Monthly market summary – Review of May 2024

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Our market summary

Global equities gained 2.4% in May. Growth stocks strongly outperformed value stocks over the period with developed markets well ahead of emerging markets. These delivered small losses, despite China making a modest gain. Although the likely timing of US interest-rate cuts was pushed back again, markets continued to anticipate rate cuts with Europe outperforming other regions thanks partly to expectations of a June rate cut. Meanwhile, US Treasuries and UK gilts delivered modest gains while corporate bonds outperformed.

US

US equities rebounded from April’s losses to gain 3% in another strong month for growth stocks as better-than-expected first quarter earnings across a number of sectors boosted the market. The Magnificent Seven mega-cap stocks were also prominent amid ongoing investor appetite for AI-related stocks. The top sectors were information technology, utilities, and communication services while energy stocks trailed as oil prices weakened.

Europe

Europe was the top performing regional equity market. It gained 3.7% as corporate profits generally surprised, and the economy improved. Thanks to the widely-anticipated June rate cut from the European Central Bank (ECB), interest-rate sensitive areas such as real estate and utilities outperformed, as did financial stocks. As in the US, falling oil prices hit European energy stocks while several major luxury goods and automakers also struggled.

UK

UK equities trailed those of other developed markets with a return of 2.4% but UK smaller companies jumped 5.7% due to record levels of bid activity from overseas investors. Amid news of positive GDP growth in the first quarter, UK financial and industrial stocks were the top performers despite UK CPI inflation disappointing. It declined to 2.3% in April, which further pushed out the expected timing for the first Bank of England rate cut.

Emerging markets

Emerging markets declined 1.1%, despite Chinese equities making a modest 0.7% gain. Egypt was the top performer with the Czech Republic, Colombia, Chile, Peru and Turkey all posting gains. Taiwan also outperformed thanks to its heavy tech sector weighting. Elections impacted South Africa, Mexico and India. Korea and Brazil also trailed while Greece and Thailand suffered losses alongside Middle East markets, which declined in line with the oil price.

Fixed income

Despite the lack of progress in containing US inflation to target levels, which pushed expectations of rate cuts further back into the year, the rejection of the need for further US rate hikes by Federal Reserve Chairman, Jay Powell, was sufficient for US Treasuries to rally modestly over the month. Meanwhile, UK gilts added smaller gains, despite selling-off late in the period as UK inflation numbers disappointed. Sterling corporate bonds modestly outperformed gilts.

Source: Quilter Investors as at 31 May 2024. Total return, percentage growth in pounds sterling except where shown, rounded to one decimal place. The performance shown for global equities is represented by the MSCI AC World Index; developed market equities by the MSCI World Index; US equities by the MSCI USA Index; European equities by the MSCI Europe ex UK Index; UK equities by the MSCI United Kingdom All Cap Index; UK smaller companies by the MSCI United Kingdom Small Cap Index; emerging markets by the MSCI Emerging Markets Index.

Important Information

Past performance is not a guide to future performance and may not be repeated. Investment involves risk. The value of investments may go down as well as up and investors may not get back the amount originally invested.

This communication is issued by Quilter Investors, a trading name of Quilter Investors Limited. Quilter Investors is registered in England and Wales under number 04227837 and is authorised and regulated by the Financial Conduct Authority (FCA) under number 208543. Registered office: Senator House, 85 Queen Victoria Street, London, United Kingdom, EC4V 4AB.

This communication is for information purposes only. Quilter Investors uses all reasonable skill and care in compiling the information in this communication and in ensuring its accuracy, but no assurances or warranties are given. Investors should not rely on the information in this communication when making investment decisions. Nothing in this communication constitutes advice or a personal recommendation. This communication is for information purposes only and is not an offer or solicitation to buy or sell any Quilter Investors portfolio or fund.

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Marcus Brookes

Chief Investment Officer & Managing Director

Marcus is chief investment officer and managing director of Quilter Investors. Marcus joined Quilter Investors in December 2021 from Schroders Personal Wealth, where he also held the role of chief investment officer. He has considerable investment management experience with a deep understanding of the multi-asset sector having managed multi-manager fund ranges for more than 20 years.

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