Stocks rise despite U.S. trade policy concerns.

Global equities, as measured by the MSCI ACWI Index, rose sharply in May despite periods of volatility in response to numerous changes in the trade policy of the administration of U.S. President Donald Trump. Investors ultimately focused on positive news regarding negotiations between the U.S. and several major trading partners. The U.S. broad-market S&P 500 Index and the tech-heavy Nasdaq Composite Index surged 6.3% and 9.7%, respectively, in May (in U.S. dollar terms)—their largest monthly gains since November 2023.¹ Additionally, the S&P 500 Index saw its best May performance since 1990.² 

Developed markets outperformed emerging markets in May. North America led the developed markets for the month attributable largely to the rally in the U.S. The Pacific ex Japan region was bolstered by strength in Singapore and New Zealand. Despite registering a positive return, Europe was the most notable developed-market laggard in May due to relative weakness in Switzerland, Belgium, and France. The Far East was the top performer within the emerging markets for the month, benefiting mainly from robust performance in Taiwan and Indonesia. Chinese and Hong Kong stocks listed on the Hong Kong Stock Exchange also performed well. In contrast, the Gulf Cooperation Council (GCC) countries recorded negative returns for the month and were the worst performers in the emerging markets due mainly to weakness in Saudi Arabia.³

Global fixed-income assets, as measured by the Bloomberg Global Aggregate Bond Index, dipped 0.4% (in U.S. dollars) in May. Canadian bonds were essentially flat. High-yield bonds comprised the lone sector within the U.S. fixed-income market to finish the month in positive territory, while investment-grade corporate bonds posted virtually flat returns. U.S. Treasury securities and mortgage-backed securities (MBS) recorded losses in May. U.S. Treasury yields rose for all maturities of three months or longer. Yields on 2-, 3-, 5-, and 10-year Treasury notes increased by corresponding margins of 0.29%, 0.29%, 0.24%, and 0.24% to 3.89%, 3.87%, 3.96%, and 4.41%, respectively.⁴ The Treasury yield curve turned positive (10-year yields exceeded 3-month yields) over the month.   

Global commodity prices, as represented by the Bloomberg Commodity Index (USD), were down 0.6% in May. The West Texas Intermediate (WTI) and Brent crude oil prices rose 4.4% and 4.7%, respectively in USD, during the month amid optimism that an agreement between the U.S. and China, the world’s two largest oil consumers, to delay and reduce tariffs on imported goods could boost demand. The gold price retreated somewhat from its recent record highs, ending the month with a 0.1% dip as the postponement of U.S. tariffs on China and, later in the month, the European Union (EU), eased investors’ demand for safe-haven assets. The New York Mercantile Exchange (NYMEX) natural gas price fell 5.2% due to a decline in demand and increasing stockpiles in the U.S. The 0.6% upturn in the wheat price resulted mainly from forecasts that unusually warm summer temperatures and extreme weather could reduce stockpiles in North America, Asia, and Europe. 

U.S. trade policy dominated the global market news again in May. Under a tentative agreement with the U.K., which Trump and U.K. Prime Minister Keir Starmer announced on May 8, U.K. steel and aluminum imports will be exempt from the 25% tariff and levies on autos manufactured in the U.K. will be reduced from 25% to 10% for the first 100,000 imported vehicles. The agreement stipulates that the U.K. will purchase Boeing jets worth $10 billion and ease restrictions on imports of ethanol from the U.S. Imported goods from the U.K. will still be subject to the global 10% tariff implemented in early April.

Representatives of the U.S. and China hashed out a trade deal at a meeting in Switzerland on May 10-11. The two nations agreed to postpone some tariffs for 90 days while negotiations continue. The U.S. will reduce the levies on most goods imported from China from 145% to 30% (with a 10% across-the-board tariff and an additional 20% levy to pressure China to curb the illegal exports of fentanyl to the U.S.). China agreed to reciprocate by cutting the tariff on U.S. imports from 125% to 10%. 

In a social media post on May 23, Trump said that he was considering the assessment of a 50% tariff on imported goods from the EU beginning on June 1, because trade policy talks were “going nowhere.” In a separate post, the president noted that he informed tech giant Apple’s CEO Tim Cook that he expected the company to manufacture its iPhones in the U.S. “If that is not the case, a Tariff of at least 25% must be paid by Apple to the U.S.,” he wrote. Apple previously announced that it will shift the manufacturing of its devices from China to India after the Trump administration imposed tariffs on Chinese imports. Three days later, Trump announced that he was a delaying the imposition of the levies from June 1 to July 9 after the EU agreed to accelerate negotiations. He said that European Commission President Ursula von der Leyen requested an extension of the tariff deadline while trade negotiations continued. The ongoing tariff dispute remains highly volatile and in constant flux.

On the geopolitical front, there were several developments in the Russia-Ukraine military conflict in May. Russian President Vladimir Putin rejected a 30-day ceasefire supported by Ukrainian President Volodymyr Zelensky and refused to meet with Zelensky in Turkey in mid-May. Trump and Putin engaged in a discussion by telephone on May 19, but could not reach agreement on a ceasefire in the war. Late in the month, Russia launched massive drone and missile attacks on Ukraine. In response, Trump indicated that he was considering sanctions against Russia. 

