please contact us on the same number as above. Or you can get in touch using the links to the forms towards the end of this page.

Investments can go down, as well as up, to the extent that you might get back less than the total you originally invested. Exchange rates also impact the value of your investments. Past performance is no guide to future returns. Any individual investment or security mentioned may be included in clients’ portfolios. They are referred to for information only and are not intended as a recommendation, not least as they may not be suitable. You should always seek professional advice before making any investment decisions.

about the author

No data was found

Access more of our insights


The week in review

15 Jun

   |   2 mins

We review the week starting 7 June, which saw global stocks hit fresh highs due to expectations that the economic recovery outweighed concerns that the Federal Reserve could start to roll back its market support.


8 July quarter end investment webinar: what's happening with inflation?

15 Jun

   |   45 mins

David McFadzean is joined by Tom Caddick to discuss recent trends in financial markets, how these might affect investors in the coming months, and how our portfolios are positioned to respond.


The week in review

8 Jun

   |   2 mins

We review the events and financial market movements of the week commencing 31 May which was a continuation of the roller coaster investors are experiencing as a result of conflicting economic and policy updates.


May's investment market commentary

3 Jun

   |   3 mins

The COVID-19 narrative continued throughout May with the focus of most market commentators on the efficacy of the vaccine rollout and the global economic reopening, which Tom Caddick’s update explains.

Get in touch

If you are interested in becoming a client, please complete the form via the ‘become a client’ button below. Alternatively, if you are already a client, or if you have a question about how we help clients in particular circumstances, please use the ‘contact us’ button.

We will get back to you as soon as we can during office hours, which are Monday to Friday, 8am to 8pm (UK time), except for UK public holidays.

Become a Client

Thank you for your interest in Nedbank Private Wealth. Please call us on +44 (0)1624 645000 or complete the requested information and one of our team will get back to you soon. We look forward to speaking with you.  Please note: If you are an EU resident, we are unfortunately unable to offer our services to you at present.

* Required fields

Contact Us

Give us a call today on +44 (0)1624 645000 or please complete the requested information and one of our team will get back to you soon. We look forward to speaking with you.

Our office hours are weekdays from 8am to 8pm UK time, except for UK public holidays.

* Required field

Search suggestions


Beware of scams using Nedbank Private Wealth’s name.


Have you received an email or SMS claiming to be from Nedbank Private Wealth, inviting you to open an account?


Don’t be tricked – Nedbank Private Wealth never contacts members of the public directly, and will never use email or text messages to ask you for your bank details or sensitive personal information.


We are aware of scams using our name and those of our staff. These are usually intended to convince you to send money to the scammers, who use our name because it sounds legitimate.


If you are in any doubt about whether an email or SMS in our name is legitimate, please speak to your private banker, or call the telephone numbers on the “Contact us” page.