Economic data 

(unless otherwise noted, data sourced to Bloomberg)

• According to Statistics Canada, consumer prices (as measured by the change in the Consumer Price Index (CPI)) declined 0.1% in April. Year-over-year consumer prices were up 1.7% as consumers paid more for groceries while energy prices were significantly weaker. Producer prices were lower in April, as the Industrial Product Price Index (IPPI) and the Raw Materials Price Index (RMPI) slid 0.8% and 3.0%, respectively. Year-over-year prices were mixed, up 2.0% and down 3.6%, respectively, for the IPPI and RMPI. Prices for metals have sharply increased over the past 12 months, while crude oil prices were once again notably weaker after starting 2025 in strong fashion. The Canadian labour market added a meager 8,800 jobs in May, and the unemployment rate rose 0.1 percentage point to 7.0%. When excluding COVID-19 related distortions in 2020 and 2021, the 7.0% unemployment rate represents the highest level since September 2016.
• The U.S. Department of Labor announced that the consumer-price index (CPI) rose 0.2% in April, up from the 0.1% dip in March and in line with expectations. Housing costs increased 0.2%, comprising more than half of the increase in inflation for the month. Energy prices were up 0.7% in April, as rising costs for utility gas service and electricity more than offset a decline in fuel oil and gasoline prices. The CPI advanced at a slightly lower-than-expected rate of 2.3% year-over-year—the smallest 12-month increase since February 2021—and was down from the 2.4% annual upturn in the previous month. Costs for utility gas service and housing climbed 15.7% and 4.0%, respectively, over the previous 12-month period, while gasoline and fuel oil prices declined by corresponding margins of 11.8% and 9.6%. Core inflation, as measured by the CPI for all items less food and energy, rose 2.8% year-over-year in April, meeting market expectations and unchanged from the annual increase in March. According to the second estimate from the Department of Commerce, U.S. gross domestic product (GDP) decreased at an annual rate of 0.2% in the first quarter of 2025—down sharply from the 2.4% rise in the fourth quarter of 2024, but slightly higher than the government’s initial estimate of a 0.3% dip. The economic contraction in the first quarter was attributable mainly to a surge in imports (a subtraction from GDP) as businesses rushed to purchase goods before the Trump administration’s import tariffs took effect in early April. GDP also was hampered by a drop in government spending. Conversely, nonresidential fixed investment (purchases of equipment and software, and nonresidential structures), consumer spending, and exports each rose for the quarter.
• The Office for National Statistics (ONS) reported that inflation in the U.K., as measured by the CPI, increased 1.2% in April, well above the 0.3% rise in March. The CPI advanced at an annual rate of 3.5% in April, up from the 2.6% year-over-year increase for the previous month. Transportation and communication costs posted the largest gains in April, while prices for furniture and household goods declined. Prices for housing and household services, education, and communication surged 7.8%, 7.5%, and 5.8%, respectively, over the previous 12-month period. Conversely, prices for furniture and household goods, and clothing and footwear dipped by corresponding margins of 0.5% and 0.4% year-over-year. Core inflation, which excludes volatile food, energy, and alcohol and tobacco prices, increased at an annual rate of 3.8% in April, accelerating from the 3.4% year-over-year upturn in March.⁵ The ONS also announced that U.K. GDP increased 0.7% in the first quarter of 2025, up from the 0.1% growth rate in the fourth quarter of 2024. Production and services output rose 1.1% and 0.7%, respectively, over the quarter, while output in the construction sector was flat.⁶
• Eurostat pegged the inflation rate for the eurozone at 2.2% for the 12-month period ending in April, unchanged from the annual upturn in March. Costs in the services sector rose at an annual rate of 4.0%, notably higher than the 3.5% increase in March. Prices for food, alcohol and tobacco increased 3.0% year-over-year in April, edging up from the 2.9% annual rate for the previous month. In contrast, energy prices fell 3.6% over the previous 12-month period. Core inflation, which excludes volatile energy and food prices, rose at an annual rate of 2.7% in April, up from the 2.6% year-over-year increase in March.⁷ Eurostat also reported that eurozone GDP rose 0.4% the first quarter of 2025, representing slight improvement over the 0.2% growth rate for the fourth quarter of 2024. Eurozone GDP increased 1.2% over the previous 12-month period. The economies of Ireland, Lithuania, and Spain were the strongest performers for the first quarter, expanding 10.9%, 3.2%, and 2.8%, respectively. In contrast, GDP in Austria, Hungary, and Germany saw corresponding declines of 0.7%, 0.4%, and 0.2% during the quarter.⁸
   

¹ Source: Nasdaq. “May 2025 Review and Outlook.” May 31, 2025. 
² Source:  MarketWatch.. “S&P 500 scores best May since 1990, but stocks end month with fresh tariff worries.” May 30, 2025. 
³ All equity market performance statements are based on the MSCI ACWI Index.
⁴ According to the U.S. Department of the Treasury. As of April 30, 2025.
⁵ According to the ONS. May 21, 2025.
⁶ According to the ONS. May 15, 2025. 
⁷ According to Eurostat. May 19, 2025.
⁸ According to Eurostat. April 30, 2025. 

Disclosures

SEI Investments Canada Company, a wholly owned subsidiary of SEI Investments Company, is the investment fund manager and portfolio manager of the SEI Funds in Canada. 

The information contained herein is for general and educational information purposes only and is not intended to constitute legal, tax, accounting, securities, research or investment advice regarding the Funds or any security in particular, nor an opinion regarding the appropriateness of any investment. This information should not be construed as a recommendation to purchase or sell a security, derivative or futures contract. You should not act or rely on the information contained herein without obtaining specific legal, tax, accounting and investment advice from an investment professional. This material represents an assessment of the market environment at a specific point in time and is not intended to be a forecast of future events, or a guarantee of future results. There is no assurance as of the date of this material that the securities mentioned remain in or out of the SEI Funds.